ModusLink (MLNK) Drops After $90 Million Convertible Debt Offer

NEW YORK (TheStreet) -- ModusLink Global Solutions (MLNK) is dropping after announcing an offering of convertible senior notes to institutional buyers.

By midafternoon Thursday, shares had taken off 14.1% to $4.20. Trading volume of 2.1 million was more than 13 times its three-month daily average.

The company, which provides supply chain management services, said it would offer $90 million worth of its convertible senior notes due 2019. The notes offer 5.25% interest and are due to mature on March 1, 2019.

ModusLink also offered the initial purchaser a 30-day option to purchase an additional $10 million worth of notes.

The offering is scheduled to close on March 18, pursuant to customary closing conditions.

The Waltham, Mass.-based business said it intends to use capital raised for general corporate purposes. The company said these purposes could include potential acquisitions, though noted no material acquisitions are probable at this time.

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TheStreet Ratings team rates MODUSLINK GLOBAL SOLUTIONS as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate MODUSLINK GLOBAL SOLUTIONS (MLNK) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

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