12/04/12 Volcano (VOLC)

$350m (52.5m) sen unsec cb coming Tues night from JPM/GS Terms: 5y, 1.75-2.25% up 22.5-27.5%, partial happy meal. Full pctns. UOP = note hedge/buyback up to 50m 2.875% CB/acq/gcp.

 

PF Cash = $550m

PF Debt = $415m

LTM EBITDA = $47m
Although lev high (8.8x), ebitda expected to double over next two years, bringing lev down to more reasonable levels. Pre-deal announcement, existing 2.875% trade L+200 for 3 years. We’ll conservatively use L+500 for 5 year. 90d hist vol last 2 yrs =30, we’ll use that. Theo = 105.5. Hard not to like +equity story and improving credit profile in this sector. Could see an eruption of interest from a wider audience than 1st deal. Be weary of reprice, but make this a core position.

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