Ineos prices downsized two-parter, Chesapeake prices also; Adelphia moves up

By Paul Deckelman and Paul A. Harris

New York, Jan. 31 - Ineos Group Holdings plc successfully priced a downsized €2.355 billion two-part offering on Tuesday, high yield syndicate sources said. It was one of several pricings, including Chesapeake Energy Corp.'s add-on offering to its 6½% notes due 2017, and Copano Energy LLC's 10-year note offering. Price talk meantime emerged on Spanish broadband operator ONO Finance II plc's upcoming eight-year note offering.

In the secondary market, Adelphia Communications Corp.'s bonds were seen having firmed smartly, as the Federal Trade Commission gave its blessing to the proposed $17.6 billion acquisition of the bankrupt Greenwood Village, Colo.-based cable operator by industry giants TimeWarner Inc. and Comcast Corp.

Things meanwhile were seen pretty quiet in the automotive area, which has recently been humming on news developments involving such companies as General Motors Corp., Ford Motor Co., Tower Automotive Inc. and Dana Corp.

A buy-side source told Prospect News that the broad junk market advanced as much as a quarter point to half a point Tuesday morning ahead of the Federal Reserve's Federal Open Market Committee meeting, which saw the Fed hike short-term interest rates by another quarter of a point.

After the FOMC meeting, the buy-sider added, the market slipped a little but still seemed to end the session with a positive tone.

Another source merely marked the market unchanged on the day.

The primary market cleared a substantial amount of business off the forward calendar as three dollar-denominated tranches priced generating $1.470 billion of proceeds.

Both Ineos tranches oversubscribed

However Tuesday's largest tranche was the euro-denominated issue from Ineos Group Holdings plc's downsized €2.355 billion equivalent two-part 10-year senior notes (B2) transaction.

The Lyndhurst, U.K.-based chemical company's acquisition financing included a €1.750 billion euro-denominated issue that price at par to yield 7 7/8%, at the tight end of the 8% area price talk.

Ineos also priced a $750 million dollar-denominated issue at par to yield 8½%, on top of price talk.

Merrill Lynch & Co., Barclays Capital and Morgan Stanley were joint bookrunners.

The combined issuance was decreased from €3.105 billion equivalent, with €750 million shifted to the company's bank facility. A proposed tranche of floating-rate notes was abandoned.

A source close to the deal said that Ineos's €1.750 billion tranche is the largest euro-denominated tranche ever.

The source added that both parts of the offering saw a great deal of demand.

Chesapeake prices $500 million add-on

Elsewhere Chesapeake Energy Corp. priced a $500 million add-on to its 6½% senior notes due Aug. 15, 2017 (Ba2/BB) at 99.00, resulting in a yield of 6 5/8%.

The dollar price came on top of the 99.00 area price talk.

Banc of America Securities, Citigroup, Lehman Brothers, UBS Investment Bank and Wachovia Securities were joint bookrunners for the debt refinancing deal.

The original $500 million issue priced at 98.977 on Aug. 11, 2005 to yield 6 5/8%. On the following day the company priced a $100 million add-on at 99.50 to yield 6.561%. The total issue size following the latest add-on is $1.1 billion.

A buy-side source said that there were $1 billion of orders for the $500 million deal.

Copano Energy comes tight to talk

Nor was Chesapeake the only name from the energy sector to price bonds in the Tuesday session.

Copano Energy LLC priced a $225 million issue of 10-year senior notes (B2/B) at par to yield 8 1/8%, at the tight end of the 8¼% area price talk.

Banc of America Securities had the books for the deal which the Houston-based midstream natural gas company brought in order to refinance debt related to an acquisition.

January issuance tops $16 billion

Tallying Tuesday's trio of dollar-denominated tranches, $1.47 billion of proceeds, January's issuance tops $16 billion in 31 dollar-denominated tranches, according to Prospect News data.

In terms of dollar amount the 2006 primary market outpaced January 2005 issuance, $12.4 billion, by 30%. Meanwhile total volume for the month was just ahead of the $15.33 billion in January 2004.

That made it the biggest month for new deals since November 2004's $16.19 billion.

However owing to the mega-deals seen thus far in 2006, especially from NRG Energy, EchoStar DBS Corp. and R.H. Donnelley Corp., the number of tranches priced in January 2006, 31 tranches, lags January 2005's 41 tranches.

January ending with positive tone?

As the bits were swept up Tuesday on sell-side official asserted that "with all the paper shoved out the door" in January the market "feels pretty good" and has a "positive tone."

"It looks like the calendar is cleaning up," the source added.

Meanwhile a buy-side source said that the market seems to have had little difficulty absorbing January's $16 billion of new issue supply.

"There is very good liquidity in the market, although I don't get the feeling that a lot of accounts are doing a lot right now," the source added.

Having said it, this buy-sider said that the present new issue market is "not leaving very many places to hide.

"We're not buying a lot of these one-off small credits," the source explained, adding that there is not a lot of liquidity in the smaller deals, which could render those issues more vulnerable in a downturn.

"We're more interested in sticking with the names we know instead of reaching for something because we have cash."

Copano higher in trading

When the new Copano Energy 8 1/8% senior notes due 2016 were freed for trading, a trader saw the Houston-based natural gas company's new bonds jump to 102 bid, 102.25 offered, well up from their par issue price earlier in the session.

There was more restrained appreciation in the new bonds of another energy producer - Chesapeake Energy's just-priced 6½% senior notes due 2017. The Oklahoma City-based independent oil and gas producer's notes had priced at 99 bid, and were seen at 99.625 bid, 99.875 offered.

"It was a busy market today [Tuesday], with a lot of issues," a trader said in looking over the proliferation of new bonds moving over into aftermarket trading.

Easily the biggest of these was Ineos Group Holdings' two-part offering, which was downsized from its original €3.105 billion equivalent magnitude to a still-considerable €2.355 billion equivalent issue of dollar- and euro-denominated bonds. The trader saw the dollar-denominated 8½% notes due 2016 straddling their par issue price at 99.875 bid, 100.125 offered. And he saw the company's new euro-denominated 7 7/8% notes due 2016, which also priced at par, at 99.625 bid, 100.125 offered.

Among other recently priced issues, Sanmina-SCI Corp.'s new 8 1/8% notes due 2016, which priced at par on Monday, were seen at 101.375 bid, 101.625 offered.

A trader said he had seen no aftermarket activity in the new 11½% second lien senior bonds due 2014 of Indalex Aluminum Solutions, which priced on Monday at 98.217.

Adelphia gains

Back among the established issues, traders saw Adelphia's bonds - which have recently been on the rise - pushing up still further. A trader saw the company's 10¼% notes due 2006 about a point better on the day at 64 bid, 66 offered, while its 10¼% notes due 2011 were also up a point at 68 bid, 70 offered.

Another trader saw those 2011 bonds at 69.5 bid, 70.5 offered, up two points on the session and three points over the past two sessions.

At another desk, a trader pegged the company's 9 7/8% notes due 2007 at 67 bid, up from prior levels in the lower 60s. However, another market source only saw those bonds up three points on the day at 67.

Adelphia's bonds were seen benefiting from Tuesday's decision by federal antitrust regulators to allow the huge acquisition deal to go through. The Federal Trade Commission closed its investigation into the deal without taking any action, following a seven-month probe of the planned transaction.

Adelphia which slid into bankruptcy in 2002 amid allegations that the company's founder, John J. Rigas, and members of his family who occupied senior management positions there, had diverted millions of dollars of company money into their own investments, leading to the ouster of those family members from their positions and their later prosecution.

Last spring, Adelphia accepted the $17.6 billion offer made by TimeWarner and Comcast, the nation's second- and first-largest cablers, respectively. Under the terms of the deal, Adelphia's far-flung network of local cable systems will be divided up between the two giants, with TimeWarner getting the crown jewels of the acquisition, Adelphia's Los Angeles-area cable systems. The FTC ruled that the proposed transaction is not likely to likely to "substantially lessen competition in any geographic region in the United States."

The purchase of Adelphia must still be approved by the Federal Communications Commission.

Prior to the FTC approval, Adelphia's bonds had already been moving up slowly but surely; the 9 7/8% notes due 2007, for instance, had been down around the 59 level on Jan. 10, moving up from there in small increments.

The bonds got a boost last week on market speculation that Adelphia was in talks with the holders of its Arahova Communications Corp. (formerly Century Communications Corp.) bonds aimed at settling outstanding issues between them. That followed a federal bankruptcy judge's refusal to appoint a trustee to oversee disputes, as the Arahova bondholders had requested; the judge said that might put the whole merger into possible jeopardy.

Station steady despite earnings

Elsewhere, "today stunk," a trader said, in lamenting both the relatively low level of activity and the lack of any real price moves.

For instance, he noted that even though Station Casinos Inc. was out with pretty good numbers - the Las Vegas-based local gaming operator reported fourth-quarter profits up nearly 10% year-over year, to $41.7 million (61 cents per share) from $38 million (55 cents per share) a year earlier, and its results ex-items blew through analysts' forecasts - the bonds were "status quo, trading like mud."

He saw the company's 6½% notes and 6 7/8% notes "in the same range since the ball dropped [on New Year's] until today, so not much activity there. He saw the latter issue hanging in at 102.25 bid, 103.25 offered, with "really no movement."

Duane Reade higher

He did note some recent interest in "the higher beta [retailing] names, CCC type paper." One name in that sector in which "there seems to be some buyers out there" is New York-based drugstore operator Duane Reade. He said that its 9¾% notes, which were "left to die last year in the 60s," moved up to 72.5 bid, 73.5 offered, "so there's been some buyside interest there, people seem to like that name.

"Every couple of days, they move a quarter point, a half a point," her continued. "They've kind of petered out here in a 72-74 range, but they've had a nice little move since the beginning of the year."

GM little changed

Apart from that, though, he said there was not that much going on. General Motors Corp. bonds - which had firmed solidly on Friday and again on Monday, first on rumors of progress in its efforts to sell a 51% stake in its General Motors Acceptance Corp. financial unit, and then on weekend news reports identifying two potential bidder groups interested - were not much moved on the session Tuesday. The trader saw them at 73.5 bid, 74.5 offered, up perhaps half a point on the day, while the GMAC 8% notes due 2031 were unchanged on the session at 101 bid, 102 offered.

Other automotive names were seen unchanged to perhaps a quarter-point higher, with a trader at another shop pronouncing the GM and GMAC bonds unchanged on the day and Ford Motor Co.'s 7.45% notes due 2031 up ¼ point at 73.25 bid, 74.25 offered. He saw Ford's credit division's 7% notes due 2013 also a quarter-point better at 90.25 bid, 91.25 offered.

Former Ford parts subsidiary Visteon Corp.'s 8¼% notes due 2010 were unchanged at 84 bid, 84.75 offered, he said, while ex-GM subsidiary Delphi Corp.'s 6.55% notes due 2006 were at 56.75 bid, 57.75 offered, and its 7 1/8% notes due 2029 were at 57.5 bid, 58.5 offered, both unchanged on the day.

Rural Cellular higher

Outside of the automotive area, a trader saw Rural Cellular Corp.'s bonds up two points on the session, but saw no fresh news out about the Alexandria, Minn.-based provider of cellphone service to small- and mid-sized markets that might explain such a move. The trader said that Rural Cellular and Adelphia seemed to be the only names moving about, as "everybody else was quiet."

Also quiet, at least from a bond perspective, was Elan Corp., even though the Irish pharmaceuticals company announced its intentions of taking out about $250 million of existing convertible debt this year.

Elan's 7¼% notes were seen steady at 98 bid, 99 offered, while its 7¾% notes were at 94.5 bid, 95.5 offered, a trader said, "pretty much in the same context where they had already been trading."

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