Goodyear, Ahold stronger on financing news; Hollinger prices upsized deal

By Paul Deckelman and Paul A. Harris

New York, March 5 - Goodyear Tire & Rubber Co. and Royal Ahold NV bonds were quoted firmer on Wednesday, after both companies reported some positive news on the financing front. The troubled Fleming Companies Inc. - whose bonds had slid on Tuesday as the Dallas-based grocery wholesaler announced the ouster of chairman and chief executive officer Mark Hansen - stabilized at lower levels.

In the primary market, two publishing names were putting out news, as newspaper owner Hollinger Inc. priced an upsized $120 million issue of seven-year notes, while men's magazine publisher Playboy unveiled a $110 million deal, which is expected to price in Thursday's session.

Goodyear said that it had secured a commitment from JPMorgan and Citigroup to underwrite a new $1.3 billion asset-based credit facility. The facility would not start until existing loans are amended and would extend into 2006.

Of perhaps even more immediate importance to the troubled Akron, Ohio-based tire manufacturing giant, its lenders extended until April 4 a waiver of loan requirements that it make a $500 million pension payment. That waiver had been scheduled to expire this Friday. The company said that It was extended to give Goodyear time to restructure and extend some loan agreements into 2005.

Both pieces of news are good for Goodyear, and the bonds reflected that, with the company's 8 1/8% notes coming due later this year 99.75 bid/99.875 offered and its 8½% notes due 2007 at 80 bid/82 offered, both up around two points on the session.

A trader, acknowledging that Goodyear "got a little better," saw the company's 2006 notes likewise two points higher at 78 bid/79 offered, pegged its 2011 bonds at 73 bid/74 offered and its longest bonds, due 2028, at 55 bid/56 offered.

Goodyear's shares were up 29 cents (7.25%) to $4.29 on New York Stock Exchange volume of nearly three million shares, a little heavier than normal.

Meantime, Dutch supermarket operator Ahold, which also operates U.S. supermarket chains Giant, Bi-Lo and Stop & Shop, was heard to have pushed higher Wednesday as it announced that it had entered into a revolving credit facility with ABN AMRO, Goldman Sachs, ING, JP Morgan and Rabobank. The lenders agreed to provide a total of €3.1 billion to the giant retailer, which is still reeling from the recent disclosure of accounting irregularities at its U.S. Foodservice unit, and the resulting investigations in the U.S. and Europe.

"Ahold was stronger on the news," a trader said, pegging the company's 8¼% notes due 2010 at 82 bid/84 offered, up two points. He quoted its 6 7/8% notes due 2029 at 73 bid/75 offered, up from levels around 70 bid previously, while its 6 ¼% notes due 2009 were about three points better at 80 bid/82 offered.

Ahold's NYSE-traded shares, however, lost five cents to close at $3.58.

And while Ahold - whose bonds had taken a beating last week and on Tuesday - was bouncing, the trader said he saw Fleming's paper "status quo" at the lower levels to which it tumbled following Tuesday's news of Hansen's abrupt departure.

Fleming's 10 5/8% notes due subordinated 2007 continued to languish around 24 bid/26 offered, while its 10 1/8% senior notes due 2008 stayed around 54 bid/58 offered.

Elsewhere, the housing construction sector continues to roll along like, well, a bulldozer, market participants said, seemingly impervious to any obstacles. Last week, for instance, Washington reported that new homes sales in January dropped 15.1% to a annualized rate of 914,000 units - below the 1.05 million-unit rate that analysts were looking for and well below the 1.086 million-unit pace reported for December. January's pace was the lowest rate, in fact, since January, 2002. Then, on Tuesday, Federal Reserve Chairman Alan Greenspan told a bankers' conference that he expected both the rate of housing price increases and home loan borrowing to slow.

While the stocks of some of the housing companies showed some erosion on signs that the sector's healthy run-up in securities prices might be over, the bonds continued to hang in there at levels well above par.

Beazer Homes' 8 3/8% notes due 2012 hovered at 106 bid, while D.R. Horton's 10½% notes due 2011 were at 108.5 and Hovnanian Enterprises' 10½% notes due 2007 were positively stratospheric at 112. Bonds of such other issuers as Toll Brothers, Pulte Homes - the old Del Webb - Ryland and KB Homes all also remained bid in the 104-105 context.

And on Wednesday, Hovnanian said that its February new orders rose 13.3% to $284.4 million, bucking the recent trend of weakness in orders some of the companies had reported. Even though February was characterized by extremely cold weather in much of the nation and a roaring blizzard in the Northeast, the Red Bank, N.J. -based homebuilder said that orders were up 41%.

Meanwhile the pace of the primary market moderated somewhat on Wednesday as terms emerged on a slightly upsized $120 million eight-year deal from Hollinger Inc. And the investment banks unfolded a new quick-to-market offering of $110 million of seven-year notes from PEI Holdings, Inc., a financing subsidiary of Playboy Enterprises, Inc.

One sell-side source told Prospect News on Wednesday that the Playboy deal, like the rapidly marketed Overseas Shipholdings offering that priced during Tuesday's session, might signify a trend in the primary market, at least in the near term.

"It looks like there are a lot of small deals coming," this official advised Prospect News. "It doesn't look like there are any mega-deals in the works. I don't think you can get a mega-deal out the door as quickly as you can get a smaller deal to pop out, so that you can go with a drive-by.

"I think we'll see a lot of drive-bys taking advantage of the cash," the source added, making reference to the most recently reported $1.54 billion inflow to the high-yield mutual funds for the week that ended Feb. 26.

This official expressed a suspicion that has been common among several sources from the investment banks who have spoken with Prospect News during recent sessions: that high-yield investors are presently sitting on cash.

"It seems like there's money out there to be put to work, but the accounts don't want to chase a bubble," said the source.

This official also noted that a downward-trending equities market and the unfolding geopolitical events in eastern Asia and the Middle East seem to be registering a noticeable impact upon the pace of the primary market.

"Everybody wants a shorter roadshow now," the source commented. "People don't want to let things hang over the weekend."

During Wednesday's session in the primary market Hollinger Inc.'s upsized offering of $120 million 11 7/8% eight-year senior secured notes (B3/B) priced at 99.377 to yield 12%. It was announced at $110 million. The English-language newspaper publisher priced its new notes spot on to the 12% area price talk via Wachovia Securities.

One new deal surfaced on Wednesday. Playboy Enterprises, Inc. announced its PEI Holdings, Inc. financing subsidiary will bring $110 million of seven-year senior secured notes (B2/B). Price talk is for a yield in the 11% area on the quick-to-market Rule 144A deal which figures to price during Thursday's session, via Banc of America Securities.

Also on Wednesday price talk of 10¾%-11% emerged on Radnor Holdings Corp.'s $135 million of seven-year senior notes (B2/B-). The Pennsylvania-based packaging and insulation firm looks to price its Rule 144A offering on Thursday via Deutsche Bank Securities.

Finally on Wednesday La Quinta Corp. and La Quinta Properties, Inc. announced in a press release that they intend to sell new senior notes. The proceeds will be used to fund the tender for four of its existing issues of notes.

The release identified Lehman Brothers as the dealer manager of the tender, which has a premium, or early expiration date of March 13, 2003, and a scheduled expiration date of April 1, 2003 (see related story in this issue).

One informed source told Prospect News that the La Quinta transaction, like Peabody Energy's $500 million of senior notes to fund its tender offer (also via dealer manager Lehman Brothers), are expected to be late March business.

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