Tenet, Interface price, others slate; GM bonds jump post Chapter 11; Elan up on buyout buzz

By Paul Deckelman and Paul A. Harris

New York, June 1 - Tenet Healthcare Corp. and Interface, Inc. successfully priced new deals Monday, with Dallas-based hospital operator Tenet's offering sharply increased to approach $1 billion in size.

High yield syndicate sources meantime heard a number of issuers floating potential new deals around the market, including Affinion Group Inc., Graphic Packaging, Wallace Theater Holdings, Western Refining, Inc. and CGG Veritas.

Among recently priced issues, Virgin Media Finance plc's new bonds were seen adding to the gains which they had notched in initial dealings on Friday, while Terex Corp.'s new issue, which like Virgin Media, had also priced on Friday, held onto its gains.

Back among the established issues, General Motors Corp.'s were among the most actively traded credits on the session, following the stricken Detroit giant's Chapter 11 filing. The bonds were seen up anywhere from 4 to 6 points on the session - although traders noted that at least some of that gain was due to the fact that the bonds are now trading flat, without their accrued interest.

Elsewhere, Elan Corp.'s bonds were seen better, given a boost by news reports that the Irish biotechnology company is in talks with U.S. drug giant Bristol-Myers Squibb Co., which may take a minority stake in Elan - sparking market buzz that Elan could eventually be acquired outright.

The high-yield market took a leg up on Monday, despite the fact that the day began with a bankruptcy filing from General Motors Corp., a banker said.

Cash bonds were up ½ point or better.

Tenet: existing holders staying aboard

Tenet Healthcare priced a massively upsized $925 million issue of 8 7/8% senior secured 10-year notes (B1/BB-) at 95.229 to yield 9 5/8% on Monday.

The deal, which was increased from the initially announced $200 million minimum amount and from the $450 million amount announced Monday morning, came on top of the 9 5/8% area price talk.

The Tenet bond transaction went very well, according to an informed source.

It was driven by holders of the company's existing bonds - especially holders of the 9 7/8% senior notes due 2015, which are concurrently being tendered for - who keenly wanted to stay in the name.

The new 8 7/8% notes due 2019 traded up 2 points on the break, the source added.

Banc of America Securities LLC, Goldman Sachs & Co. and Citigroup were joint bookrunners.

Proceeds from the notes sale will be used to help fund the tender for up to $1 billion of the aforementioned 9 7/8% senior notes due 2015.

Interface prices $150 million

Also pricing Monday was Interface's $150 million issue of 11 3/8% senior secured notes due Nov. 1, 2013 (B1/BB-), which came at 96.301 to yield 12½%.

The yield was printed on top of the 12½% area price talk.

Banc of America Securities LLC, Citigroup and Wachovia Securities were joint bookrunners.

Proceeds will be used to fund the tender for the Atlanta-based floor covering company's 10 3/8% senior notes due 2010.

Calendar builds

The Monday session was rife with high-yield deal announcements

CGGVeritas is expected to price approximately $300 million of senior notes due 2016 on Tuesday.

Credit Suisse will lead the debt refinancing and general corporate purposes deal from the Paris-based provider of geophysical equipment and services.

Western Refining, Inc. will run a Tuesday-to-Thursday roadshow for its $600 million offering of eight-year senior secured notes, according to an informed source.

Pricing is expected after the conclusion of that roadshow.

Banc of America Securities, Goldman Sachs & Co., RBS Greenwich Capital and Wachovia Securities are joint bookrunners for the Rule 144A deal.

The notes come with four years of call protection.

Proceeds will be used to repay the El Paso-based refiner's term loan.

The notes are secured by a first priority lien on the collateral securing the term loan and a second priority lien on the collateral securing the revolver.

Credit ratings remain to be determined.

The prospective issuer is an independent crude oil refiner and marketer of refined products, and also operates service stations and convenience stores.

Graphic Packaging International will host an investor call at 12:30 p.m. ET on Tuesday for its $245 million offering of eight-year senior notes (B3/B-).

Banc of America Securities LLC, JP Morgan and Goldman Sachs & Co. are joint bookrunners for the deal to fund the tender for company's 8½% senior notes due August 2011.

Wallace Theater Holdings began a full roadshow on Monday for its $150 million offering of four-year senior secured notes via Jefferies & Co.

Credit ratings remain to be determined.

Proceeds will be used to repay outstanding debt under the Portland, Ore.-based motion picture exhibitor's existing credit facilities and for general corporate purposes.

And Affinion Group will host a Tuesday investor call for its $125 million of non-fungible 10 1/8% senior mirror notes due Oct. 15, 2013 (expected ratings B2/B-).

Banc of America Securities LLC and Deutsche Bank Securities are joint bookrunners.

Proceeds will be used for general corporate purposes which could include working capital needs, capital expenditures and the repurchase of the company's debt or the holding company's debt.

Existing Tenet bonds little changed

The new Tenet and Interface deals came to market too late in the session for any real secondary activity.

Prior to the Tenet pricing, a trader meantime quoted its outstanding bonds little changed by the prospect of a big new deal, with Tenet's 7 3/8% notes due 2013 down ¼ point at 961/4, on $5 million traded, its 9 7/8% notes due 2014 up 1/8 point at 100 1/8, on $4 million traded, and its 9¼% notes due 2015 up 5/8 point - though on only $4 million traded - at 933/4.

Virgin Media moves up

A trader saw Virgin Media's new 9½% notes due 2016 at 99¼ bid, on a "very active" $15 million turnover.

Another trader said that the New York-based U.K. broadband services provider's new issue "had a nice pop." He said that the bonds - $750 million of which had priced on Friday at 95.574 to yield 10 3/8%, upsized from the originally planned $650 million equivalent dual-currency deal - "popped on Friday" when they were first freed, and then "traded up a bit more" on Monday.

He saw the bonds open at 98 bid, 99 offered, then get as good as 99 3/8 bid, before going out at 99¼ bid, 99¾ offered.

Terex trades up

The trader meantime saw Terex Corp.'s new 10 7/8% notes due 2016 -- $300 million of which priced Friday at 97.633 to yield 11 3/8% -- hanging in at levels "a little under par" Monday, after having gone out on Friday at the 99 3/8 bid, 99¾ offered level to which those bonds had risen on the break.

However, he said that he "didn't see too much go on today," saying the bonds looked "largely unchanged."

Another trader, though, saw the Westport, Conn.-based heavy equipment maker's bonds having risen to 100¼ bid, though only on a relatively light $2 million of bonds traded.

High-grade paper holds its own

Two recent issues which came off the high-grade desks - for Allegheny Technologies Inc. and Pride International Inc. - continued to trade well above their respective issue prices, with no small amount of interest from junk accounts.

A trader saw Pittsburgh-based diversified metals producer's Allegheny's $350 million offering of 9 3/8% notes due 2019 at 10¼ bid, 102¾ offered. Those bonds, upsized from $300 million originally, had priced last Wednesday at 99.204, to yield 9½%, and then subsequently moved up to 100½ bid, 101 offered, and continued to firm after that initial rise.

He meantime saw Houston-based oilfield services company Pride International's split-rated (Ba1/BBB-) 8½% notes due 2019, $500 million of which priced off the high-grade desks Thursday at 99.641, or 487.5 bps over comparable Treasuries, to yield 8.533%, trading above 102. He said that junk players were "very familiar" with Pride and had bought the deal.

Other new paper struggles

Other recent issues were not doing anywhere near as well.

A trader acknowledged that last Thursday's issue of Ford Motor Credit Co. 8% notes due 2014 "hasn't done well at all," quoting them at 81 bid - "unchanged from Friday but still down from their issue price," on $17 million traded.

Another trader called that 81 level up a point on the day, although he saw only "quiet" dealings in the bonds.

The auto-loan financing arm of Dearborn, Mich.-based carmaker Ford Motor Co. priced $1.1 billion of the bonds at 82.036 bid, to yield 13%, but the bonds have traded below issue ever since.

Another recent big new deal which has struggled, a trader said, was Harrah's Operating Escrow LLC/Harrah's Escrow Corp.'s $1.375 billion of 11¼% notes due 2017, which priced last Wednesday at 96.225 to yield 12%.

He said that the Las Vegas-based casino giant's issue - upsized from the originally planned $1 billion - "never really got out of its own way." On Friday, for instance, he said that it opened at 98, but then those bid got hammered back down to the 96 level, and then "every time they tried to get above 97, the sellers came back in," keeping the bonds down around present levels in a 96-97 area.

Cricket Communications Inc.'s 7¾% notes due 2016, he said, had been "hanging in" around a 96¾ bid, 97¾ offered context, although he allowed they were perhaps ¼ point better Monday at 97 bid. The San Diego-based wireless provider's $1.1 billion bond issue had priced Thursday at 96.134 to yield 8½%. He said that even though the bonds are secured, their relatively low coupon works to discourage some junk market participants from buying the issue.

That's also been the case, he said, with American Tower Corp.'s $300 million of 7¼% notes due 2019, which priced last Wednesday at 98.279 to yield 7½%. Investors, he said were "not chasing" the Boston-based communications antenna tower company's bonds up, "not following through, with that low coupon."

Market indicators turn northward

Back among the established issues, a trader saw the CDX Series 12 High Yield index - which gained 1¼ point on Friday - going even better on Monday, jumping 2¼ points to end at 83¾ bid, 84¼ offered.

The KDP High Yield Daily Index, which had gained 21 basis points on Friday, soared by 52 bps to close Monday at 62.07, while its yield tightened by 29 bps to 10.71%.

Advancing issues - which led decliners for a ninth straight session on Friday - continued to hold a nearly two-to-one lead on Monday.

Overall market activity, measured by dollar-volume totals, rose by 11% from Friday's levels.

A trader called the market "generally firm, even though governments are down. We've been hanging in, so spreads have been pretty tight. People are still looking for yield," even though he added that over the last week or so, "the calendar started to make a dent in cash positions. We started to see accounts that were willing to sell things, to use them as a source of cash for bonds that were coming on the calendar that they were buying."

He said that the most likely candidates for sale were "lower-coupon stuff that were trading close to par, or something 'I've been dying to get rid of.'"

He said that some investors "have some cash - but not as much as they used to." He said they are "waiting for the calendar," because "there's not a need to chase stuff up, because stuff is coming in the calendar."

The calendar, he said, "is a mixed bag - because some stuff is priced right at the market, and is not going anywhere." Other paper, he said, "initially has a little bit of a harder time, or it isn't in the right industry. It gets priced cheap, and pops up 3 or 4 points."

Another trader saw Junkbondland on Monday "consistently crawling up. This is a much, much better pattern than the extreme movements we've had in the past - which typically have not lasted."

GM motors higher after bankruptcy

Among specific secondary names, a trader said that the big news Monday in the distressed and junk markets, "obviously," was General Motors' long-expected Chapter 11 filing with the U.S. Bankruptcy Court for the Southern District of New York.

"It's been all about GM today," another trader said. "All of my alerts have been GM, and if you look at the volume leaders on Trace, the top three are GM, and probably five or six of the top 10."

A trader saw GM's benchmark 8 3/8% bonds due 2033 as the single most actively traded junk issue of the day, seeing those bonds up four points on the session from Friday's finish, at 14 ¼ bid, with $61 million having changed hands.

A trader saw GM's benchmark 8 3/8% bonds due 2033 as the single most actively traded junk issue of the day, seeing those bonds up 4 points on the session from Friday's finish at 14¼ bid, with $61 million having changed hands.

He saw heavy trading in several other of the Detroit-based carmaker's issues, including its 8¼% bonds due 2023, going out at 14¼ bid versus 9¾ on Friday, on turnover of $38 million, and at the shorter end of the curve, its 7.20% notes due 2011, which rose to 13¾ bid from 9¾ on Friday, with $36 million traded. He also saw GM's 7.70% notes due 2017 firm to 13 5/8 bid, up from 10¾ on Friday, with $16 million traded.

A market source elsewhere saw GM's 7 1/8% notes due 2013 gain more than 5 points on the session to finish at 141/2, while its 8.10% bonds due 2024 did even better, up more than 6 points on the day to go out just under 14 bid. Its 6¾% bonds due 2028 gained more than 4 points to finish at 12.

Another trader, who saw "all the activity in the world" going on in the GM paper, pointed out that with the bankruptcy filing now official, the company's bonds, which had traded with their accrued interest as recently as Friday, are now trading flat, or without the accrued, so "yeah, it's up points, but when it trades flat [the interest] gets added into the price, so that's part of the move up."

GM's New York Stock Exchange-traded shares were meantime unchanged, trading at 75 cents, on volume of 341 million shares, nearly seven times the norm. It was announced on Monday that GM will be dropped from the Dow Jones Industrial Average, where it had been a fixture since Aug. 31, 1925.

Under the bankruptcy plan, General Motors will sell substantially all of its global assets to a separate and independent company called "New General Motors," and the new company will execute the key elements of the April 27 viability plan, along with additional initiatives.

The new company is expected to be built from only General Motors' best brands and operations, and it will be supported by a stronger balance sheet due to a significantly lower debt burden and operating cost structure than before. GM is expected to keep its iconic Chevrolet and Cadillac nameplates, along with Buick and GMC, and will meanwhile seek to dispose of its Hummer, Saab and Saturn lines, by selling them if possible. Its Pontiac brand -- which has been a GM mainstay since 1926 and the spearhead of its dominance during the "muscle-car" era of the '60s, but which has fallen on hard times in recent years -- will be wound down; after 2010, it will follow in the tiretracks of another venerable GM nameplate, Oldsmobile, now relegated to the history books.

The company will incorporate the terms of General Motors' recent agreements with the United Auto Workers and Canadian Auto Workers unions and will be led by General Motors' current management team.

The capital structure of New General Motors is expected to be much improved from that of the current General Motors.

Upon closing of the sale, the new company will have approximately $17 billion in total consolidated debt, including $6.7 billion of debt owed to the U.S. Treasury, $1.3 billion of debt owed to the Canadian and Ontario governments, $2.5 billion of notes issued to the new Voluntary Employee Beneficiary Association, and approximately $6.8 billion of other, primarily international debt, but excluding Europe.

By comparison, on March 31, General Motors reported consolidated debt of $54.4 billion, along with additional liabilities, including an estimated $20 billion obligation to the UAW VEBA.

The new capital structure will also include $9 billion of perpetual preferred stock, common equity divided into 60.8% owned by the U.S. Treasury, 11.7% owned by the Canadian and Ontario governments, 17.5% owned by the VEBA, and 10% for unsecured bondholders and other unsecured creditors, and warrants.

As part of the bankruptcy, General Motors will get a debtor-in-possession financing facility of approximately $33 billion.

Pending approvals, "New General Motors" is expected to launch in about 60 to 90 days. The plan already has the support of the U.S. Treasury, the UAW and a substantial portion of unsecured bondholders.

GMAC little moved

A trader meantime saw GM's auto-loan financing arm, GMAC LLC's bonds, not much moved on the long-expected GM bankruptcy news.

He saw GMAC's 8% notes due 2031 up a point at 75 bid, though on only $3 million traded.

Another trader said that was "about where those bonds have been. There was not a lot of activity."

Ford quietly higher

A trader saw "the un-GM" - GM's financially healthier domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 at 60 bid, up from 59 on Friday, though on only $3 million traded.

A second trader saw the Ford bonds at 58, which he called a 1 point gain.

Yet a third also saw the bonds at 58 bid, 59 offered, though on "not a lot of volume."

Elan firmer on Bristol buzz

Apart from the automotive names, a trader saw Elan Corp.'s 7¾% notes due 2011 at 95 bid, up from 91¼ on Friday, with $6 million traded, citing the news reports of the Dublin-based pharmaceutical company being in "advanced talks" with U.S. drug major Bristol-Myers Squibb, according to The Wall Street Journal.

The paper said the current round of talks, which center on Bristol-Myers taking a minority stake in Elan, could be a precursor to a total buyout of the company somewhere down the road. The newspaper also said another unnamed drugmaker was eyeing the biotech group.

Another trader saw the 73/4s move up to 94½ bid, 95 offered from prior levels at 93, and opined that he was not sure whether the Bristol-Myers news was the reason, or just the general strength of the market - but then he added that its subordinated 8 7/8% notes due 2013 had jumped to 91 bid from 86½ last week, a gain of more than 4 points, "so it's likely that this was credit-related rather than market -related."

Rite Aid rise continues

Elsewhere, a trader said that Rite Aid Corp.'s bonds were trading "a bit higher" in the wake of Friday's news of an expanded term loan for the Camp Hill, Pa.-based Number-Three U.S. drugstore chain operator, part of its overall refinancing strategy. He quoted its 9 3/8% notes due 2015 at 68 bid, 68½ offered, although he added that he didn't know "if it means that much."

But he allowed that "there was a lot of activity" in the name, with its 10 3/8% notes due 2016 trading around 90, "on a good amount."

He saw Rite Aid's 7½% notes due 2017 "up a little, less than a point," around 79 bid, 80 offered, "where the activity was today, and it seemed like there was good volume there as well."

Another trader called "most of the structure" up ½ to ¾ point, with the 8½% notes due 2015 better by ½ point at 68 bid, 69 offered. He had seen the 7½% notes up by as much as 1½ points at midday, but said that by day's end they had eased from their peak level to end up ¾ point on the day at 79 bid, 80 offered.

A trader said that retailers in general, he said, "have been doing very well recently across the board. Their bonds have been well received" - and noted that the Rite Aid bonds had gained about 8 points since mid-May.

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