All about converts

$200m (+30m) sen unsec cb coming 2nite from JPM/BARC. Terms: 5yr bullet, 1.25-1.75% up 30-35%, pctns. UOP=gcp. Existing cb came 4.375% up 25 in 2009. We saw co in May; +ves=revised 5/12 revolver to 2016, profitable fcf+ even in yr w/o GTA release. Emerging mkt partnerships will come 2 fruition in 2013; exp proftiable thru FY13. Assume B rating & L+700. ADV=188k, 2y 90d 10/50ile = 29/38, 1/13 20c=39iv bid (low OI). We’ll use 35 vol. Hard to use model on a 1.3B B credit but fo those who disagree: THEO = 98. Even if we use Tight L+600=102 on cheap. Improving credit/interesting story, stk is up 81% since 2009 issue. Old to new cb switch given s/call & ability to re-strike? Terms are ambitious but sign of the times. We’d take two on cheaps or take none otherwise.
Publisher of interactive software games, including grand theft auto
PF Cash $464m
PF Debt = $338m
LTM EBITDA $240m
LTM FCF $110m
Leverage = 1.4x
Mkt Cap = $1.339B
Co has been able to generate +FCF last 2 yrs w/out a grand theft auto release. Have built up their catalog w/releases such as Red Dead Redemption, LA Noire, & more recently digital sales. Launched first social gaming experience in May, except to do more & focus on growing Asia Pacific exposure. Amended revolver Oct 2011, max $100m secured, rate reduced to L+250 to 300, nothing drawn, $62m avail. Liquidity good.
Our assigned spread = L+700