Smurfit-Stone drive-by prices; Spectrum Brands bonds mixed on refi news; Trump up

By Paul Deckelman and Paul A. Harris

New York, March 12 - Two issuers, Smurfit-Stone Container Enterprises, Inc. and Asbury Automotive Group, Inc., came with drive-by deals Monday, each bringing a single tranche of 10-year notes.

Total issuance on the session came to $825 million - all of it quickly shopped.

Meanwhile the Prospect News High Yield Daily forward calendar of deals in the market shot toward the $10 billion mark as TRW Automotive Holdings Corp. pulled up with a $1.5 billion equivalent quick-to-market three-piece deal that it expects to price on Tuesday, while Freeport McMoRan Copper & Gold Inc. rejigged its $6 billion offering, while setting the price talk on a deal that sources say will set a new primary market record.

In the secondary realm, Spectrum Brands Inc.'s bonds were mixed, with its 8½% notes due 2015 jumping 4 or 5 points to around par bid levels after the Atlanta-based consumer products company announced plans to refinance those bonds with new, higher-yielding debt in order to soothe the hurt feelings of disgruntled bondholders who had been contending the company was in default.

But that miffed the holders of the company's other issue, which is not being taken out. Those bonds fell more than 2 points on the session. Both were among the most actively traded junk issues Monday.

General Motors Corp. bonds - which had firmed smartly on Friday on expectations that the giant carmaker will post its first quarterly profit in two years when it finally reports its fourth-quarter results, delayed by accounting issues - were driving in reverse on Monday, its benchmark issue down more than 3 points in active trading.

Also on the downside was Masonite International Inc., after the Tampa, Fla.-based building products company reported weak fourth-quarter and full-year 2006 numbers, and said its largest customer plans to reduce the volume of business it does with the company.

Back on the upside, Trump Entertainment Resorts Inc.'s bonds firmed in busy trading, after the Atlantic City, N.J.-based gaming company said it had retained Merrill Lynch & Co. to help it evaluate possible strategic alternatives.

And out of the distressed-debt precincts, Fedders Corp. bonds gyrated around at mostly higher levels, helped by rumors that it may soon close on recently announced new financing, as well as an executive's statement that the Liberty Corner, N.J.-based air quality products maker plans to make the coupon payment on its bonds that was scheduled to have been made on March 1.

A high yield syndicate official said that the broad market was unchanged on Monday.

The source marked the five-year CDX spread to Treasuries unchanged at 251 basis points, and mentioned that healthcare credit default swaps may have widened a little on the session.

Smurfit atop the talk

The biggest of Monday's pair of a.m.-to-p.m. drive-by deals came from Chicago based Smurfit-Stone Container.

The company priced a $675 million issue of 10-year senior notes (B3/CCC+) at par to yield 8%, on top of the price talk.

Deutsche Bank Securities, Banc of America Securities and JP Morgan were joint bookrunners for the debt refinancing deal.

Asbury oversubscribed

Asbury Automotive also drove through with its $150 million issue of 10-year senior subordinated notes (B3/B).

The notes priced at par to yield 7 5/8%, at the tight end of the 7¾% area price talk.

Goldman Sachs & Co. ran the books.

The Stamford, Conn., automobile retailer's debt refinancing also included a concurrent $100 million offering of senior subordinated convertible notes due 2012.

In addition, Asbury expects to use available cash to repurchase up to 1.3 million shares of its common stock in private transactions.

A source close to the transaction said that the Asbury bond deal was well oversubscribed.

The sell-side source also commented that order has returned to the primary market, which became choppy in the wake of the late February sell-off that accompanied downturns in the global equity markets.

The sell-sider said that toward the end of last week issuers and their underwriters began see downward pricing pressure, rather than upwards, with regard to interest rates.

"Things have moved back to the issuers' side of the court," the source asserted.

Freeport adds floater, sets talk

Freeport McMoRan set price talk on its restructured $6 billion three-part offering of senior notes (B2/B+) on Monday.

The Phoenix-based mining company talked a tranche of eight-year fixed-rate notes at the 8% area. The eight-year fixed-rate notes come with four years of call protection.

Meanwhile Freeport McMoRan talked a tranche of 10-year fixed-rate notes to price 12.5 basis points to 25 basis points behind the eight-year notes. The 10-year fixed-rate notes come with five years of call protection.

The company has also added a tranche of eight-year floating-rate notes, non-callable for two years, which are talked at Libor plus 300 to 350 basis points.

JP Morgan and Merill Lynch & Co. are joint bookrunners for the LBO transaction which is expected to price on Wednesday afternoon.

TRW's $1.5 billion

Meanwhile TRW Automotive set price talk for its quick-to-market $1.5 billion equivalent three-part offering of notes (Ba3//BB-), which are expected to price on Tuesday.

The Livonia, Mich., parts supplier to the automotive industry talked a $675 million tranche of seven-year senior notes at the 6 7/8% area.

Meanwhile TRW talked a €250 million tranche of seven-year senior notes at the 6 3/8% area.

The company also talked a $500 million tranche of 10-year senior notes at the 7 1/8% area.

Lehman Brothers, Banc of America Securities, Deutsche Bank Securities, Goldman Sachs & Co. and Merrill Lynch & Co. are joint bookrunners for the debt refinancing.

Belden talked at 7% to 7¼%

Elsewhere St. Louis-based Belden CDT Inc. set price talk for its $350 million offering of 10-year senior subordinated notes (Ba2/BB-) at 7% to 7¼%.

The Wachovia Securities-led acquisition financing deal is expected to price Tuesday afternoon.

Three for the road

Two deals known to have been waiting in the wings stepped out into the reportedly friendly light of the mid-March primary market on Monday.

All three will be marketed via investor roadshows.

Pinnacle Foods Finance LLC and Pinnacle Foods Finance Corp. launched a $650 million two-part notes offering (Caa2/CCC).

The Cherry Hill, N.J.-based branded food products company plans to sell $400 million of eight-year senior notes, with four years of call protection, and $250 million of 10-year senior subordinated notes, with five years of call protection.

Lehman Brothers and Goldman Sachs are joint bookrunners for the LBO transaction.

Meanwhile Sun Healthcare Group, Inc. will begin a roadshow on Tuesday for its $200 million offering of eight-year senior subordinated notes (B3/CCC+).

Credit Suisse, CIBC World Markets and UBS Investment Bank are joint bookrunners for the acquisition financing from the Irvine, Calif., provider of long-term and post-acute care medical facilities and services.

And Warren, Mich.-based provider of outsourced services to automotive industry, MSX International Inc., unveiled a $200 million offering of notes units (B2/CCC+), in a debt refinancing via Jefferies.

Smurfit-Stone bonds don't go very far

When the new Smurfit-Stone 8% senior notes due 2017 were freed for secondary dealings, a trader quoted them at par bid, 100.5 offered, unchanged from their par issue price earlier in the session.

Another trader said that he had not seen the bonds move into the aftermarket.

No aftermarket trading was reported Monday in Asbury Automotive's new 7 5/8% notes due 2017.

Battery-maker's bonds light up

Back among the established issues, probably the big winner of the day was Spectrum Brands' Rayovac Corp. 8½% notes due 2013, which jumped on the news that they will be taken out - with the holders getting new, higher-interest debt in settlement of the festering dispute between the company and its bondholders.

Trader saw those bonds at 99.75 bid, 100.25 offered, which he called up 5 points on the session. Another market source saw them up nearly 6 points at 100.25.

That followed the announcement that the company had reached agreement with holders of more than a majority of those bonds, including Sandelman Partners LP, Sandell Asset Management Corp. and Xerion Capital Partners. Those entities had previously charged that Spectrum had defaulted on the bonds by incurring additional debt not allowed under its agreements.

Under terms of the accord announced Monday, those holders have agreed to drop their default claims, and will not seek any penalties or other remedies. They will also agree to less restrictive indenture terms for the replacement debt.

To win their agreement and settle the dispute, so it could get on with its attempts to restructure its operations, Spectrum agreed to a fat 11% coupon on the new bonds - and that will rise to 11¼% on April 1, and after that, will further increase semiannually, based on a specified schedule.

Spectrum also announced a $1.6 billion refinancing of its existing bank credit line.

While all of this is well and good for the holders of the 8½% notes, the holders of its 7 3/8% notes, which are not being exchanged for more lucrative new debt, were on the outside looking in, and those notes failed to share in the upside.

"The notes diverged," said a trader, who quoted the latter bonds down 2 points at 82.5 bid, 83.5 offered. Another source, though, saw the bonds down a deuce around the 84 level.

Spectrum shareholders were also dismayed. Its New York Stock Exchange-traded shares fell 95 cents (11.57%) to $7.26. Volume of 4.3 million shares was almost four times the norm.

Masonite gets mauled

Traders noted a 3 point fall in Masonite's 11% notes due 2015 to 95.5 bid, 96.5 offered after the company reported its numbers.

While it cut its net loss for the fourth-quarter ended Dec. 31 to $21.1 million from $34.2 million a year earlier, sales fell to $585 million, a $10 million drop - and they only are likely to get worse. The company said that after the end of the 2006 fiscal year on Dec. 31 it was informed by its largest customer that it will reduce the volume of its business with the company by around half, starting later this year, as a result of price increases implemented by Masonite during 2006.

"Although we are disappointed with this decision, it is essential that we ground Masonite on a solid foundation of selling our door products at prices that provide us with appropriate returns for the value we provide," chairman and chief executive officer Kenneth Freeman said in the company's news release.

"We are actively pursuing opportunities to accelerate growth with existing and new customers, and we are evaluating selective adjustments in capacity as we strive to balance supply and anticipated demand."

Masonite expects to record a charge in the first quarter of 2007 in connection with the transition of business.

Trump jumps

Elsewhere, instead of his customary growl of "You're fired!" made famous on his TV show, The Apprentice, Donald Trump instead said Monday "You're hired!" - to Merrill Lynch & Co., which will help The Donald's eponymous gaming company, Trump Entertainment Resorts, to evaluate potential strategic transactions. These could include capital structure moves, financing or other value-creating alternatives, the company said.

Both Moody's Investors Service and Standard & Poor's put the company's outlook on watch with developing implications, saying that whether the ratings rise - or fall - will depend on what kind of alternatives it decides to pursue, if any.

But bondholders were hopeful, and this was reflected in the 1 point gain in its 8½% notes due 2015 to around the 101.5 level. Another source also saw the bonds around there, but only called the gain ¾ point.

On the equity side, the company's stock had risen on Friday on expectations that something was in the works. But the shares were easier Monday, in a classic case of "buy the rumor, sell the news."

GM drives lower

In the automotive sphere, GM's benchmark 8 3/8% notes due 2033 - which on Friday had been seen solidly higher, in line with the Detroit giant's announcement that it anticipates reporting its first quarterly profit in two years when it posts its fourth-quarter and full-year results - were seen driving in the breakdown lane, giving back Friday's gains, and then some.

Those bonds, which had bounced around the 95-96 context Friday, moved as low as 91 Monday, before heading for home quoted around 93.375 in busy trading, down more than 3 points on the session.

Another market source called GM's 7 1/8% notes due 2013 down a point at 95.

GM announced that it would release its long-awaited quarterly results on Wednesday.

GM rival Ford Motor Co.'s 7.45% notes due 2031 were seen essentially unchanged at 80.5 bid, given no lift at all on the news that the beleaguered Number-Two U.S. carmaker plans to unload most of its Aston-Martin sports car operation for $925 million in proceeds.

Fedders looks better

Outside of the autosphere, Fedders' 9 7/8% bonds due 2014, after finishing Friday in a 5-56 context, opened at around 58 Monday and then bounced around at those mostly higher levels, at one point spiking as high as 61 for a brief period before coming off that peak to settle in around 58. However, late in the session, there were a series of small trades in a 53 bid, 55 offered context.

The sellers have cleared out, according to a trader, who called the notes 58 bid, 59 offered. He said the gain is due to buyers competing for the bonds.

At another shop, a trader said that the bonds were ending at around 55.5 bid, 56 offered, which he called unchanged on the day.

But another trader thinks the notes are around 54 bid, looking for an offer. He said the day's trades were small and therefore not necessarily an accurate reading.

But what traders have agreed on is the freshest rumor out on the Liberty Corner, N.J.-based company.

A trader told Prospect News that he heard the company's new $90 million refinancing deal could close as early as next week.

"That's a good rumor," said another trader. "I like that rumor."

The company has until March 30 to satisfy certain requirements set forth in the commitment letter with Goldman Sachs Credit Partners LP. Kent Hansen, executive vice president of administration, said in an interview with Prospect News, "We're working hard to get those done as quickly as we can."

Hansen also said that the company expects to pay the late coupon payment, which was due March 1, within the grace period.

"As soon as the refi is signed, they can pay the coupon," a trader said.

Hansen did, however, decline to comment on an estimated closing date.

MagnaChip down

MagnaChip lost 3 points during trading, according to a market source, but he could not figure out why.

"None of the other chip companies were down," he said.

He pegged the Seoul, South Korea-based semiconductor producer's 8% notes due 2014 trading in the 66 context. He called the bonds a "very weak credit."

The trader said the senior floating-rate notes due 2011 also fell, closing at 87.5.

At another desk, a trader said the notes were down about a point for most of the session, but he said that late in the day, there was more selling, which dropped the bonds a total of 3 points on the day, to 64 bid, 68 offered.

No fresh news has come out on MagnaChip, though last week did see the chip maker's bonds drop about 2 points on Thursday, then regain 1.5 points by Friday.

Stephanie N. Rotondo contributed to this report.

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