If you think you are alone in noticing that the markets have held up extremely well, you better take a look and see what managers and officers of public companies are doing on capital raises. There is a wave of secondary offerings this week either that already priced or on deck from companies such as Cousins Properties Incorporated (NYSE: CUZ), Dice Holdings Inc. (NYSE: DHX), Discover Financial Services (NYSE: DFS), Entertainment Properties Trust (NYSE: EPR), Finisar Corp. (NASDAQ: FNSR), First Potomac Realty Trust (NYSE: FPO), Genesis Energy LP (NYSE: GEL), Genpact Ltd. (NYSE: G), Global Partners LP (NYSE: GLP), Hartford Financial Services Group Inc. (NYSE: HIG), Iridium Communications Inc. (NASDAQ: IRDM), Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX), Novavax, Inc. (NASDAQ: NVAX), Oriental Financial Group Inc. (NYSE: OFG), Satcon Technology Corporation (NASDAQ: SATC), and TTM Technologies, Inc. (NASDAQ: TTMI) all either have priced deals or pending deals in the world of secondary stock offerings.
As of last night, the week’s offerings were literally a floodgate of secondary offerings. It is almost worrisome when you see this many shares being sold. We have included the appropriate color where applicable, as well as applicable price reactions, comparisons to market cap, the underwriting team on each, and more. The most difficult notion to fathom here is that these are just the decent-sized offerings to large offering from companies which did more than just an automatic shelf registrations. SIXTEEN deals here alone….
Cousins Properties Incorporated (NYSE: CUZ) filed on Tuesday to sell up to $500 million in any combination of Common or Preferred Stock, Warrants, Debt and/or Depositary Shares. The stock held up fine with only a 6.3% drop to $7.85 on Tuesday versus a 52-week range of $5.97 to $10.95. No underwriters were named for the REIT’s securities sale for ‘general corporate purposes’ and the market cap as of Tuesday was $783 million.
Dice Holdings Inc. (NYSE: DHX) registered to sell up to $50 million in common stock for holders, although the prospectus noted common and preferred stock. It also said that any proceeds to the company would be for for ‘general corporate purposes,’ which was inclusive of debt repayment, working capital and/or capital expenditures. Dice shares were down 1.1% to $7.61 n Tuesday and the market cap was about $475 million.
Discover Financial Services (NYSE: DFS) received approval to pay back its TARP obligations. After earnings last night the credit card issuer said it would be selling $350 million in subordinated debt to repay the TARP. Shares were down 1.5% at $15.07 on early look but that is after earnings and may be only a lesser event in the grand scheme of things.
Entertainment Properties Trust (NYSE: EPR) listed almost 6.3 million shares for sale for a value of close to $250 million in common shares. The difference here is that the offering is said to be dividend reinvestment component and a direct share purchase component shares, so these may actually not be sold… ” 8,500,000 common shares to be offered for purchase under the Plan, including 2,202,093 common shares that were previously registered but not sold.”
Finisar Corp. (NASDAQ: FNSR) filed on Monday to sell 7.2 million shares of common stock. Tuesday brought about a drop down 3.4% to $14.30 on above-average share volume. This one is after a significant recovery because its 52-week trading range is $2.56 to $14.90 and its new market cap was $931 million as of Tuesday’s close. Morgan Stanley and Jefferies & Company are joint book-running managers; Piper Jaffray and Morgan Keegan are co-managers.
First Potomac Realty Trust (NYSE: FPO) priced an underwritten registered public offering of 5,500,000 common shares at $14.50 per share, with all of the shares offered by the company. Net proceeds are expected to be approximately $75.9 million to be used for general corporate purposes and to pay down debt. KeyBanc Capital Markets and Wells Fargo Securities were joint book-running managers; BMO Capital Markets and Raymond James are co-lead managers. First Potomac closed down 3.75% at $15.15 on Tuesday after the filing had been made, but that was before the deal priced last night. The 52-week trading range is $6.67 to $16.07 and the market cap is $466 million.
Genesis Energy LP (NYSE: GEL) filed recently to sell 6M common units and it fell 5.5% to $20.45 Tuesday after the offering of 6.25 million shares priced at $20.50 per unit. The company noted that “common units owned by Denbury Onshore, LLC and Denbury Gathering & Marketing, Inc., each an affiliate of Denbury Resources Inc., and James E. Davison, one of the directors of our general partner, and two other members of the Davison family.” Wells Fargo, BofA Merrill Lynch, UBS, and also RBC Capital Markets were joint book-runners; Deutsche Bank and Morgan Keegan were co-managers.
Genpact Ltd. (NYSE: G) fell 6.7% to $14.91 after the company registered to sell 28 million shares of common stock for selling shareholders. Those holders include General Electric Co. (NYSE: GE) and Wells Fargo & Company (NYSE: WFC) affiliates, as well as General Atlantic and Oak Hill Capital Partners. Morgan Stanley and Goldman Sachs are lead book-running managers; Citigroup, UBS Securities, and Credit Suisse are joint book-running managers; JPMorgan Securities and Wells Fargo are co-lead managers.
Global Partners LP (NYSE: GLP) took a 5.5% hit to $22.68 after the company sold 3.4 million common units to reduce debt. The deal priced at $22.75 per common unit and Barclays Capital and BofA Merrill Lynch were joint book-running managers. Credit Suisse and RBC Capital Markets were the co-managers. This had been a $25 stock as recently as Friday morning and its listed dividend yield is 7.9%.
Hartford Financial Services Group Inc. (NYSE: HIG) took a hit last night after announcing the sale of $3.05 billion in securities to help the company repay its $3.4 billion US Government TARP obligations. Unless changes were made, this is $1.45 billion in common stock and $500 million in convertible preferred stock, with approximately $1.1 billion in bonds. Shares were off 1.6% at $26.82 on last look.
Iridium Communications Inc. (NASDAQ: IRDM) filed last night what looked to be only 130.437 founder warrants where proceeds would be going to the company. But in the filing there is also listed a 38,628,390 share count for sale. We will stay tuned here before using the larger number as gospel.
Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX) took a beating of almost 10% to close at $1.28. The company priced a public offering and private placement of its common stock to total approximately $165 million; public shares were 87,717,391 shares of common stock at $1.15 per share. Lexicon agreed to sell an additional 59,296,749 shares of common stock at the public offering price to Invus, L.P., its largest stockholder, in a private placement upon Invus’ exercise of its right to purchase shares sufficient to maintain its pro rata ownership of Lexicon’s common stock. Morgan Stanley and J.P. Morgan were joint book-runners; Cowen & Co. and Thomas Weisel Partners were co-managers.
Novavax, Inc. (NASDAQ: NVAX) filed on Tuesday to sell up to $150,000,000 in any combination of Common or Preferred Stock, Warrants, and/or Units for clinical development, R&D, expansion, and general corporate purposes. No underwriters were named.
Oriental Financial Group Inc. (NYSE: OFG) filed originally to sell up to $50 million worth of common stock. However, on Tuesday morning the company announced that announced today that it priced an underwritten public secondary offering of 7,600,000 shares of common stock at $11.40 per share to raise about $86.6 million. This was sold by KBW and by the Bank itself.
Satcon Technology Corporation (NASDAQ: SATC) filed on Monday to sell up to $50 million in Common or Preferred Stock, as well as Warrants, Purchase Contracts, Depositary Shares, Debt Securities, and/or Units. This compares to a $163 million market cap for the provider of utility grade power conversion solutions and services for commercial and utility scale renewable energy installations and distributed energy markets. At $2.33, the 52-week range is $1.22 to $2.93.
TTM Technologies, Inc. (NASDAQ: TTMI) registered 10,101,000 for roughly $93 million for selling holders. None of the proceeds go to the company from the selling holders. Underwriter names not seen. Its market cap is $396 million and its $9.19 share price compares to a 52-week trading range of $4.60 to $12.52.
Secondary offerings are not an absolute sign that the market has peaked. But when you see waves and waves of selling like this, it can’ go unnoticed that perhaps the share sales are uncoordinated thoughts by management in many sectors that they better raise capital while the window is open.
In the ‘new normal’ it seems that expectations still involve guesswork and uncertainty. Even for those with clarity, the reminders of hard times are still fresh in mind.
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JON C. OGG
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