Walter Energy takes focus as new issue launched; NII notes decline; Arch Coal, Connacher gain

By Stephanie N. Rotondo

Phoenix, March 19 - Walter Energy Inc. was a major focus of the distressed debt market on Wednesday, as the company announced a new deal.

The Birmingham, Ala.-based metallurgical coal company held an investor call early in the session to discuss its proposed $450 million two-part private deal that included a $100 million add-on to its 9½% notes due 2019 and a new offering of $350 million senior secured second-lien pay-in-kind toggle notes due 2020.

Price talk on the add-on was around 1011/2, which compared to 107 1/8 when the company first priced the deal on Sept. 19. As for the PIK notes, price talk was around 11% for cash pay, plus 100 basis points for the PIK rate.

Morgan Stanley & Co. LLC, Barclays, Citigroup Global Markets Inc., Credit Agricole CIB, Goldman Sachs & Co., J.P. Morgan Securities LLC and Scotia Capital (USA) Inc. are the joint bookrunners for the Rule 144A for life offerings.

BB&T Capital Markets, BBVA Securities Inc., BMO Securities, Comerica, Fifth Third Securities Inc., ING Financial Markets LLC, Mizuho Securities USA Inc., Natixis Securities North America Inc., Regions Securities and TD Securities (USA) LLC are the co-managers.

Proceeds will be used to repay a term loan and to increase liquidity.

In the company's existing bonds, a trader said the 9 7/8% notes due 2019 were "lower at the outset, but then they kind of recovered."

He said the issue went out 73½ bid, 74½ offered, which compared to 71 bid, 73 offered on Tuesday.

He also saw the 8½% notes due 2021 around 69, which he said was off a point.

Another trader deemed both the 9 7/8% notes and the 8½% notes lower at 69 and 73, respectively.

However, he noted that the 9½% notes inched up to around 103.

NII Holdings drifts in

NII Holdings Inc. debt was weaker on the day, though without any fresh news to act as a catalyst.

A trader called the 10% notes due 2016 down 1½ points to 443/4. Another trader pegged the issue around 45.

NII Holdings is a Reston, Va.-based provider of Nextel mobile phone services in Latin America.

Some gains seen

Elsewhere in the world of distressed debt, Arch Coal Inc.'s 7¼% notes due 2021 were seen rising slightly to 781/4.

Connacher Oil & Gas Corp.'s 8½% notes due 2019 were meantime up about half a point from levels seen earlier in the month at 78.

A trader said he rarely sees the name and that it was last trading around 771/2.

Also on the rise were Global Geophysical Services Inc.'s 10½% notes due 2017. The bonds increased nearly 3 points to 57½ on "heavy volume," according to a trader.

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