Dobson to bring new bond deal, convertibles; existing Dobson bonds firm on news

By Paul Deckelman and Paul A. Harris

New York, Sept. 6 - It was back to work for the high-yield market Tuesday as the summer vacation season came to an unofficial close - no matter what the calendar says. However, traders reported that, in the words of one, "not much" went on - "it was pretty disappointing.

"The stock market made up 140-odd points, and put a pretty decent tone underneath it [junk] - I think the market was looking to go a little lower" otherwise, he said.

"The high-yield market didn't do very much in general," the trader continued, although there were pockets of activity in specific areas.

One was Dobson Communications Corp., which unveiled plans to issue new floating rate seven-year notes as well as new convertible bonds. Proceeds of the new financing will go to redeem the Oklahoma-based small-market wireless service provider's existing 10 7/8% notes due 2010. That news - which the trader said was "not unexpected" - helped push those bonds up a little, and helped to propel several other issues as well.

He quoted the 10 7/8s as trading at 105.75 bid, 106 offered, a little bit above the scheduled 105.438 call price at which the bonds will be taken out. Those bonds, he said, had previously been hanging around a 104.5-105.5 context. "They're up - but they can't go too much higher, given the current redemption."

The news also helped the company's 8 7/8% notes due 2013 move up about a point to 101.25 bid, 102 offered, and "were also pushing up a little bit" on the bonds of another provider of wireless services to small and mid-size markets, Rural Cellular Corp. The trader saw the latter's 9¾% notes due 2010 up around a point to 102 bid, 103 offered. However, he added that he had "not seen any real movement" in the bonds of Triton PCS - now officially known as SunCom Wireless Holdings Inc. The Berwyn, Pa.-based cellular provider's 9 3/8% notes due 2011 were up perhaps half a point at 83 bid, 84 offered.

Dobson's upcoming deal was only one of a number of pending placements that emerged Tuesday, as the primary market started to shake off its torpor of the past two weeks and rev up for what's expected to be a busy fall.

Ashton Woods Homes and San Pasqual Casino were heard to be launching new deals, while roadshow details emerged on offerings for Williams Scotsman Inc., E-Trade and The Restaurant Co., operator of the Perkins Family Restaurants chain. And French engineering concern Alstom priced a floating-rate euro-denominated deal, market participants said.

Primary back from vacation

Meanwhile, as forecast, the primary market came to life.

French engineering firm Alstom priced an unrated €600 million issue at the tight end of talk to yield three-month Euribor plus 220 basis points

And at the end of the session the tally of deals in the market shot to more than $1.4 billion, with sources advising Prospect News that the September forward calendar will continue to grow at a purposeful pace.

One high yield syndicate official said late Tuesday that accounts have expressed the belief that September could be the first month in 2005 to top its 2004 counterpart, as all eight previous months, this year, have lagged the same month of 2004 in terms of new issuance.

According to data compiled by Prospect News issuance in September 2004 totaled slightly less than $9 billion in 33 dollar-denominated tranches.

The official said Tuesday that the present month appears poised to match and perhaps top that figure.

Alstom oversubscribed

Terms circulated Tuesday on an unrated issue from French engineering firm Alstom.

The company priced €600 million of four-year floating-rate notes at par to yield three-month Euribor plus 220 basis points, at the tight end of the Euribor plus 220 to 230 basis points price talk.

Dresdner Kleinwort Wasserstein, HSBC, Ixis and Natexis managed the sale, proceeds from which were pegged to refinance debt.

A market source told Prospect News that the deal was more than three-times oversubscribed.

However market sources also said that the deal, which had no U.S.-based underwriters, was not closely followed in the States.

Dobson driving through

In the run-up to Labor Day junk watchers warned that September could bristle with drive-by business, and the first contender - a familiar name to high-yield investors - came forward on Tuesday.

Dobson Communications Corp. will hold an investor conference call at 12 p.m. ET Wednesday for its $150 million offering of seven-year senior floating-rate notes, and expects to price the deal later in the day.

Lehman Brothers, Bear Stearns & Co. and Morgan Stanley are bookrunners for the debt refinancing deal from the Oklahoma City-based rural cellular telephone services provider.

$1.4 billion for the road

As far as the dollar-denominated market goes, the high-yield deal roadshow calendar was empty as the Labor Day holiday began.

However activity stepped up notably on Tuesday, the first day back, as five prospective issuers headed for the blocks with six dollar-denominated tranches.

New York City online brokerage firm E*Trade Financial Corp. will begin a roadshow on Wednesday for a $450 million two-part offering (B1/B+).

The company will offer new eight-year senior notes and will tap its existing issue of 8% senior notes due June 15, 2011, with pricing expected next week via JP Morgan and Morgan Stanley.

The company priced $400 million of the 8% notes due June 15, 2011 at par on June 2, 2004.

Tranche sizes for the acquisition financing remain to be determined.

Elsewhere a timing update was heard Tuesday on the only deal known to be in the market during the run-up to Labor Day.

Williams Scotsman Inc will begin a roadshow on Thursday for its $325 million offering of 10-year senior notes (B3) via Deutsche Bank Securities, Banc of America Securities LLC, Citigroup, Lehman Brothers and CIBC World Markets.

The company is a Baltimore, Md., provider of modular space solutions will use the proceeds to refinance debt.

Perkins Family Restaurant will start a roadshow Wednesday for its $190 million offering of eight-year senior notes (B2/B) via bookrunner Wachovia Securities.

Proceeds will go to fund the leveraged buyout of the Memphis, Tenn., restaurant company.

San Pasqual Casino Development Group will also start a roadshow on Wednesday for its $180 million offering of eight-year senior notes.

Merrill Lynch & Co. has the books for the debt refinancing and project funding deal from the American Indian gaming facility, which is located near San Diego.

Finally, homebuilder Ashton Woods USA LLC, in conjunction with Ashton Woods Finance Co., will start a roadshow Thursday for its $125 million offering of 10-year senior subordinated notes.

UBS Investment Bank and Wachovia Securities are joint bookrunners for the debt refinancing deal.

Albertson's down again

Back in the secondary market, Albertson's Inc. bonds - which fell sharply Friday, though on light pre-holiday trading - were heard to have widened out further, as Moody's Investors Service became the third major ratings agency to threaten to cut the Boise, Ida.-based supermarket giant's precariously investment-grade rating in wake of the company's Friday announcement that it would consider various "strategic alternatives," possibly including the sale of all, or part, of the company. On Friday, both Standard & Poor's and Fitch Ratings, which each rate the company just one thin notch above junk bond status, said they were considering a ratings cut.

A trader said the company's 8% notes due 2031 - which on Friday had widened out 125 basis points to bid levels around 345 basis points over Treasuries - had widened to a bid level of 365 bps over, and an offered level of 345 bps over. Its 7½% notes due 2011, which had also widened out 125 bps on Friday, to bid levels about 250 bps over Treasuries, widened to 270/255 bps over.

Moody's, which currently rates Albertson's at Baa2, cautioned that moves to increase shareholder value could add to Albertson's leverage or lower free cash flow available to fund capital investments.

Pinnacle up

After a very rough week last week, Pinnacle Entertainment announced plans to rebuild its hurricane-ravaged Casino Magic resort in Biloxi, Miss. and its less-damaged Boomtown New Orleans casino in suburban Harvey, La. The Las Vegas-based gaming operator said that while the barge-based Biloxi casino had suffered substantial damage from the storm, along with the adjoining land-based hotel, "management believes that the insurance coverage should be sufficient to replace the Biloxi facility. The company has $400 million of coverage, with a 3% deductible, and is also insured for business interruption."

That encouraging news may have been the catalyst behind a rise in the company's bonds, with its 8¼% notes due 2012 seen up two points at 102.5 bid. Rival Biloxi gambling operator Isle of Capri Casinos Inc.'s bonds, like its 7% notes due 2014, trading in the 99 area, were seen slightly better on the session.

Delta higher

The financial markets were heartened by the news that some of the hurricane-damaged refineries, pipelines and other energy facilities might be back on line as soon as later in the week, and that helped to push the price of crude oil back down for a second straight session. Light sweet crude for October delivery ended down $1.67, at $65.90 per barrel on the New York Mercantile Exchange on Tuesday, well below the panic-induced peak levels of over $70 a barrel at which the black gold traded last week. Experts cautiously believe that oil prices could start trending modestly lower.

That's good news for the beleaguered airline carriers, who were already getting slammed by rising fuel prices even before Katrina caused crude prices - and futures prices for jet fuel also - to go through the roof.

And the most beleaguered of the not-yet-bankrupt carriers, Delta Air Lines Inc.'s bonds, were seen higher on the session, helped by the oil price decline, market participants said, and also by the Atlanta-based Number-Three carrier's announcement that its passenger traffic and load factor - the percentage of filled seats on the average flight - rose in August.

Delta's bonds were up a point across the board, said one trader, who quoted its benchmark 7.70% notes scheduled to come due on Dec. 15 at 21 bid, 23 offered, its 10% notes due 2008 at 17 bid, 18 offered, and its 7.90% notes due 2009 at 15 bid, 17 offered. He saw Delta's 8.30% notes due 2029 two points better, at 15 bid, 17 offered.

Delta's New York Stock Exchange-traded shares jumped 12 cents (12%), to $1.12, on volume of about 17 million, double the norm.

Northwest lower

But rival troubled carrier Northwest Airlines Corp. did not share the good fortune, hobbled as it was by a two-notch ratings downgrade Tuesday by S&P to CCC- from CCC+ previously as well as by a Wall Street Journal story indicating that the Federal Aviation Administration is looking into the carrier's maintenance against the backdrop of the continuing strike by mechanics and other employees against the Eagan, Minn.-based Number-Four U.S. airline operator.

In its downgrade message, S&P cited rising fuel costs, as well as delays in the airline's efforts to win labor concessions from the mechanics and other employee groups.

While a trader saw Northwest's widely quoted 8 7/8% notes due 2006 actually a point better at 49 bid, 51 offered, he saw its other bonds all down two points, with its 9 7/8% notes due 2007 falling to 39 bid, 41 offered, its 10% notes due 2009 at 34 bid, 36 offered, and its 7 7/8% notes due 2008 at 33 bid, 35 offered.

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