Intrawest, B/E Aerospace, Houghton-Mifflin slate deals; Collins & Aikman up on bank loan buzz

By Paul Deckelman and Paul A. Harris

New York, Sept. 29- Intrawest Corp., B/E Aerospace and Houghton-Mifflin Co. announced Monday that they planned to bring new junk bond offerings to market shortly, with Intrawest's issue seen pricing this week after a very short road show.

In the secondary sphere, Collins & Aikman Products Co. bonds and shares were up despite a lack of new news seen about the Troy, Mich.-based automotive components maker, although a trader noted market rumors of a possible bank financing deal for the company. Activity was otherwise considered dull and range-bound.

From the primary, the eurobond market produced terms on two deals that came inside of their price talk during Monday's session, including a 10-year notes offering from EMI Group plc that upsized to €425 million from €300 million.

Meanwhile four new dollar-denominated high-yield offerings surfaced during the session, three of which are expected to price during the present week.

EMI priced an upsized split-rated offering of €425 million 10-year senior notes (Ba1/BBB-) at par to yield 8 5/8%, inside the 8¾%-9% talk. The deal was increased from €300 million.

Royal Bank of Scotland was the "physical bookrunner" on the on the London-based recording company's offering.

A source close to the deal, who had earlier advised Prospect News that the EMI notes would be marketed primarily to traditional high yield names, disclosed late Monday that the upsized offering had been two-times over-subscribed.

"The deal was complicated by the announcement that the company is in early dialog with Time Warner to acquire the latter's recorded music business," added the source. "A debt-to-free cashflow covenant of 4.5 times was added to allay investor concerns."

The source, who indicated that the book was over 90% European accounts, said that the extra proceeds raised in the upsizing will be used to retire more senior bank debt.

EMI Group, according to the source, is Royal Bank of Scotland's fourth deal as bookrunner this year, after Vivendi, HeidelbergCement and Focus Wickes.

Also on the European front, ASPropulsion Capital BV priced €200 million of 10-year senior notes (B2/B-) at par to yield 9 5/8%, inside of the 9¾%-10% price talk.

The deal, which is part of the funding for a leveraged buyout of the FiatAvio SpA aviation engine business by The Carlyle Group, was led by Lehman Brothers, Citigroup and Goldman Sachs.

Meanwhile, a two-day roadshow begins Tuesday for Intrawest Corp.'s $250 million of 10-year senior notes (B1/B+). Deutsche Bank Securities is bookrunner on the Vancouver, B.C.-based resort company's deal.

The roadshow also starts on Tuesday for B/E Aerospace, Inc.'s $150 million of seven-year senior notes. The Wellington, Fla.-based aircraft parts manufacturer's deal is being run by Credit Suisse First Boston.

And HM Publishing Co., the parent of Houghton Mifflin, expects to price $150 million of 10-year senior discount notes due 2013 (Caa1) on Tuesday.

Deutsche Bank Securities, Goldman Sachs and CIBC World Markets will run the deal on the Boston publisher's notes, which will come with a five-year zero coupon.

On the emerging markets scene, Vitro SA de CV was heard to be headed for the European roadshow circuit with an offering of $250 million of 10-year senior unsecured notes (B2/B-) later this week, with a U.S. roadshow to follow during the week of Oct. 6.

Citigroup and Credit Suisse First Boston are joint bookrunners on the Mexican glass maker's refinancing deal.

Finally, price talk of 10%-10¼% emerged Monday on Koppers Inc.'s $300 million of 10-year senior secured notes (B2/B), which are expected to price on Tuesday.

Credit Suisse First Boston is bookrunner.

One high yield sell-side official told Prospect News late in the session that the market at present appears to be in "phenomenal shape.

"People have a ton of money, and they're looking for quality supply," the sell-sider added. "They are looking for some name diversification and they're really looking for an uptick in mergers and acquisitions in order to break out of this refinancing rut.

"The M&A people have been very active lately," added the source. "There is some stuff in the pipeline and I think we'll start to see that pick up in the first quarter of 2003.

"In the wake of all the corporate governance scandals the M&A process has been taking a lot longer. The due diligence is far more thorough. The types of deals you will see announced have been through a ton of hurdles."

A trader likened the environment for secondary activity to "a Monday morning in the summer - even though it isn't summer any more."

It was, he added, "not such a busy day."

He pegged the new Level 3 Communications Inc. 10¾% senior notes due 2011 at 100.5 bid, 101 offered, an improvement on its performance Friday when it priced at par, moved up briefly, then came back down to close at levels slightly under its issue price.

He saw no activity in any of the other recently priced names.

The major feature he saw was out of the distressed world, quoting Air Canada's notes "down 10 points right out of the chute," falling as low as 34 bid from Friday's levels in the 43-44 area before the troubled Canadian air carrier rebounded off its lows to close at 37.5 bid, 38.5 offered. Air Canada is currently restructuring under the U.S. Bankruptcy Code and the Companies' Creditors Arrangement Act in Canada.

Another trader agreed that Monday was "a pretty dull day" in which to find markets. "The market overall was unchanged to kind of creepy better," he said. "It started out lower bid and improved during the course of the day after early trades, with cheaper offerings getting lifted. "

While he saw not much going on, one name which "did seem to trade up" was Collins and Aikman, which saw "a fair amount" of activity in its 10¾% notes due 2011 in a range between 86.5 bid and 87.25 offered, with over 10 million bonds moving on the Nasdaq TRACE tracking system.

He said that the issue had gotten down into the 84-86 range last week, even dipping at points into the 83-85 area.

As to their upside move Monday, he said "there's a short out there [in the bonds]. There's a rumor going around that there's some kind of bank deal in the market place, so I think there are shorts in both issues [the 10¾% and Collins & Aikman's 11½% notes due 2006] and they're getting squeezed at this point, if that's actually true and there's a deal in the market place."

At another desk, the 11½% notes were as good as four points higher than Friday's closing levels at one point, heard to have peaked at 75 bid, before dropping back from that high to close around 73, still up more than two points on the day.

There was no fresh news out on the company. Even so, its shares meantime jumped 35 cents (11.44%) to $3.41 in New York Stock Exchange dealings Monday, with nearly 890,000 shares traded, over three times the norm.

Elsewhere, not much else was seen happening. News that B/E Aerospace was bringing a new bond deal had no impact on its existing 8% notes due 2008, which stayed at 86.5 bid, while Houghton-Mifflin's existing 8¼% notes due 2011 were likewise unmoved at 104 bid. However, at another desk, the publisher's 9 7/8% notes due 2013 were quoted down about a point at 104.5.

Tyco International was in the news, with the start of former Chief Executive Officer Dennis Kozlowski's trial in New York.

One market-watcher saw Tyco's longer-end bonds having risen two points on Friday, with the 7% bonds due 2028 firming to 97 bid; he meantime saw nothing going on its issues Monday, with the 6¾% notes due 2011 holding steady at 104.75.

"I think [the news that Kozlowski is standing trial] is basically built into the market for the bonds," he said. "Unless something new pops up, I don't think anything will happen to the bonds because of the trial."

Kozlowski - who earned a reputation during his tenure at the top as a high-living bon vivant - stands accused of having looted more than $600 million from the Bermuda-based conglomerate to allegedly finance a lavish lifestyle that included big mansions filled with pricey art treasures, a $1 million birthday bash for his wife and such gaudy baubles as a $6,000 shower curtain. Former chief financial officer Mark Swartz is also charged with fraud in the case.

A trader saw Tyco "maybe a little better," quoting its 6 1/8% notes due 2008 and 2009 up a quarter point at 103.5 bid, 104.5 offered, its 5 7/8% notes due 2004 at 102.5 bid,103 offered, and the 7s of '28 at 97 bid, 98 offered, all up about a quarter points, with "nothing new. No great shakes."

AK Steel - whose bonds have recently been reeling in the wake of the abrupt announcement earlier this month that CEO Richard Wardrop and President John Hritz had resigned - continued to struggle, its 7¾% notes due 2012 at 70.5 bid, 71.5 offered and its 7 7/8% notes due 2009 at 71.5 bid, 72.5 offered.

A trader said that Levi Strauss & Co. bonds "continue to move around two or three points a day in volatile, if range-bound dealings;" he quoted the San Francisco-based blue-jeans giant's 11 5/8% notes due 2008 at 84 bid.85 offered, its 12 ¼% notes due 2012 at 82 bid, 83 offered, and its 7% notes due 2006 at 80 bid, 81 offered.

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