$500m (+75m) sen unsec CB coming Thurs from JPM.Terms: 5y,1¼-¾ up 37½-42½%, put 3y, full pctns. UOP=cb hedge /gcp. Stk +2.25x since last CB was issued (18/09/12) w/0.5 parity @ 285. Recent $600m QIHU deal (different biz but comparable cb structure/size) came 2% up 40% now ~109.5, x/par +72% & backs out L+305 (35vol) for 2.93y. PFcash=1.4bn, debt=752m, LTM ebitda=186m, fcf=158m.
We’d assume L+450. ADV=2.4m, 01/15 same delta calls ~40bid. 12bn mkt cap+strong credit+elevated eqty=classic cap structure trade.
We’d use higher vol if it was domestic (yes, we know it is the Chinese Expedia but still). We’d cap 3y vol @35%. Theo= 102.9 /
104.4 / 105.9. UBS index inclusion, obv regional demand & cheap to modelwill trump all those bad memories.