Standard Pacific, Hovnanian quickie deals price; Tower continues gains; Allied now flat

By Paul Deckelman and Paul A. Harris

New York, Aug. 1 - Standard Pacific Corp. and Hovnanian Enterprises Inc. were heard by high-yield syndicate sources to have each unlocked the doors to further funding Monday, as each homebuilder brought separate quickly appearing deals to market and got them successfully priced. Also pricing was a smallish scheduled calendar deal by power generator Caithness Coso. And Canadian forest products company Domtar Inc. was heard getting ready to bring a big issue of new paper to the market, possibly as early as Tuesday.

In the secondary sphere, Tower Automotive Inc. - whose bonds firmed smartly on Friday after the bankrupt Novi, Mich.-based automotive components supplier reported better cash numbers in its latest monthly financial data - continued life in the fast lane Monday, up another several points.

Bonds of another bankrupt automotive-related company, Allied Holdings Inc., were seen several point higher Monday, after the Decatur, Ga.-based automobile transport operator filed for protection from its junk bond holders and other creditors; however, those bonds were now being quoted trading flat, or without their accrued interest, essentially offsetting the gain in their nominal price, market participants said.

Overall sources were marking high yield off a little on Monday, on the back of weakness in Treasuries. One source said that, as has been the case for perhaps the last fortnight, there was a bid Monday for lower tier credits.

One high-yield syndicate official termed the Monday session as "the day of the homebuilders."

Three of the four tranches that priced came in drive-by action from Standard Pacific Corp., which priced two tranches on the tight end of price talk, and Hovnanian Enterprises Inc., which priced one tranche at talk.

Standard Pacific and Hovnanian represented $650 million of the $740 million total of junk that priced during the opening session of August 2005.

The homebuilders

Most of Monday's action came sans investor roadshows, as the above-mentioned homebuilders, each sporting four-B credit ratings, priced $650 million in three tranches.

Standard Pacific Corp., of Irvine, Calif., priced $350 million in a two-part senior notes (Ba2/BB) transaction.

The company priced two $175 million bullet tranches at par.

A tranche of 10-year notes priced with a yield of 7%, at the tight end of the 7% to 7 1/8% price talk.

Meanwhile a tranche of five-year notes priced with a yield of 6½%, at the tight end of the 6½% to 6 5/8% price talk.

Credit Suisse First Boston, Banc of America Securities and JP Morgan were joint bookrunners for the debt refinancing and general corporate purposes deal.

The third home-builder tranche came from Hovnanian Enterprises, which priced an upsized $300 million issue of 6¼% 10.5-year senior notes (Ba1/BB+) at 98.429 to yield 6.46%.

With its 213 basis points spread to Treasuries the Hovnanian notes came approximately on top of the Treasuries plus 215 basis points price talk. It was increased from $250 million.

Citigroup, Banc of America Securities, Credit Suisse First Boston and JP Morgan were the bookrunners for the debt refinancing and general corporate purposes deal from the Red Bank, N.J., company.

Elsewhere Monday, in a deal that had toured the investor roadshow route, Caithness Coso Funding Corp. - a special-purpose entity of Caithness Energy, LLC, a privately held company specializing in alternative forms of generating power - priced a $90 million issue of nine-year subordinated secured notes (Ba2//BB-) at par to yield 6.263%.

Citigroup ran the books.

The company also priced a $375 million issue of notes due June 15, 2019 (Baa3//BBB-) at par to yield 5.489%.

Tuesday drive-by from Domtar Inc.

Monday's quick-to-market activity figures to carry over into the Tuesday session with Montreal-based paper and packaging firm Domtar Inc. planning to price a $400 million offering of 10-year notes (Ba2/BB-).

The talk is Treasuries plus 275 basis points.

Citigroup and JP Morgan are the underwriters for the debt refinancing deal.

Three for the road

News also surfaced during the first session of August on three deals that will make the investor roadshow rounds.

Dollarama Group, a Montreal dollar store operator, will begin a roadshow Tuesday for its $200 million offering of seven-year senior subordinated notes (B3/B-), via Citigroup, JP Morgan and RBC Capital Markets.

Ahern Rentals Inc., of Las Vegas, will also start a roadshow on Tuesday for its $175 million offering of eight-year second priority senior secured notes (B3/B-), via CIBC World Markets.

And Mac-Gray Corp., a Cambridge, Mass., contractor that managers coin-operated laundries in apartment buildings and dormitories, will begin a roadshow Tuesday for its $125 million offering of 10-year senior notes, via JP Morgan.

All three of these companies plan to use the proceeds from their respective bond sales to repay debt.

Talk on Acco, Stanley-Martin

Finally, talk was heard Monday on two deals that were winding up their roadshows.

Acco World Corp. talked its $350 million offering of 10-year senior subordinated notes (B2/B) at 7½% to 7¾%. Pricing is expected on Tuesday via Citigroup and Goldman Sachs.

And Stanley-Martin Communities LLC talked its $125 million offering of 10-year senior subordinated notes (B3/B-) at 9¾% to 10%, with pricing expected on Wednesday.

Wachovia Securities has the books.

Tower higher again

Back in the secondary arena, the 12% notes due 2013 issued by R.J. Tower Corp. - the bond issuing arm of automotive frame-maker Tower Automotive - were "up a little," a market source said, on top of Friday's 10-point gain that boosted those bonds into the lower 80s.

The source saw the Tower notes having firmed to 84.25 bid from Friday's close at 81.5.

A trader at another desk saw Tower's 12s at 83.5 bid, 84.5 offered, up from 81 bid, 83 offered, and yet another pegged them at 83 bid, 85 offered.

Those Tower bonds had zoomed up into the 80s on Friday from prior levels in the low 70s, traders said, after Tower released its June operating results; June revenues rose to $188.01 million from $177.89 million in May, and cash and cash equivalents as of June 30 stood at $5.76 million, up from $2.86 million at the end of May.

That relatively good news apparently more than compensated for the operating loss for the month having widened to $25.22 million from May's $2.02 million deficit, and the net loss for June ballooning to $124.46 million, wider than the $17.73 million net loss in May.

A trader also noted the positive impact of numbers in the company's 10-K annual report, released this past Thursday night; he said that those numbers were better than expected, giving investors hope that the recovery values for the bonds are way undervalued and can only go up.

Equity investors were also enthused - Tower's over-the-counter-traded penny stock shares were up a nickel - 26.32% - to 24 cents a share. Volume of 2.3 million shares was nearly five times the norm.

Allied gains but trades flat

Allied Holdings was another automotive-linked name whose bonds were seen higher Monday, despite the company's weekend bankruptcy filing; a trader saw those 8 5/8% notes due 2007 as having pushed up to 56 bid, 58 offered from prior levels at 52.5 bid, 54.5 offered, while another one quoted the bonds at 57.5 bid, up from 55.

However, they noted that, as is customary following a bankruptcy filing or other event of default, the bonds were trading without several points of accrued interest - meaning basically that there was little real change in their overall value, with the bonds neither helped nor hurt by the widely expected Chapter 11 filing.

MedQuest jumps

Among other issues, a market source saw MedQuest Inc.'s 11 7/8% notes due 2012 quoted as high as 104 bid, well up from 98.5 previously; the Alpharetta, Ga.-based operator of medical diagnostic imaging centers began soliciting noteholder consent to waivers of reporting requirements. Successful completion of the consent solicitation would be an important step to transactions that would allow equity investors to take control of the company.

Playtex inches higher

On the earnings front, Playtex Products Inc. reported lower fiscal second-quarter sales and net earnings - although it said that adjusted net income was up about 45% from the year-ago quarter, helped by lower interest costs brought about by the company's aggressive debt-repayment campaign, which has seen $81.5 million of 8% notes due 2011 bought back since the start of the year, leaving the Westport, Conn.-based personal-care products maker more than four-fifths of the way toward its goal of $100 million of debt reduction by year's end (see related story elsewhere in this issue).

Those 8% notes were seen by a market participant to have firmed slightly, to 107.25 bid from 107, while the company's 9 3/8% notes due 2011 were also better, at 106.5 bid, up from 106.

Tekni-Plex gains

Tekni-Plex Inc.'s bonds were seen moving up Monday, although nobody saw any fresh news out about the Somerville, N.J.-based packaging company.

A trader saw its 10 7/8% notes due 2012 at 109, up a point, its 8¾% notes due 2013 at 90, up 1½ points, while its 12¾% notes due 2010 finished up about a point at 75 bid.

A market source at another desk saw those bonds finish up 1 1/8, 1¼ and 1½ points, at 109.5 bid, 90.5 and 74.5, respectively.

Visteon little changed

Traders saw little real reaction to Visteon Corp.'s announcement that the Van Buren Township, Mich.-based automotive components supplier - a former Ford Motor Co. unit - does not expect to be able to file its second-quarter financial results by the Aug. 9 deadline, due to accounting errors it has discovered.

Visteon's 8 ¼% notes due 2010 were steady at 96.5 bid, although a source did see its 7% notes due 2014 a point down at 87.5, though in very quiet dealings.

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