Wachovia Securities is organizing an unusual post-deal fieldtrip for high-yield investors who were routed after they participated in the firm's recent offering on behalf of US Oncology. In response to investor dissatisfaction with the deal, the firm is arranging an investor trip to Houston to meet with US Oncology officials to discuss the company's prospects.
Bond investors were spooked after US Oncology's 10-year, $250 million drive-by transaction was priced at par last month and plummeted as much as five points in days after the deal. The trip is intended to reassure traditional investors and underscore how the early drop was due to speculative buyers flipping their positions and broader uncertainty related to General Motors--and not related to company-specific concerns.
"Wachovia should be congratulated for arranging the trip--after they screwed up placing the credit," commented one portfolio manager, who would have preferred hedge funds to receive a smaller allocation. While on-site visits to issuers are not unusual, investors say it is rare for a trip to be arranged so soon after a deal was priced. "If [the deal] goes well, investors don't have questions," poked one sell-sider at a rival firm.
A Wachovia official noted the deal was the victim of bad timing in that it was priced the day before the GM earnings announcement and also blamed hedge fund investors for the deal's poor performance, even though Wachovia placed the deal. Bruce Broussard, cfo and treasurer of US Oncology, referred questions to Miles Highsmith, a Wachovia healthcare analyst who is arranging the trip. He did not return calls. Gary Palmer, head of leveraged sales at Wachovia, also did not return a call.
