November opens with nearly $3.5 billion primary pricing parade, including Lamb Weston, Jack Ohio megadeals

By Paul Deckelman

New York, Nov. 1 – November opened with a bang in Junkbondland on Tuesday, as syndicate sources reported a barrage of new issues coming to market, producing the heaviest daily new-issue volume seen in nearly two months.

When the dust had settled, some $3.491 billion of new U.S.-dollar-denominated and fully junk-rated paper had been priced by five domestic or industrialized-country borrowers in seven tranches.

According to data compiled by Prospect News, it was the most junk paper to come clattering down the chute since back on Sept. 8, when eight issuers had priced nine tranches of new bonds totaling $4.365 billion of new issuance.

All but one of Tuesday’s deals were regularly scheduled transactions coming off the forward calendar and two of the offerings were up in megadeal territory, topping the $1 billion mark.

Both of those giant-sized offerings were two-parters.

Frozen potato products company Lamb Weston Holdings, Inc. priced $1.666 billion of eight- and 10-year senior notes, evenly split into two tranches of $833 million each.

Gaming and lodging operator Jack Entertainment LLC’s Ohio subsidiary rolled the dice with a $1.05 billion offering of first- and second-lien notes.

Another dual-tranche offering came from Spanish gaming company Codere SA, although only $300 million of that was denominated in dollars, in the form of five-year senior secured paper; the remainder of that deal was a larger euro-denominated tranche, also of five-year secured notes.

Canadian energy-drilling contract Precision Drilling Corp. did $350 million of seven-year notes.

And Midwestern cable television provider Midcontinent Communications added a smallish ($125 million) add-on to its existing 2023 notes that it sold this past summer.

Construction company Tutor Perini Corp. continued to shop its planned $500 million issue eight-year senior notes around, with price talk emerging and a Wednesday pricing of that transaction expected on Wednesday.

Secondary market traders saw substantial aftermarket activity in several of the day’s new issues, including both halves of the Lamb Weston Holdings deal, and Precision Drilling’s new paper.

Lamb Weston megadeal prices

What may well be a fairly busy month started out with a pair of billion-dollar-plus bond behemoths coming to market.

One of them was Lamb Weston Holdings’ $1.666 billion two-part offering (Ba3/BB) of eight- and 10-year senior notes, neatly split into a pair of equally-sized $833 million tranches.

High yield syndicate sources said that the new 4 5/8% notes due Nov. 1, 2024 and the 4 7/8% notes due Nov. 1, 2026 both priced at par.

Price talk on the eight-year tranche had envisioned a yield in the 4.75% area, while talk on the 10-year piece was in the 5% area, both a little wider than the actual pricing levels.

The offering came to market via joint bookrunners Goldman Sachs & Co., Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC, along with co-managers Mizuho Securities USA, Inc. Rabobank and, Scotia Capital (USA) Inc.

The company, a supplier of frozen potato products to the foodservice industry, plans to use the expected new-deal proceeds to partially fund a cash payment to current corporate parent ConAgra Foods, Inc., which announced plans last year to spin off Lamb Weston. That separation is expected to be completed by the end of the year.

Lamb Weston bonds trade up

A trader noted that there was considerable aftermarket activity in both tranches of the new Lamb Weston paper.

He quoted the 4 7/8% notes due 2026 having gained 1 point on the day to end at 101 bid, with over $38 million of the new notes having changed hands.

He saw the 4 5/8% notes at 101 1/8 bid, on turnover of around $35 million.

Jack prices secured notes

The day’s other giant-sized pricing came from Midwest gaming operator Jack Entertainment LLC, whose

subsidiaries Jack Ohio Finance LLC and Jack Ohio Finance 1 Corp. priced a $1.05 billion two-part senior secured bond offering.

The new deal consists of $750 million first-lien notes due 2021 (B3/B+) and $300 million second-lien notes due 2022 (Caa3/CCC).

The first-lien tranche priced at par to yield 6 ¾%, on the wide end of its 6.50%-to-6.75% price talk which surfaced on Monday, while the second-lien piece of paper also priced at par to yield 10 ¼%, versus its 10%-to-10.25% price talk.

The megadeal was brought to market via left lead bookrunner Goldman Sachs, along with joint bookrunners Credit Suisse Securities (USA) LLC, Wells Fargo and Deutsche Bank Securities Inc.

The Detroit-based gaming company – whose Ohio division owns and operates the Horseshoe Casino properties in Cincinnati and Cleveland and the Cleveland-area Thistledown track and racino – plans to use the expected new-deal proceeds to finance debt and provide cash for upcoming payments, with remaining proceeds, if any, to finance ongoing working capital needs, capital expenditures and general corporate purposes;.

Precision deal prices tight

Apart from the megadeals, Precision Drilling Corp. was heard to have priced $350 million of seven-year senior notes (B3/BB) at par to yield 7¾%, high yield syndicate sources said.

That was inside of price talk that had circulated on Monday, when the deal had first been announced, envisioning an 8% yield.

That offering, which is being sold with registration rights, came to market via bookrunners Credit Suisse Securities and RBC Capital Markets Corp.

Morgan Stanley & Co. LLC, Bank of America Merrill Lynch, TD Securities (USA) LLC, HSBC Securities (USA) Inc., Wells Fargo, Scotia, Desjardins Securities Inc. and AltaCorp Capital Inc. were co-managers on the deal.

The Calgary, Alta-based energy drilling company – the fourth largest land-drilling contractor in North America – plans to use the expected new-deal proceeds, together with cash on hand, to redeem C$200 million of its outstanding 2019 notes, to redeem US$250 million of its outstanding 2020 notes and for other debt repurchases.

Precision paper pops

A trader said that the Precision offering priced early enough in the session to generate some volume in the aftermarket, with more than $16 million of the notes moving around.

He said the bonds had firmed from their par issue price and were going out around 100¾ bid.

Codere comes to market

Spanish gaming company Codere priced a dual-currency deal, consisting of dollar- and euro-denominated

five-year senior secured notes (B2/B) totaling €775 million equivalent.

The issuing entity is Codere Finance 2 (Luxembourg) SA.

The offering consisted of a $300 million tranche of 7 5/8% notes and a €500 million tranche of 6¾% notes, both of which priced at par.

Price talk on dollar tranche had envisioned a yield of around 7.75%, while the euro tranche had been talked at a 6.875% yield.

The lead bookrunner on the deal was BofA Merrill Lynch, acting as global coordinator, and joint bookrunners Barclays Capital Inc., Jefferies & Co. and Morgan Stanley.

Madrid-based Codere plans to use the new-deal proceeds, plus the proceeds from a €95 million multi-currency super senior revolving credit facility agreement and cash on the balance sheet, to refinance €865.2 million of existing bonds, and fund call premiums in connection with the repayment of the company’s second-lien notes and third-lien notes.

Midcontinent adds on

The day’s smallest transaction came from Midcontinent Communications, which priced a quickly shopped $125 million add-on (B3/B) to its existing 6 7/8% senior notes due Aug. 15, 2023.

A junk bond syndicate source said the add-on tranche priced at 105.5 – in line with price talk – to yield 5.55%.

The company’s Midcontinent Finance Corp. unit is a co-issuer on the notes.

The deal got done via joint bookrunners SunTrust Robinson Humphrey Inc., Wells Fargo and RBC, plus co-managers TD Securities (USA) LLC and U.S. Bancorp.

The add-on notes have the same terms as the original $300 million of 6 7/8s which priced at par on Aug. 11.

Midcontinent, a Sioux Falls, S.D.-based regional cable operator serving customers in North and South Dakota, Minnesotaand Wisconsin, plans to use the new-deal proceeds for general corporate purposes, including to partially finance the company’s recently announced acquisition of assets from Lawrence, Kan.-based cable operator WOW!.

Tudor Perini on tap

Looking ahead to Wednesday, primaryside players said that Tutor Perini Corp.’s $500 million offering of eight-year senior notes (Ba3/BB) might be on the menu; order books were slated to close at 10:30 a.m. ET on Wednesday, with pricing expected thereafter – moving the timetable for the issue up from the originally anticipated Thursday pricing.

The company put out price talk on Tuesday – and the 7% to 7.25% yield range was wider than the initial guidance of 6% to 6.375%.

The sources also said that several covenant changes had been made within the notes’ indenture.

Left-bookrunner Goldman Sachs is leading the deal, along with joint bookrunners SunTrust, BMO Capital Markets Corp. and KeyBanc Capital Markets Inc.

Tutor-Perini, a Sylmar, Calif.-based civil and building construction company, plans to use the expected new-deal proceeds, together with borrowings under its revolving credit facility, to redeem existing senior notes and pay existing term loan and revolver borrowings.

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