American Tower, Northwest Airlines lead primary parade; Lucent eases despite stock gains

By Paul Deckelman and Paul A. Harris

New York, Jan. 26 - There were no billion-dollar-plus mega-deals in the high-yield primary market on Monday as there had been Friday, when United Rentals Inc. had brought such an offering to market in two tranches. But there was still no shortage of new-deal activity, as American Tower Corp. and Northwest Airlines led the way with opportunistically timed quick offerings; others heard to have priced during the session included textile maker Interface Inc. and European sporting goods manufacturer Head NV.

In the secondary market, meantime, Lucent Technologies Inc.'s shares firmed solidly and it was easily the most active stock on the New York Stock Exchange, after a favorable article in Barron's magazine over the weekend. But the Murray Hill, N.J.-based telecommunications equipment maker's bonds failed to join the party, and in fact were heard a bit easier as investors took profits after their recent strong run-up. Elsewhere, Cole National Group Inc.'s bonds were heard to have firmed after the vision-care retail chain operator announced that it had definitively agreed to be acquired by Luxottica Group SpA.

An event-filled Monday in the high yield primary set the stage for what market sources are predicting will be a busy week in for new junk bond issues.

Four deals priced, three of which came as quick-to-market offerings.

In addition, four roadshow start dates surfaced during the session.

"The market felt a little bit softer today," one sell-side source commented following Monday's close.

"Nevertheless all of these deals were getting priced and getting announced," the official added

"The way things are, it is going to take a lot before the market feels bad. It was just that this was the first day in a while where levels have not been flat-to-better. Today it was flat-to-worse - down half to three-quarters of a point.

"But it didn't stop anybody."

"Historically low levels."

Northwest Airlines Corp. sold the day's biggest issue, $300 million of 10% five-year unsecured public senior notes (Caa1/B-), which priced at 96.227 to yield 11%.

Price talk was for a yield in the 11% area on the drive-by deal led by Morgan Stanley.

Also in drive-by action, American Tower Corp. sold $225 million of eight-year senior notes (Caa1/CCC) at par to yield 7½% via Credit Suisse First Boston.

Although the 7½% yield on the Boston-based wireless communications company's new notes was wide of the 7%-7¼%, a sell-side source wondered aloud as American Tower terms circulated when a lower interest rate had ever been fixed to a note that came with Caa1/CCC credit ratings.

"This deal, with triple hooks on both sides, came at a spread of 354 basis points," said the official. "I don't know yet, but that could be the tightest pricing ever on something with those characteristics.

"Right now in this market we are seeing historically low levels."

Monday's third drive-by deal came from Atlanta, Ga.-based commercial interiors company Interface, Inc., which priced an upsized $135 million of 10-year senior subordinated notes (Caa3/CCC) at par to yield 9½%.

Interface priced right on top of the 9½% area price talk and was increased from $125 million. Bookrunners were Wachovia Securities and Citigroup.

And in Monday's only roadshow-marketed transaction Head NV's HTM Sport/Freizeitgerte AG priced an upsized €135 million of 10-year senior notes (B2/B) at par to yield 8½%.

Citigroup ran the books for the deal from the Rotterdam-based manufacturer and marketer of sports equipment, which came at the tight end of the 8½%-8¾% price talk and was increased from €125 million.

A quintet enters the pipeline

Five new offerings took places upon the building forward calendar on Monday.

Pliant Corp. announced its intention to sell $225 million of five-year senior secured discount notes, which the Schaumburg, Ill. packaging firm expects to price on Feb. 5 or 6.

JP Morgan, Deutsche Bank Securities and Credit Suisse First Boston are underwriters of the debt refinancing deal.

The roadshow starts Wednesday for Affinity Group Holding, Inc.'s $190 million of eight-year senior subordinated notes (expected ratings B3/B-), which are expected on Friday, Feb. 6.

CIBC World Markets will run the books on the deal, proceeds from which will be used by the Ventura, Calif. recreational vehicle equipment company to repay debt and to pay a one-time dividend to the sole shareholder.

The roadshow starts Wednesday and runs through Feb. 5 for Ply Gem Industries Inc.'s $180 million of eight-year senior subordinated notes (B3/B-), with pricing also expected on Friday, Feb. 6.

UBS Investment Bank and Deutsche Bank Securities are joint bookrunners.

Proceeds will be used to fund Caxton-Iseman Capital's acquisition of Kearney, Mo.-based Nortek's windows, doors and siding businesses.

And the roadshow starts Tuesday and runs through Feb. 4 for Bluegreen Corp.'s $150 million of 10-year senior notes (B3/CCC+).

Citigroup will run the books on the refinancing deal from the Boca Raton, Fla.-based company that develops, owns, operates and markets vacation ownership resorts and residential communities.

Finally, Haights Cross Communications, Inc. plans to sell $50 million proceeds of senior discount notes due Aug. 2011, on Wednesday, via Bear Stearns & Co. Proceeds will be used to fund future acquisitions.

Talk on four deals

Price talk of 9 3/8%-9 5/8% emerged Monday on Atlantic Broadband Finance, LLC's $150 million of 10-year senior subordinated notes (Caa1/CCC+), expected on Wednesday via Merrill Lynch & Co.

The price talk is 7¾%-8% on Inmarsat Group Ltd.'s $375 million of eight-year senior notes (B2/B), expected to price on Tuesday via joint bookrunners Credit Suisse First Boston, Barclays Capital and RBS Capital Markets.

Price talk of 8½% area was heard Monday on SGL Carbon Finance SA's planned €300 million of eight-year senior notes (Caa1/CCC+), expected to price Tuesday morning in London. Credit Suisse First Boston and Deutsche Bank Securities are the bookrunners.

And price talk of 10 3/8%-10 5/8% emerged Monday on Town Sports International Holding Inc.'s $125 million proceeds of 10-year senior discount notes (Caa2/CCC+), expected to price on Wednesday, with Deutsche Bank Securities running the books.

One senior sell-side source who took a minute to speak to Prospect News on Monday warned that the remainder of the Jan. 26 week could easily play out with an activity level as high as was seen during Monday's session.

"I think issuers are going to continue to take advantage of what continues to be strong demand on the buy-side," the official said.

"It's going to be a week-to-week thing, but as long as the demand is there, issuance will be there to meet it."

United Rentals dips

The new United Rentals 6½% senior notes due 2012 and 7% senior subordinated notes due 2014, which had each priced Friday at par and then struggled to remain above their issue price later that session, were heard to have come in during Monday's dealings, with the senior notes dipping to 99.875 bid, 100.375 offered, while the subordinated notes retreated to 99.5 bid, par offered.

Even Portola Packaging Inc.'s recently priced 8¼% notes due 2012, which had come to market last week at par and then firmed smartly to 104 bid, came in a little, quoted Monday at 103.5 bid, 104 offered, in line with the market's overall slightly easier trend.

About the only new deal bucking the trend was the Premier Entertainment Biloxi 10¾% notes due 2012, which had priced below par on Jan. 15 and then shot above 106 bid in early dealings; they have continued to hover up there and in fact, added to their gains, inching up a little more to 107.5 bid, 108.5 offered.

But overall, a trader said, "it was a pretty frustrating environment. People are getting a little skittish, and sellers come in. All in all, it was not a fun day."

Lucents looses

Case in point - Lucent, whose bonds "got mooshed, by about two points worth," a trader said, even as its shares appreciated by 34 cents (8.27%) to $4.45 on very busy NYSE volume of 130 million shares, roughly double its usual activity level.

Lucent's shares began heading upward after Barron's puffed Lucent, suggesting that its days as a purely speculative play may be numbered, and noting that the shares have risen to current levels from a low of 58 cents a share back in October, 2002.

The Barron's piece said that with Lucent having recently winning contracts for telephone, broadband and wireless networks in Europe, Asia and South America, as well as U.S. defense contracts - all of this on top of a revival of capital expenditures by Lucent's bread-and-butter customers, major telephone providers like Verizon Communications, Lucent is an attractive buy, relative to its peers.

Be that as it may, though Lucent's bonds were softer Monday, its benchmark 7¼% notes due 2006 dipping to 104 bid, 105 offered, down about a point from recent highs, and its 6.45% bonds due 2029 easing almost a point to 85.5 bid, 86.5 offered.

"Maybe they're selling the bonds to buy the stock, I don't know," a trader said,

Another trader said that Lucent "feels weaker, even though the news is good," and suggested that "they've run up pretty well, and now are starting to feel sort of toppy."

Indeed, the first trader pointed out, back in early November, the same bonds trading well over par now were being offered at 77.

Elsewhere, news that Cole National had agreed to the $401 million buyout, plus $287 million of debt assumption, sent the retailer's normally little-traded 8 7/8% notes due 2012 up to 117 bid, well above recent levels in the 111-112 area.

Milan-based Luxottica Group will acquire the company for $22.50 per share for a total purchase price of $401 million. The transaction is expected to close in the second half, subject to anti-trust clearance, approval of Cole National's stockholders and other customary conditions.

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