Reddy Ice add-on, Conexant deals price, Avis, tw telecom, Holly slate; Visteon surge subsides

By Paul Deckelman and Paul A. Harris

New York, March 3 - Reddy Ice Corp. made a surprise return visit to the high yield primary sector on Wednesday, pricing a $30 million add-on issue literally just days after having brought its original $270 million tranche of five-year first-lien senior secured notes to market. Ironically, that Friday deal had been downsized from its originally announced amount by that same $30 million figure.

Also coming to market during the session, and likewise without any fanfare beforehand, was Conexant Systems Inc., a Newport Beach, Cal.-based semiconductor company that priced a $175 million issue of five-year senior secured notes in a club-style placement with institutional investors and announced it only after the fact. The deal was part of a larger comprehensive refinancing plan the company announced, which also includes an equity offering and a tender for its convertible subordinated notes.

High yield syndicate sources meantime heard price talk on Pioneer Drilling Co.'s upcoming $250 million issue of eight-year notes; the San Antonio, Tex.-based contract oil driller's deal is expected to price after the books close Thursday.

The forward calendar continued to grow, with new deal announcements from Littleton, Colo.-based telecommunications operator tw telecom Inc., which plans to price a $430 million eight-year issue on Thursday afternoon; from Avis Budget Group, Inc., the Parsippany, N.J.-based car-rental giant, which was heard starting a short roadshow Thursday for a $400 million eight-year offering expected to price early next week; and from Dallas-based crude oil pipeline operator Holly Energy Partners, LP, doing a $150 million eight-year issue.

In the secondary market, traders were calling HCA Inc.'s huge new issue of 10-year secured notes a dud - or worse - in aftermarket dealings.

Visteon Corp.'s strong surge of the prior three sessions appeared to stall out, as its bonds gave back some of those robust gains.

Conexant prices club-style

In Wednesday's primary market Conexant Systems priced a $175 million issue of 11¼% five-year senior secured notes at 99.063 to yield 11½%.

Goldman Sachs & Co. led the Rule 144A with registration rights deal, which was rolled up club-style by one or two accounts, a market source told Prospect News.

Proceeds will be used to fund a tender for the company's 4% convertible subordinated notes due March 2026. Any excess proceeds will be used for general corporate purposes, including repurchasing in the open market or otherwise any remaining convertible subordinated notes that remain outstanding as of March 1, 2011.

Reddy Ice brings add-on

Also Reddy Ice priced a $30 million add-on to its 11¼% first lien senior secured notes due March 15, 2015 (B1/B-) at par, on Wednesday.

J.P. Morgan, Broadpoint Gleacher and Wells Fargo Securities were joint bookrunners for the quick to market deal.

On Feb. 26 the company priced the original issue, a downsized $270 million, which also priced at par.

That issue was reduced from $300 million.

Wednesday's add-on brings the issue up to the size which the company initially hoped to raise from the market.

Pioneer Drilling sets price talk

Pioneer Drilling set price talk for its $250 million offering of eight-year senior unsecured notes (B3//) at the 10½% area.

The books close at 1 p.m. ET Thursday. The notes are expected to price after that.

Bank of America Merrill Lynch, Goldman Sachs & Co. and Wells Fargo Securities are joint bookrunners for the debt refinancing.

tw telecom for Thursday

Meanwhile tw telecom plans to price a $430 million offering of eight-year senior notes on Thursday afternoon.

Credit Suisse and Wells Fargo Securities are joint bookrunners for the deal to fund a tender for the company's 9¼% senior notes due 2014.

Avis Budget plans $400 million

Further out along the timeline, Avis Budget Car Rental, LLC and Avis Budge Finance, Inc. will host an investor call on Thursday for a $400 million offering of eight-year senior notes.

A brief roadshow will also begin Thursday in New York, followed by stops in Boston on Friday, and in Los Angeles on Monday.

Pricing is set for early in the March 8 week.

Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank Securities, JP Morgan and Wells Fargo Securities are joint bookrunners for the debt refinancing and general corporate purposes deal.

Holly lines up $150 million

Finally, Holly Energy Partners, LP and Holly Energy Finance Corp. plan to sell $150 million of eight-year senior unsecured notes.

UBS Investment Bank is the left bookrunner. Bank of America Merrill Lynch and Goldman Sachs & Co. are joint bookrunners.

Proceeds will be used to refinance the company's outstanding senior secured revolver and to fund the acquisition of petroleum storage tanks.

Reddy Ice comes too late

Traders said that Reddy Ice's new $30 million add-on to its 11¼% first-lien senior secured notes due 2015 came to market too late for any kind of aftermarket dealings.

The Dallas-based packaged ice company's original $270 million tranche of those bonds - which like the add-on, also priced at par last Friday to yield 11¼% -- was seen by a trader earlier Wednesday staying at the 101½ bid, 102½ offered level to which it had risen during Monday's dealings and had then held on Tuesday.

The traders also saw no trace of Conexant Systems' new 11¼% senior secured notes due 2015, which were placed in the hands of institutional buyers club-style and which did not trade around.

"I didn't see squat in it," one declared.

HCA deal hardly healthy

Looking at Tuesday's biggest deal - Nashville-based hospital operator HCA Inc.'s upsized $1.4 billion offering of 7¼% senior secured notes due 2020 - traders said they were underwhelmed by its performance in the secondary market, with the new bonds seen staying around the 99 bid mark, just under the 99.095 level at which the mega-deal - increased from the originally announced $1 billion - had priced late Tuesday to yield 7 3/8%.

One trader went so far as to characterize the deal as "a pig." He said that "guys got full allocations, and it's trading slightly below issue."

Another, quoting the bonds at 99-991/4, had asked around in the market about the deal after it priced - and he said that some of what he heard in reply "I don't think would be proper to print."

"It sounds like everyone got stuffed."

He noted that with "everyone who put in an order getting a full allocation, even after they've bumped [up] the deal in size - where was the demand?"

He suggested that the company and the underwriters may have made a tactical blunder by upsizing the deal to $1.4 billion from the original $1 billion, since apparently, anyone who wanted the deal already got it. "You like to leave a little bit of pent-up demand to help support the deal" when it begins trading. Otherwise, he opined, "it can leave a bad taste" in the mouths of many market participants.

If HCA had kept the size of the deal at $1 billion, he theorized, "you would have had a nice pop on this" as anyone who didn't get a slice of it originally then having motivation to buy it in the secondary market. "I'm not saying you have to a four-point profit, but it's nice to have things trade up a little bit." This deal, on the other hand, "looks like it's just sitting right where it was issued. It hasn't moved at all."

Another trader, who also saw no movement in the bonds from the issue price, called HCA "a fine core holding," but on this deal, with "plenty of supply to go around" and a coupon of just mediocre attractiveness and desirability - "it's only a 7¼% coupon, not like 10% plus" - he saw no compelling reason for anyone to try to buy the deal in the secondary on Wednesday.

Solutia shows strength

But Tuesday's other deals were seen having firmed solidly in the secondary arena. A trader said that he was "surprised" he saw anything going on in Solutia Inc.'s new 7 7/8% notes due 2020, since it was, at $300 million, "such a small, little deal, not a huge liquid issue like [HCA] - but you're able to mark it higher."

The St. Louis-based chemical company's drive-by issue, which priced at 99½ to yield 7.948%, too late for any trading on Tuesday, had moved up by more than a point on Wednesday to go out at 100¾ bid, 101¼ offered.

Express excels in secondary

A trader saw Express LLC/Express Finance Corp.'s 8 3.4% notes due 2018 having risen 2 points on the session to 100½ bid, 100 7/8 offered. The Columbus, Ohio-based specialty retail apparel company's $250 million issue - upsized from the originally shopped $200 million - had priced on Tuesday afternoon at 98.599 to yield 9%.

Another trader, though, had not seen Express trade around.

Recent issues hang in there

Among other recently priced deals, a trader saw Oshkosh Corp.'s $250 million of 8¼% notes due 2017 trading around 102¾ bid, 103¼ offered - off a little from the 103-104 context at which those bonds had traded on Tuesday, but still well up from the par level at which the bonds had priced on Friday.

He meantime did not see any trading in the company's $250 million of 8½% notes due 2020.

Oshkosh, a maker of fire trucks and other special-access vehicles based in the eponymous Wisconsin city, had priced both halves of that that $500 million two-part deal on Friday at par, with both then moving up between 2 and 3 points in initial aftermarket dealings later that session, and then up further on Monday.

A trader saw ArvinMeritor Inc.'s 10 5/8% notes due 2018 holding steady at 101½ bid, 102 offered, around the same level to which the bonds had firmed on Tuesday.

The Troy, Mich.-based automotive components company had priced the $250 million issue at 98.024 on Friday to yield 11%, and they had moved up above the par level in initial aftermarket dealings, and then to around 101 on Monday and 102½ on Tuesday.

A trader saw Niska Gas Storage's 8 7/8% notes due 2018 at 102 1/8 bid 102 5/8 offered, little changed from Tuesday's levels.

The Calgary, Alta.-based natural gas storage company's bonds -- $800 million of which had priced at par on Friday - had moved up to the 102ish area on Monday.

Market indicators remain firm

Among bonds not connected with the new-deal market, a trader saw the CDX Series 13 index up by ¼ point on Wednesday to end at 97 7/8 bid, 98 1/8 offered, after having lost 1/8 point on Tuesday.

The KDP High Yield Daily Index meanwhile rose by 14 basis points on Wednesday to finish at 71.02, after having pushed upward by 15 bps on Tuesday. Its yield narrowed by 6 bps on Wednesday at 8.19%, after having tightened by 7 bps on Tuesday.

Advancing issues led decliners for a fourth day in a row on Wednesday, holding a better-than eight-to-five edge for a third straight day.

Traders noted that the annual J.P. Morgan high yield and leveraged finance conference in Miami which had attracted a big crowd of buyside players and had thus blunted Junkbondland activity on Monday and Tuesday, was over, with many participants back at their usual stations on Wednesday. However, overall activity, measured by dollar-volume levels, was off by some 10% versus Tuesday's pace.

A trader characterized Wednesday's session as "a real snoozer."

Freeport trades fiercely

But for a second consecutive session, Freeport-McMoRan Copper & Gold Inc.'s bonds were trading around at red-hot levels, helped in part by Tuesday's announcement that Phoenix-based metals mining company will redeem $1 billion of floating-rate notes due 2015 on April 1, as well as by recent strength in metals prices.

Copper, a trader declared, "is on a roll," helping to push the price of Freeport's bonds upward. He saw its 8 3/8% notes due 2017 as perhaps the most active junk issue on the day, up another point and change Wednesday to above the 111 mark, on a whopping $73 million of turnover, while its 8¼% notes due 2015 also gained, to 109, on volume of $16 million.

The trader did acknowledge that some of the heavy volume, particularly in the 2017s, may have come from high-grade accounts dabbling in the bonds, since the issue is rated Ba2/BBB-/BBB-.

Besides the strength in metals prices - gold as well as copper - the bonds were seen having gotten a boost on the news that the company plans a bond redemption on April 1 for its $1 billion of senior floating-rate notes due 2015, which will be redeemed at a price of 101. Freeport expects to save some $58 million per year in interest costs over the remaining life of the notes. The floaters meanwhile were trading right around the anticipated 101 bid takeout price, pretty much unchanged on the day.

Visteon backs off from gains

Visteon Corp. "gave back some" of the big gains which its bonds had notched over the previous three sessions, a trader said, quoting both its 8¼% notes coming due on Aug. 1 and its 7% notes due 2014 around 85½ bid, 86 ½ offered, which he said was down four points from the recent highs. "They went into a little stall," he added.

Another trader, seeing the 7s at 85¾ bid, 86 offered, down from around 90 on Tuesday, noted that on Monday, the bonds had traded at 80½ bid, 81 offered, "so this thing has been volatile."

Before Wednesday's retreat, Visteon's bonds had risen nearly forty points in three days - starting from the lower 50s at the opening on Friday to around 90 going home on Tuesday - in the wake of solid quarterly numbers, as well as more favorable market sentiment about the domestic automobile industry on which the company depends so heavily, in the wake of a favorable weekend piece in Barron's magazine about General Motors Corp. and the strong year-over-year February sales gains reported on Tuesday by GM and the even stronger gains posted by Visteon's former corporate parent and still-largest single customer, Ford Motor Co.

Visteon late Thursday reported fourth-quarter sales of $2.03 billion, up from $1.65 billion the year before. Net income came to $276 million, or $2.12 per share - an improvement over the net loss of $346 million, or $2.67 per share, for the fourth quarter of 2008.

For the year, Visteon - spun off from Ford a decade ago - reported its first-ever yearly profit, with net income coming to $128 million, or 98 cents per share, on sales of $6.68 billion. In 2008, the bankrupt Van Buren Township, Mich.-based auto components company reported a full-year loss of $681 million, or $5.26 per share, on sales of $9.54 billion.

Elsewhere in the autosphere, a trader said that Ford's 7.45% bonds due 2031 were ending around a 90-90½ area, which he called up a point on the day, although another trader called them unchanged at 89½ bid, 90½ offered.

A trader said that Ford domestic arch-rival GM's benchmark 8 3/8% bonds due 2033 were unchanged at 31½ bid, 32½ offered.

Another trader called them "pretty much unchanged" around a 31-32 context on "not a lot of volume"

A trader said former GM auto loan financing arm GMAC Inc.'s "old" 8% bonds due 2031 that were not tendered in the company's big debt exchange offer last year were unchanged at 92 bid, 93 offered, while the "new" 8% bonds issued to holders who did tender were around 941/2, also unchanged.

NewPage surges on tariff decision

NewPage Corp.'s debt was one of the day's most actively traded names, according to traders, spurred by a recent Department of Commerce decision to impose tariffs on coated paper imported from China and Indonesia.

A trader said the credit had seen "a lot of activity in the last two days," with the bonds gaining a point in the midweek session. He quoted the 10% note due 2012 at 61 bid, 62 offered and the 11 3/8% notes due 2014 at 97 bid, 98 offered.

Another market player saw about $75 million to $80 million of the 11 3/8% notes changing hands around 971/2. About $25 million of the 10% notes traded at 60 bid, 61 offered.

At another desk, yet another source pegged the 10% notes around 601/2, which he deemed ½ point better.

Miamisburg, Ohio-based NewPage - along with Appleton Coated Paper LLC and Sappi Fine Paper North America and the United Steelworkers union - commended the action taken by the Commerce Department, as it will "offset the unfair advantage provided by subsidization," the group said in a joint press release.

According to a Commerce report, "Chinese coated paper was subsidized by an average rate of 8.38%."

"We have a world-class work force; highly competitive, well-managed assets; and sound environmental practices from proper forest management to efficient use of energy and raw materials to low-cost transportation and logistics," remarked Tom Curley, president and chief executive officer, in the release. "Given a balanced score card and level playing field, we believe NewPage can compete with anyone in the global marketplace."

Appleton's recently priced 10½% senior secured notes due 2015 meantime were seen by a trader having gained about 2 points to the 95 level - still down from the 98.035 level at which the Appleton, Wis.-based coated-paper company's $305 million deal had priced on Jan. 29, to yield 11% , but impressively up from the lows around 89-90 hit during February trading.

Little movement in Rouse

A trader said that Rouse Co.'s 5 3/8% notes due 2013 were up by ½ point around 108-109, while its other issues - the 7.230% notes due 2012 and the 8% notes that were to have come due last April 30 - were unchanged, at 114 bid and 110 bid, respectively.

He said that the bonds seemed "a little better in the morning," but added that "I don't think there was much volume in the name - I didn't really see much activity in them, nothing to move them," even as the lawyers for Rouse corporate parent General Growth Properties Inc. and a would-be buyer of the bankrupt Chicago-based shopping mall owner, Simon Property Group Inc., were sparring on Wednesday at the U.S. Bankruptcy Court in Manhattan, where a judge heard General Growth's request for a six-month extension of its exclusive right to file a reorganization plan and instead gave it four months. That was a setback for Simon, which has made a $10 billion offer to buy General Growth out of bankruptcy, and for General Growth's own unsecured creditors committee, which has endorsed the Simon proposal.

-Stephanie N. Rotondo contributed to this story

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