$210 (+40m) sen unsec cb coming tonight from DB. Terms: 5yr bullet, 0.5-1% up 20-25%, full pctns. UOP = hedge/$212m stk buy back. Mktd to hedgers on swap/traders. Stock has nearly halved since April & fell 18% alone in Aug when Remodulin trial failed. 2.2B mkt cap now but a good credit; PF Cash = 1.13B, Debt = 720m, lev = 2x LTM FCF=231m, EBITDA = 241m. We’d assume L+500 (see credit color). No leaps, ADV = 1.25B, 2y 90d 50/10ile = 20/29. Striping out short dated vol spike 32 vol is plenty generous. Theo = 99.1/101.3/103.5. Not sure 2 points cheapness over 5 yrs does it for us given some secondary cheapness out there. UTHeR than the hope o/r’s will buy in secondary (esp given where stk is) hard to see the catalyst. We want to like new deals but for that reason we’d push 4 cheaps.
Credit Color
Biotech focused on the treatment of vascular diseases
PF Cash $1.132B
PF Debt = $720m
LTM EBITDA $241m
LTM FCF $231m
Leverage 2.9x
Market Cap = $2.2B
UTHR shares fell lower in late august on news of the second failed trial for oral Remodulin. Little hope exsts for an impact to valuation until 2013. Largest drivers to current valuation are traditional Remodulin and Tyvaso franchises & to a lesser extent, Adcirca. Cash on balance sheet is deceptive, as company has been stocking up to take out old converts.
Growth slowing in traditional Remodulin adn Tyvaso. Challenges in hypertension market persist. No clinical catalysts on horizon.
Our assigned spread L+500