Nordic Telephone, Pioneer, Rural Cellular deals price; Amkor, Lear gain on earnings

By Paul Deckelman and Paul A. Harris

New York, April 26 - Nordic Telephone Co. Holding ApS, Pioneer Natural Resources Co. and Rural Cellular Corp. were heard by high yield syndicate sources to have successfully priced new issues Wednesday.

Nordic Telephone's was a three-part, dual-currency €2 billion-plus equivalent calendar mega-deal - massively oversubscribe - while the Pioneer and Rural Cellular transactions were quickly emerging, rapidly shopped drive-by offerings. The Pioneer deal was upsized while Rural Cellular's was actually an add-on to an existing tranche of bonds.

In the secondary realm, good earnings pushed the bonds of Amkor Technology Inc. and Lear Corp. higher. Fedders Corp.'s bonds - up solidly on Tuesday in tandem with a sharp rise in the company's stock - were up again Wednesday in both markets, though not quite so dramatically. Movie Gallery Inc.'s bonds were volatile, seen gyrating around at sharply higher levels at one point in the day, before giving back those early gains to end essentially unchanged.

Overall sources marked the broad high-yield market softer with a sell-off in Treasuries on Wednesday.

In the primary, the Nordic Telephone transaction included the day's biggest dollar-denominated tranche, a $600 million issue. Tallied with the rest of the day's dollar-denominated business - all the rest of it in the form of drive-by deals - the market saw a face amount of $1.210 billion of dollar-denominated issuance on Wednesday.

Nordic Telephone a "total blowout"

The massively oversubscribed Nordic Telephone €2.031 billion equivalent of 10-year senior notes (B2/B/B+) in three tranches priced on Wednesday.

Two of the three tranches came inside of the price talk while the third came at the tight end.

The Copenhagen, Denmark-based provider of communications solutions priced a $600 million issue of fixed-rate notes at par to yield 8 7/8%, 25 basis points inside of the 9% to 9¼% price talk.

Nordic Telephone also priced an €800 million issue of fixed-rate notes at par to yield 8¼%, at the tight end of the 8¼% to 8½% price talk.

In addition the company priced a €750 million issue of floating-rate notes at par to yield three-month Euribor plus 550 basis points, 25 basis points inside the Euribor plus 575 to 600 basis points price talk.

Deutsche Bank Securities and JP Morgan had the physical books for the deal, proceeds from which will refinance LBO-related debt.

Pressed for color on the transaction that was said to have been multiple-times oversubscribed, a source close to the Nordic Telephone deal would only say that it was a "total blowout."

Pioneer upsizes

The remainder of Wednesday's primary market business came in the form of drive-by deals.

Pioneer Natural Resources priced an upsized $450 million issue of 6 7/8% 12-year senior notes (Ba1/BB+/BB+) at 99.903 to yield 6.887% in a quick-to-market transaction.

The notes priced at a 178 basis points spread to Treasuries, towards the tight end of the Treasuries plus 180 bps price talk.

Deutsche Bank Securities ran the books for the Dallas-based independent oil and gas exploration and production company's debt refinancing and general corporate purposes deal. The bonds were upsized from $400 million.

Rural Cellular taps 8¼% notes

Elsewhere, Alexandria, Minn.-based wireless services provider Rural Cellular priced a $160 million add-on to its 8¼% senior secured notes due March 15, 2012 (B2/B) at 104.125, resulting in a 7.011% yield to worst and a 7.369% yield to maturity.

The dollar price came in the middle of the 104.00 to 104.25 price talk.

Lehman Brothers ran the books for the debt refinancing.

The original $350 million issue priced at par in March 2004 as part of an overall $510 million transaction that also included a $160 million tranche of the above-mentioned senior secured floating rate notes due March 15, 2010.

A source close to the deal said that it had gone well.

Meanwhile a buy-side source said that shortly after the Rural Cellular bonds broke for trading late Wednesday afternoon they were quoted at 104.75 bid, 105.25 offered.

ISS upsizes to €1.109 billion

FS Funding AS, a subsidiary of Denmark-based global facilities services provider ISS issued price talk on an upsized, restructured €1.109 billion two-part offering of 10-year senior subordinated notes (B3/B-).

The company is talking a tranche of fixed-rate notes at 9% area. The notes will come with five years of call protection.

Meanwhile the company is talking a tranche of floating-rate notes at Euribor plus 700 basis points. The floating-rate notes will be callable immediately at 101.

Citigroup and Goldman Sachs & Co. are joint bookrunners for the debt refinancing deal.

Tranche sizes remain to be determined, however an approximately 50-50 split between the fixed- and floating-rate tranches is anticipated.

The offering was upsized from €975 million. However a proposed dollar-denominated tranche was abandoned.

Still a lot of cash

A high-yield investor, speaking on background, said Wednesday that there is still plenty of cash to be put to work in junk.

This source did not play any of Wednesday's transactions, but did take part in Tuesday's NPC International Inc. deal.

To recap, the Lenexa, Kan.-based franchisee of Pizza Hut restaurants priced a downsized $175 million issue of senior subordinated notes due 2014 (Caa1/B-) at par to yield 9½% on Tuesday, on top of the price talk.

The investor said that the NPC deal had gone well, traded up to 102.25 bid when it broke for trading, and then came in Wednesday to 101 bid, 101.50 offered.

The investor said that Wednesday saw the broad high-yield market trade off a quarter of a point to a half a point, with the move registering a greater impact upon double-B and high single-B paper.

Triple-C and low single-B credits tightened further on the day, the source added.

The investor said that the building products sector, in particular, really caught a bid, Wednesday.

The source explained that the sector is characterized by big coupon, low single-B or triple-C names that are trading at a discount.

"People are looking at it because these companies are reporting some good numbers, and these names are not sensitive to Treasury sell-offs, so there is some upside left.

Pressed for names, the investor said that the bonds of Ply Gem Industries, Inc. were up a point and a half on the day, while the paper of Nortek Inc. was also higher on the session.

This investor, headquartered in the Midwest where regular unleaded gasoline is selling at just below $2.80 per gallon, maintains a steady-as-she-goes macroeconomic outlook for the remainder of 2006, looking for gas prices and interest rates to continue to climb.

"Last year when we hit $3 per gallon on gas, the economy pulled back a little bit," the investor said.

"This year people may have already adjusted for it."

Nordic Telephone jumps in trading

When Nordic Telephone's new bonds were freed for secondary dealings, traders saw the dollar-denominated 8 7/8% notes due 2016 having zoomed to 103 bid, 103.5 offered, well up from their par issue price earlier in the session. One of the traders also observed its euro-denominated floating-rate notes due 2016 at 102.75 bid, 103.25 offered, also up from a par issue price.

The Pioneer Natural Resources issue of 6 7/8% notes due 2018 was seen having come too late in the day for any meaningful aftermarket activity. Ditto for Rural Cellular's 8¼% add-on notes due 2012.

A trader said the existing tranche of the latter bonds had fallen a point on the day to around the 104.125 area where the add-ons ultimately priced at. He said that the company's other two issues were "active during the day but closed pretty much unchanged," its 9¾% notes due 2010 at 102.5 bid, 103 offered and its 9 7/8% 2010 notes at 106.75 bid, 107.25 offered.

Among other recently issued deals, the new NPC International Inc. 9½% notes due 2014 were "up nicely" from their late-Tuesday par issue price, a trader said, at bid levels around 101.25-101.5.

And P.H. Glatfelter Co.'s 7 1/8% senior notes due 2016, which priced Tuesday at par and then moved up slightly in the aftermarket, remained only modestly above their issue price on Wednesday, at 100.25 bid, 100.5 offered.

Amkor higher on profit

Back among the established issues, a trader saw Amkor's bonds "up anywhere from a point or two" as the Chandler, Ariz.-based provider of packaging and testing services to the semiconductor manufacturing industry swung into the black in the fourth quarter from a year-ago loss, paced by surging sales.

Amkor's 9¼% notes due 2008 were up a point at 104 bid, 105 offered, while its 7 1/8% notes due 2011 were a full 2¼ points better at 95.75 bid, 96.75 offered. Another trader who saw the bonds at similar levels pegged them up 1¼ point and 1½ point, respectively.

Amkor, helped by a 46% sales boom and the shedding of some legal costs that pulled down year-ago results, reported net income for the latest quarter of $35.8 million (20 cents per share) - a sharp turnaround from its year-earlier loss of $119.1 million (68 cents per share). Results in that 2005 quarter were weighed down by a provision for legal settlements of $50 million (28 cents per share).

Lear better on earnings

Also on the earnings front, Lear Corp.'s bonds firmed as the Southfield, Mich.-based automotive interior, seating and electronic components supplier reported improved first-quarter results from a year ago, reiterated previously announced full-year financial guidance, and said that it was making progress in its efforts to restructure itself to cope with the current challenging conditions in the automotive parts supplier industry.

Lear had "a strong quarter," a trader said, in seeing its 8 .11% notes due 2009 up 1¼ points at 97.75 bid, 98.75 offered, although he saw its 5¾% notes due 2014 up just half a point at 82 bid, 83 offered.

In the 2006 fiscal first quarter ended April 1, Lear recorded net sales of $4.7 billion, up from $4.3 billion in the year-earlier period, helped by an increase in new business globally. Net income was $17.9 million (26 cents per share), up from $15.6 million (23 cents per share) a year earlier.

Company executives, on a conference call with analysts following the release of the results, also touted the future impact of the $1 billion of new term loan financing which closed on Tuesday. That will enable Lear to meet maturities on convertible bond debt which holders are expected to put back to the company next year, as well as at least some of the high yield bond debt coming due in 2008 and 2009 (see related story elsewhere in this issue).

Fedders up again

Apart from earnings, traders saw the Fedders 9 7/8% notes due 2014 - which on Tuesday had jumped to around the 79 bid level from prior levels in the low 70s, in line with an 18% gain in its New York Stock Exchange-traded shares - continuing to climb on Wednesday. A trader put those bonds at 80 bid, 81, up a point on the day and up sharply from levels nearly 20 points lower at which they had begun April. Fedder's shares meantime tacked on another 27 cents (10.07%) to finish at $2.95, on volume of 1.55 million shares, about nine times the norm. Those shares were trading under $1 earlier in the month.

No fresh concrete news was seen out on the Liberty Corner, N.J.-based air-conditioner maker. The rise in the shares - and the accompanying rise in the bonds - is being attributed to factors ranging from rumored merger and acquisition activity in the appliance industry, especially in the late of Fedders rival Whirlpool's successful recent purchase of Maytag Corp., to expectations that hot summer weather in much of the United States will sharply boost air-conditioner sales.

Charter up

Among other names, a trader saw Charter Communications Inc.'s bonds gaining, but saw no news out about the St. Louis-based cable television operator that might explain the rise. Its holding-company floating-rate notes due 2014 were seen at 67 bid and its 9.92% notes due 2014 were at 60.5 bid, each up 2½ points.

Young lower

Young Broadcasting Inc.'s 10% notes due 2011 were seen off a point to 92.75 bid, perhaps driven down by the news that the New York-based television station operator is increasing its bank-loan facility by $50 million - putting more debt that is senior to its bonds into its capital structure.

Movie Gallery moves around

And Movie Gallery's bonds were "volatile," a trader said, noting that the Dothan, Ala.-based home video rental and sales chain operator's 11% notes due 2012 "traded up three points, but then came back in," to end at around the same 52 bid, 53 level at which they had started.

Another trader saw the bonds up around half a point - far less than the earlier gains - at 52.25 bid, 53.25 offered.

Market players noted the news during the session that 8.6% shareholder Schultz Asset Management LLC has floated the idea of raising capital from existing shareholders via a stockholder rights offering. According to a filing with the Securities and Exchange Commission, such proceeds would be used to reduce debt.

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