Itron, Whiting, Preem deals price; Telewest moves lower

By Paul Deckelman and Paul A. Harris

New York, May 5 - Itron Inc. and Whiting Petroleum Corp. were heard by high-yield syndicate sources to have successfully priced new deals Wednesday, as did Preem Petroleum AB, which was heard to have brought a euro-denominated offering to market.

In secondary dealings, Telewest plc bonds were being quoted several points lower, with at least one trader citing possible concerns about the health of the company's acting chief executive officer.

The three junk bond deals pricing Wednesday generating $275 million and €100 million of proceeds for three respective issuers as the pipeline continued to build.

"The calendar is still full," one senior sell-side official reflected not long after the session came to a close.

"You've seen price come off somewhat. Some of that is due to Treasuries. And some of it is due to liquidity," added the source, referring to negative funds flow numbers from the high-yield mutual funds.

"But there is still a lot of cash in the market for people to invest," the official asserted.

This source referred to one of Wednesday's three transactions, a $125 million issue of 7¾% eight-year notes from Spokane, Wash.-based meter-maker Itron Inc. (B2/B), which priced at 99.265 to yield 7 7/8%. He told Prospect News that it indicates that investors are probably shopping more closely but that they are still shopping.

The Bear Stearns & Co. acquisition/debt financing deal came in the middle of its 7¾%-8% price talk, and was oversubscribed, according to the source.

"The execution went really well," the sell-sider commented.

"Investors are really focusing on credits rather than just buying the market, which they had been doing in the recent past."

Shortly thereafter another sell-side source reported seeing the just-released Itron bonds trading at 100.5 bid, 100.75 offered.

Oil companies complete deals

Also pricing Wednesday were offerings from petroleum companies on either side of the Atlantic.

Whiting Petroleum Corp. sold $150 million of 7¼% eight-year senior subordinated notes (B2/B-) at 99.26 to yield 7 3/8%.

The Denver, Colo.-based oil and natural gas exploration and production company's debt refinancing deal came at the wide end of the 7 1/8%-7 3/8% price talk, via Merrill Lynch & Co. and Lehman Brothers.

And Stockholm, Sweden-based Preem Petroleum AB priced a downsized €100 million of 10-year senior subordinated notes (B2/B-) at par to yield 9%, wide of the 8 5/8%-8 7/8% price talk.

Deutsche Bank Securities ran the books debt refinancing and capex funding deal, which was decreased from €125 million, while the company's credit facility was increased by €25 million.

Talk on Rhodia, Primedia drive-by

Price talk emerged Wednesday on Rhodia's upsized €700 million equivalent offering of six-year senior notes (B3/B) in dollar and euro tranches, both of which are expected to price Friday morning, New York time.

The dollar tranche is talked at 10¼%-10½%. The euro tranche is talked 25 basis points behind the dollar tranche.

Credit Suisse First Boston, BNP Paribas and Goldman Sachs & Co. are joint bookrunners.

And price talk of three-month Libor plus 450 basis points was heard late Wednesday on a quick-to-market offering from Primedia Inc. of $275 million of six-year senior floating-rate notes (B3/B).

A brief roadshow is expected to conclude on Thursday, with pricing expected later the same day.

Banc of America Securities, Citigroup and JP Morgan are joint bookrunners on the debt refinancing deal from the New York City-based targeted media company.

Alpha starts roadshow

The roadshow started Wednesday for Alpha Natural Resources' $200 million of eight-year senior notes (B3), which are expected to price mid-week during the week of May 10.

Credit Suisse First Boston is the bookrunner for the deal, proceeds from which will be used to refinance debt and fund a distribution to the Abingdon, Va.-based coal company's parent, ANR Holdings LLC.

Also Collins & Aikman Corp. announced late Wednesday that it plans to sell $500 million of junk bonds in two tranches, via Deutsche Bank Securities.

No timing was heard on the deal, proceeds from which are slated to repay the Troy, Mich. manufacturer of interior and exterior automotive trim's debt.

Itron up in trading

When Itron's new 7¾% senior subordinated notes due 2012 were freed for aftermarket dealing, a trader saw the new bonds as only "marginally higher" than their 99.265 issue price earlier in the session, at 99.5 bid, par offered.

However, another trader, queried a little later, after first dismissing the new issue as having "crapped out," took another look and decided that Itron had "done pretty well after all," with a closing level around 100.5 bid, 101.5 offered.

Also on the new-deal front, Whiting's new 7¼% senior subordinated notes due 2012, which had priced at a discount to par, were seen staying below that level, ending at 99.5 bid, 100.5 offered.

A trader saw Preem's new eurobonds offered at par, after having priced there earlier.

He said that LaBranche & Co. Inc.'s new 11% senior notes due 2012, which had priced at par Tuesday as part of a two-tranche offering, had firmed slightly to 100.5 bid, 100.75 offered, on "better buyers going out."

Adjusting to lower levels

Taking a broader view, the trader said that the new-issue market doesn't have the same sort of vigor as it had a month or so ago," although he allowed that "issues are trickling out, here and there."

Overall, he said, the junk secondary market was "pretty active, secondaries are starting to trade a little bit," although he said that everything was "starting to adjust to lower levels." He estimated that the market was "off a point or more in some spots" on Wednesday.

Market players, he said "were waiting for the Fed late last week and early this week."

He said many high yielders were "confused as to what higher rates would necessarily mean. You had hedge funds out there, going after the low-coupon, high dollar price paper, trying to short it."

There were, he continued, "a lot of forces acting on the market. It was pretty clear to everyone what was going on, but the reality of it was that things were just kind of drifting lower. We had some sellers of stuff, particularly those kind of lower-coupon, higher dollar price-type items."

Bottom line, he said was that the stuff was "down several points from week-ago levels - and it's just going to continue."

The cautious are still hugging the sidelines, waiting now for the April jobs-creation number to see whether the 308,000 new jobs reported created in March - the most in four years - was just a fluke.

The trader said that "the consensus of opinion is we're going to see another strong number. Then we'll see if the Fed is forced to act more quickly" to bring interest rates back up.

The trader said his sense was that the Fed "is waiting for the market to tighten for them."

Telewest drops

Another trader said that from his vantage point, "Telewest got mowed," the United Kingdom-based cable and broadband operator's 11% notes due 2007 falling to 59 bid, 61 offered, down from 62.5 bid, 63.5 offered.

In the lack of any other news out about the company, he cited an announcement that the company's acting CEO, Barry Elson, would return to the United States for the time being for medical reasons.

At another desk, the 11s were quoted at 60 bid, down 3½ points, while the company's 9 5/8% notes due 2006 were at 58 bid, off from a recent 62. Telewest's 9¼% notes due 2009 were heard to have dipped to 48.5 bid from 52.5 previously.

Telewest's bonds had recently been floating upward, pushed by speculation that rival U.K. cabler NTL Communications might buy its struggling competitor.

NTL unchanged

NTL meantime reported that its net loss arrowed sharply in the latest quarter to £65.4 million and it showed its first-ever operating profit of £2.2 million, quite a turnaround from its year-earlier operating loss of £54.1 million pounds. The numbers were aided by the company's addition of 61,000 residential customers during the quarter. NTL's 11.20% notes due 2007 were unchanged at 100.5 bid.

Also on the earnings front, there was little activity in the notes of Reliant Energy, which reported a slight narrowing in its quarterly loss; the Houston-based power generating company had a loss from continuing operations of $46 million, or 15 cents per share, somewhat narrower than the loss from continuing operations of $52 million, or 18 cents per share, for the same period of 2003.

Reliant little moved

Reliant also said it was pressing on with its efforts to cut costs and anticipated being able to trim another $200 million of expenses by the end of 2006, over and above previously announced cost-cutting goals. And it also said that it was committed to bringing its ratio of net debt to adjusted EBITDA down to 3x, from the current levels of over 5 x (see related story elsewhere in this issue).

Reliant's 12% notes due 2010 eased slightly to 122 bid from 122.5 earlier, while its 9¼% notes due 2010 were half a point better at 105, and its 9½% notes due 2013 were unchanged at 105.75 bid.

At another desk, however, the latter two notes were described as slightly lower.

Iasis gains on tender news

Iasis Healthcare Inc.'s 8½% notes due 2009 moved up to 108 bid from 106.75 previously, after the Franklin, Tenn.-based healthcare facilities operator said that it would tender for those notes as part of its coming acquisition by an investor group led by Texas Pacific Corp. (See Tenders and Redemptions elsewhere in this issue for full details). However, the company's 13% notes due 2009, also being tendered for, were up only slightly to 111.

Millennium Chemicals 9¼% notes due 2008 were seen a point lower at 108, possibly reacting to news that the Hunt Valley, Md.-based chemicals maker will delay filing its first-quarter earnings release until it determines the impact of a change in accounting rules. The company did not say when the report would be filed.

Back on the upside, a trader said that Advantica Restaurant's 11¼% notes were a point better, at 95.5 bid, 96.5 offered. Buyers, he said, "were looking for those."

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