Swift two-part deal prices; American Media, Pogo up on takeover buzz; funds see $209 million inflow

By Paul Deckelman and Paul A. Harris

New York, May 3 - Swift Transportation Co. Inc. was heard by high yield primary market sources to have priced its two-part offering of second priority senior secured notes on Thursday. The bonds priced too late in the session for any kind of aftermarket activity.

But the preponderance of primary news flowed from Europe.

Ford Motor Co. sold a €1 billion offering of six-year bonds, brought to market by its British financing subsidiary, FCE Bank plc.

Joining the forward calendar, if only for a short while, was German issuer Cognis GmbH's billion-euro-plus financing, including a new issue of floating-rate notes, which is expected to price on Friday.

And New World Resources is slated to bring an eight-year offering of euro-denominated senior notes to market soon.

In the secondary market, bonds of American Media Inc. pushed upward as the Florida-based supermarket tabloid publisher was the focus of merger and acquisition speculation. So was Houston-based independent energy operator Pogo Producing Co., whose bonds were also higher.

A trader described Spectrum Brands Inc.'s bonds as "another big mover," and cited market rumors the Atlanta-based consumer products company could sell its battery unit.

On the earnings front, General Motors Corp. was in retreat after its profit dropped by 90%.

A high yield syndicate official characterized the Thursday session as a "sideways" one, and added that credit default swaps were "modestly wider."

Funds see another inflow

And as activity was trailing off for the day, market participants familiar with the weekly high yield mutual fund flow numbers compiled by AMG Data Services of Arcata, Calif., told Prospect News that in the week ended Wednesday $209.4 million came into those weekly-reporting funds than left them.

That followed the $200,000 inflow seen in the previous week, ended April 25.

It was the third straight inflow and the fifth in the last six weeks, as the fund-flow numbers seem to be regaining the momentum they showed at the beginning of the year, when an aggregate total of $862 million had come into the funds in the first two months, according to a Prospect News analysis of the AMG figures. That stretch run was then interrupted by a choppy four-week period in March, characterized by alternating weeks of outflows and inflows, none larger than $25 million. Over the past six weeks, though, with five inflows seen, the funds have had a net total infusion during that period of $402.8 million, according to the Prospect News analysis.

On a year-to-date basis, inflows have now been seen in fully 14 weeks out of the 18 since the start of the year.

The latest figures extends to $1.227 billion the total of year-to-date inflows to the funds that report to AMG on a weekly basis.

Meanwhile, funds that report on a monthly basis saw $354.4 million of inflows for the most recent period, the source said. That inflow extends year-to-date inflows among the monthly reporting funds to $3.408 billion.

Hence year-to-date aggregate flows, which tally both the weekly and monthly reporting funds, stood at $4.636 billion to Wednesday.

The flow of money into and out of the junk bond funds is seen as a generally reliable market barometer of overall high yield market liquidity trends - although they only comprise 10% to 15% of the total monies floating around the high yield universe, far less than they used to - because there is no reporting mechanism to track the movements of other, larger sources of junk market cash, such as insurance companies, pension funds and, most recently, hedge funds.

The figures exclude distributions.

Swift prices $835 million

In dollar-denominated action, Saint Acquisition Corp., which will be merged with Swift Transportation Co., Inc., priced $835 million of second-priority senior secured notes (B-) in two tranches.

The Phoenix-based freight company priced a $240 million tranche of eight-year floating-rate notes at Libor plus 775 basis points, on top of price talk that had been increased from earlier talk of Libor plus 650 basis points.

Meanwhile the company priced a $595 million tranche of 10-year fixed-rate notes at par to yield 12½%, on top of price talk that had been increased from earlier talk of a yield in the 11½% area.

Morgan Stanley was the left bookrunner for the acquisition deal. Wachovia Securities and JP Morgan were joint bookrunners.

Earlier Thursday, as news was circulating through the market that talk had widened significantly on both tranches of the Swift deal, a source from a hedge fund commented that it seemed like a tough deal, with the buy-side in control.

"That said, it probably gets priced cheap, and is a blowout, with the bonds in very few hands," the source added in an email message.

In the wake of the terms circulating, a source close to the transaction would only comment that despite price talk being significantly hiked the deal had gone well.

FCE Bank drives through

FCE Bank, the U.K.-based financing arm of Ford Motor Co., priced €1 billion of 7 1/8% six-year bonds (B1/B+/BB-) at a 287 basis points spread to mid-swaps on Thursday.

Price talk on the quick-to-market issue was lower mid-swaps plus 287 to 290 basis points from 295 basis points.

The bonds came at a dollar price of 99.386.

Barclays Capital, Deutsche Bank and Royal Bank of Scotland plc managed the deal.

Cognis €1.65 billion for Friday

German specialty chemical manufacturer Cognis plans to price €1.65 billion equivalent of six-year senior secured floating-rate notes and loans (B1/B) on Friday.

The blend of issuance will come in both dollars and euros.

Both the loans and the notes come with guidance at 200 basis points spreads to Euribor or Libor.

Goldman Sachs & Co. and Morgan Stanley are leading the debt refinancing deal.

Europcar sets price talk

Also on tap for Friday is Europcar Group.

The Paris-based car rental arm of Volkswagen has set price talk for its €255 million two-part add-on transaction.

The company talked a €130 million add-on to its three-month Euribor plus 350 basis points senior subordinated secured floating-rate notes due May 15, 2013 (B1/B+) at 102.0 to 102.25, and a €125 million add-on to its 8 1/8% senior subordinated unsecured fixed-rate notes due May 15, 2014 (B2/B) at 106.125 to 106.375.

Deutsche Bank is leading the debt refinancing deal.

Roadshow starts

New World Resources BV will start a roadshow on Monday for its €300 million offering of eight-year senior notes (B3/B) via Morgan Stanley, Barclays Capital and Citigroup.

The Netherlands-based holding company whose activities include coal mining and coke production in the Czech Republic will use the proceeds to repay debt and fund capital expenditures.

Elsewhere Germany-based SGL Carbon AG will start a roadshow next week for its €200 million offering of senior floating-rate corporate bonds via Morgan Stanley and Deutsche Bank.

Demand for European paper

One high yield syndicate official involved in some of the European business detailed above said that euro-denominated issuance is playing to strong demand from a European buy-side eager to put cash to work.

For evidence the source pointed to the Petroplus Finance Ltd., $1.20 billion two-part senior notes deal that priced on April 25, which, the official said, was heard to be 10-times oversubscribed.

American Media gets merger buzz boost

Back in the secondary market, American Media - publisher of the National Enquirer, Star and other supermarket tabloids and special-interest magazines - was "up pretty substantially," a trader said, citing buyout speculation reported in a New York newspaper.

He saw the company's 8 7/8% notes due 2011 push up to 94.25 bid, 95.25 offered from 90.5 bid, 91.5 offered previously, while its 10¼% notes due 2009 rose to 97 bid, 98 offered from 95 bid, 96 offered.

Another trader who also saw those 101/4s at 97 bid, 98 offered, marked them up 3 points on the day, while yet another source saw the bonds up 2½ points on the session at 98.

The bonds got a boost after The New York Post reported that California supermarket billionaire Ron Burkle - recently thwarted in his pursuit of Tribune Co. - is considering making a bid to buy American Media. The report, attributing its information to sources within the publishing industry, said that Burkle was considering a transaction that would merge the tabloid publisher with his Source Interlink Cos., the country's Number One magazine distributor.

Both companies declined comment. No price tag for such a deal has yet surfaced.

Pogo pops up

Also on the M&A front, a trader said that oil and gas exploration and production operator Pogo Producing was "up quite a bit" on speculation that all or part of the company might be for sale. He noted that its New York Stock Exchange-traded shares jumped $2.55 (5.26%) to $51.03 on volume of 3.1 million, triple the norm, and said that "the bonds reacted later [in the day], but reacted favorably" to the buyout buzz, up a point to 11/2.

He saw Pogo's 6 5/8% notes due 2015 move up to 99.75 bid from 98 bid, 99.5 offered, while its 6 7/8% notes due 2017 were ¾ point better at 99.

Pogo essentially put itself on the auction block in February, saying it would consider a sale, and last month announced that it will sell Gulf of Mexico assets for $419.5 million, sold onshore Gulf assets in another transaction, and is in talks to divest other fields.

Industry watchers say the company could also sell all or part of its Canadian assets.

Spectrum speculation lifts bonds

Speculation that Spectrum Brands could sell its well-known Rayovac battery unit was cited by a trader as the likely driver behind a rise in that company's bonds, which, ironically, had been issued by Rayovac before the company became Spectrum several years ago.

He saw its 11¼% notes due 2013 jump to 94 bid, 95 offered, up 2 points, and its 7 3/8% notes due 2015 firm to 80 bid, 81 offered, up a point.

GM in reverse as earnings fall

A 90% slide in earnings from year-ago levels pushed General Motors' bonds off the fast track and into the breakdown lane.

A market source saw its benchmark 8 3/8% notes due 2033 down nearly ½ point on the day at 91, while its 8¼% notes due 2023 were off two points at 89.5, both issues among the most actively traded of the session.

At another desk, GM's 7 1/8% notes due 2013 were seen off ¼ point at 92.5.

GM earned $62 million (11 cents a share) in the first quarter, its second straight quarterly profit - but that was just a tenth of the $602 million ($1.06 per share) year-ago earnings.

The carmaker blamed the loss on weakness in the mortgage lending sector, which hurt the results for 49% owned GMAC LLC, which does business in that area as well as in its core automotive finance operations.

However, GM also reported an $85 million loss from its basic North American auto operations.

Cablevision comeback

Cablevision Systems reported its first-quarter net loss narrowed to $26.3 million (9 cents a share), down from its year-ago deficit of $58 million (20 cents a share). Revenue meantime rose 12.5% to $1.59 billion.

But while the loss was less than half of the year-earlier red ink, it was still a bit more than the 7 cents a share that Wall Street had been expecting.

The company said that it added 12,000 basic video subscribers during the quarter - half of the roughly 25,000 which analysts had been projecting, and less than one-third of the 38,722 subscriber adds seen in the year-ago quarter.

The results come just a day after the Bethpage, N.Y.-based cable television system operator and sports team and arena owner announced that it had agreed to a $10.6 billion buyout by its founding Dolan family - a deal that will be worth an estimated $22 billion, including assumed debt. The buyout will be funded with more than $15 billion of new financing. News of the buyout deal, and the increased borrowings, caused Cablevision's debt, including that of its CSC Holdings Inc. subsidiary, to move lower in Wednesday's dealings.

However, on Thursday, its 8% notes due 2012 - which had fallen by some measures 2 points and by one measure at least 4 points on Wednesday, to the 99 level, moved back up Thursday to end at 101.

However, another source said that the bonds had actually begun rebounding late Wednesday, closing at around par, and merely moved up modestly on Thursday.

MagnaChip bond keep rising

A trader saw MagnaChip International Inc.'s bonds continuing their rise of the past few sessions, although he did not know why they were lately doing so well, with the floating-rate notes moving up to 89.75 bid, 90.75 offered from 89 bid, 90 offered previously, its 6 7/8% notes due 2011 rising to 86.75 bid, 87.75 offered from 84 bid, 86 offered, and its 8% notes due 2011 at 69 bid, 70 offered, up from 67 bid, 69 offered.

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