Chesapeake, TNT euro deals price; Calpine continues rumor-fed climb

By Paul Deckelman and Ronda Fears

New York, Dec. 1 - Chesapeake Energy Corp. priced an upsized offering of 10-year euro-denominated notes on Friday, as expected, high yield syndicate sources said.

They also saw another euro-denominated deal pricing - this one for TNT Logistics.

Several big deals moved onto the forward calendar, including a $1.1 billion two-tranche mega-deal for Aleris International Inc., a $925 million bond deal for Tropicana Entertainment LLC and a €1.67 billion equivalent dual-currency PIK loan deal for Wind Acquisition Holdings Finance.

Tristan Oil Ltd. is bringing a more conventionally structured $300 million bond offering to market, as is Geokinetics Inc., offering $100 million of secured floating-rate notes.

Traders saw the brisk pace of activity in the new-deal market overshadowing the aftermarket. What activity there was there was largely dominated by distressed names, several of which moved up multiple points, led by Calpine Corp., while the non-distressed kind of names were "up maybe 1/8 point, or 1/4," one trader said.

Other distressed gainers included Remy International Inc., which, like Calpine, was gaining on rumors and speculation that a large market player was interested in the company.

Chesapeake euro deal upsized

The most recognizable name in the primary arena was that of Oklahoma City-based energy exploration and production company Chesapeake Energy, which sold an upsized €600 million issue of senior notes due Jan. 15, 2017.

That offering had been raised from the originally envisioned €400 million. It priced at par to yield 6¼% - at the tight end of pre-deal market price talk that expected a yield in the range of 6¼% to 6 3/8.

The quickly-shopped issue - which only surfaced during Tuesday's session - was brought to market as an off-the-shelf public offering by joint bookrunners Barclays Bank plc, Credit Suisse Securities (Europe) Ltd., Deutsche Bank Securities Inc. and Goldman Sachs International.

Chesapeake plans to use the deal proceeds to repay bank debt, which may be reborrowed for general corporate purposes, including potential future acquisitions.

One source familiar with the transaction called it a "blowout."

TNT Logistics two-parter prices

TNT Logistics priced a two-tranche €730 million issue of senior and senior subordinated notes, consisting of €505 million of senior notes due Dec. 1, 2014, which priced at par to yield 8½%, and €225 million of senior subordinated notes due Dec. 1, 2016, which priced at par to yield 10%. Both tranches priced in line with pre-deal market price talk.

The notes were brought to market by joint bookrunning managers Credit Suisse, ABN AMRO, Bear Stearns and Goldman Sachs.

TNT, an Amsterdam-based logistics company, plans to use the proceeds from the deal, as well as from an €805 million credit facility, to back Apollo Management LP's already completed buyout of TNT NV's logistics division for €1.48 billion

Wind blows through primary market

Yet another big euro-denominated name seen in the new-deal arena was Wind Acquisition Holdings Finance, which launched a €1.67 billion equivalent five-year payment-in-kind (PIK) loan Friday.

The deal will include both dollar- and euro-denominated components, and will be non-callable for the first six months after issue.

According to high yield market sources, there will also be a step-up that will push the coupon up by 200 basis points after three years.

The company begins a roadshow on Tuesday in London, which will continue on Wednesday. The deal is being brought to market by Deutsche Bank, Credit Suisse, Citigroup and Banca IMI.

Wind Acquisition will use the deal's proceeds to refinance its existing PIK debt, and to fund the purchase of Enel's remaining stake in the deal.

A repackaging into notes is likely later, somewhere down the line.

Aleris slates two-part mega-deal

Back among the dollar-denominated new-deal names, Aleris International was heard by participants planning to be selling $1.1 billion of senior PIK toggle notes and senior subordinated notes, as part of the larger financing package for the Beachwood, Ohio-based metals company's planned leveraged buyout by Texas Pacific Group.

The company hits the road Monday to sell the deal to prospective investors, with pricing expected during the week of Dec. 11 via joint bookrunners Deutsche Bank Securities and Goldman Sachs.

The deal will consist of $600 million of eight-year senior PIK toggle notes, which will be non-callable for the first four years after issue, and $500 million of 10-year senior subordinated notes, which will be non-callable for the first five years after issue.

The coupon on the toggle notes will step up by 75 basis points if the company chooses to pay its interest by issuing new notes rather than in cash.

Besides the bond deal, Aleris has lined up $1.85 billion of new bank debt to pay for its LBO - a $750 million asset-backed revolving credit line, and a $1.1 billion term loan B tranche.

Tropicana deal to fund Aztar buy

Almost as big a bond deal as Aleris' is the $925 million of new notes that will be sold by Tropicana Entertainment LLC and its affiliated Tropicana Finance.

That sale of eight-year senior subordinated notes will provide the financing for the Fort Mitchell, Ky.-based gaming and lodging company's ongoing expansion, including the previously announced acquisition of Aztar Corp. and Casino Queen, as well as refinancing existing debt.

Junk bond primaryside sources said Friday that the company will hit the road on Monday, to sell the deal to investors, with pricing anticipated on Dec. 15. Credit Suisse is the bookrunner on the offering.

Tristan plans five-year deal

Several smaller deals were also seen managing to crowd their way onto the forward calendar for the big final primary push of the year, including Tristan Oil Ltd., which plans to sell $300 million of senior secured notes due 2011.

Participants said the British Virgin Islands-based oil and gas company began a roadshow Friday to market the offering to potential investors. The roadshow is expected to run through Dec. 12, with pricing shortly after that.

The notes will be brought to market via Jefferies & Co.

Tristan operates primarily in the former Soviet republic of Kazakhistan. It plans to use the proceeds of the deal to repay the existing debt of its affiliate, Tolkynneftegaz LLP (TNG), to make a distribution to company shareholders, and for working capital and for general corporate purposes of TNG and another Tristan affiliate, Kazpolmunay LLP (KPM).

Geokinetics plans secured deal

Also coming out of the energy industry, Houston-based seismic services provider Geokinetics unveiled a $100 million offering of six-year second-priority senior secured floating rate notes.

It will use the deal proceeds to repay some debt it incurred when it acquired Grant Geophysical Inc.

It will begin a roadshow for the deal on Tuesday.

Calpine climb continues on buyout buzz

Back among the established issues, Calpine's bonds extended the week's climb Friday, adding another couple points or so, as rumors of an imminent buyout of the bankrupt San Jose, Calif., power producer circulated.

Its 8½% notes due 2011 traded up to 83.5 at one point Friday before easing back to close at 76 bid, 77 offered, off a point from Thursday. But the 10½% notes due 2006 continue to gain, going out for the weekend at 94 bid, 95 offered with a gain of 1.5 points from 92.5 bid 93.5 offered previously.

And at another desk, a trader saw the 81/2s ending up 2 points, at 78 bid 79 offered - and said that earlier in the session, they had gotten as good as 82.5 bid - a 6 point gain from Thursday's close - before coming off that peak to close with the more moderate 2 point advance.

As a measure of how far the troubled company's paper has come in a short time, a trader noted that "Calpine paper was trading in the 50s just a month ago."

The second trader said that the rise was being fueled by rumors, speculation and scuttlebutt that something is up. He said he had heard that "GE [General Electric Co.] is doing something."

He said that talk in the market is there's "a huge buyer out there" trying to take a position in Calpine, and thus be in a good position to control the company, but added that "the GE name didn't show up until the last day or so."

It should be noted that Calpine is a major buyer of turbines and other major electric power generating equipment manufactured by - GE.

A buyout? Not so fast . . .

But while there was lots of talk of GE or some other potential big buyer waiting in the wings, skeptics were on the rise, as well, saying it could very well be a situation in which some of the big banks just want to clear their books of the distressed paper before year-end.

Onlookers at some big buyside firms say it doesn't make sense that a buyer would step up before the weeding-out process of bankruptcy is completed.

A trader commented that "any time something moves this much in this short of a time there is going to be a lot of talk - but there is nothing solid."

Another skeptical buysider said he doesn't believe there is really a buyer for Calpine right now. He thinks it's "just the big shops wanting to clear their books of this paper before year-end, which is certainly not beyond the capability of those guys."

"Calpine has a lot of work to do," he said.

"There is so much wood still left to chop at Calpine, I really can't imaging someone stepping in, not right now anyway."

In addition, another buysider on the West Coast, who has sold out his position in Calpine, said he thinks the paper has been over-valued past 80.

"Some people now feel they have good insight into what the eventual recovery will be on the unsecured debt, and it must look a lot better than the level the bonds were trading at," he said.

"Personally, I cannot foresee a scenario where these unsecureds surpass 80 cents on the dollar."

Remy upside ride continues

The volatile distressed names remained the major draw elsewhere in the junk market as well.

Remy International's bonds continued to ride northbound Friday, adding another 2 to 3 points, which one onlooker attributed to buyers tagging along after the big hedge fund Tennenbaum Capital Parterns, LLC was seen buying the paper in recent sessions.

"Tennenbaum buying a position in Remy is old news," said a buyside source. But their purchase "may have sparked others to want to get involved and that could still be driving the bonds up."

Remy's 11% notes due 2009s gained 3 points on the session to 40 bid, 41 offered from 37 on Thursday and the 9 3/5% notes due 2012 added about 2 points to 35.5 bid, 36.5 offered from 34.

The bonds made a big move Thursday - but the buysider said Tennenbaum's purchases in the Anderson, Ind.-based manufacturer of automotive electrical systems took place "quite a while back."

Remy bonds have been routed recently by grumblings that it is on the verge of bankruptcy, which escalated on Nov. 10 when it hired the Rothschild investment bank to lead a refinancing effort.

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