Case New Holland, LaBranche price deals; Evergreen Resources up on Pioneer merger

By Paul Deckelman and Paul A. Harris

New York, May 4 - Case New Holland Inc. in drive-by action sold $500 million of new bonds at a discount Tuesday and New York City-based financial specialist firm LaBranche & Co., Inc. sold its planned offering of $460 million.

Meanwhile a junk bond forward calendar which, according to sources, is already remarkably built out with euro deals, took aboard one more during the session, as German specialty chemical company Brenntag Finance GmbH announced a roadshow start for its €190 million 10-year offering.

In secondary dealings, Evergreen Resources Inc. bonds were pushed higher by the news that the Denver-based natural gas producer is to be bought by Pioneer Natural Resources Co. in a deal totaling $2.1 billion, including debt assumption.

Late in the morning, one sell-side official told Prospect News that his concerns for a calendar that is crammed with deals - particularly euro deals - are twofold: 1) the then-pending pronouncement from the Federal Reserve, and 2) the negative funds flows numbers for high yield mutual funds for 2004.

"A lot of money is not accounted for," said the official, who added that the weekly and monthly fund flow figures from AMG Data Services are said to represent only a fraction of the high yield asset class's liquidity.

"The hedge funds definitely are not accounted for," the source added.

"The market is still there. But there are a couple of new trends. One is a large flow of euro-denominated deals. And then there is the continuing popularity of floating-rate deals. Also, bond tenor seems to be getting a little shorter.

"The reason is that the wave is pretty much over," asserted the official.

"Right now, as long as you stay outside of the bank maturity, I think you will be fine.

"That's the case with Rhodia. It's a secured deal. It addresses some immediate liquidity issues. And they stay out of the way of the bank. You don't want to get the notes done inside of the bank maturity."

The source was referring to the €700 million equivalent six-year senior notes deal (confirmed B3/expected B-), which is being marketed in dollars and euros, and is expected to come off the roadshow on Thursday and possibly price on Friday.

Case, LaBranche complete deals

In quick-to-market action Case New Holland sold $500 million of 6% 10-year senior notes (Ba3/BB-) at 97.459 to yield 6.6%, well wide of the 6¼% area price talk.

Terms on the Lake Forest, Ill. farm implement-maker's debt refinancing deal via Deutsche Bank Securities emerged well after the session closed, so no color was immediately available. However market sources advised Prospect News throughout the afternoon that the deal was heard to be struggling.

Terms also were heard on LaBranche & Co., Inc.'s $460 million of senior notes (Ba1/B) in two tranches.

The company sold $200 million of five-year notes at par to yield 9½%, wide of the 9¼% area price talk.

LaBranche also sold $260 million of eight-year notes at par to yield 11%, again wide of the 10¾% area talk.

Credit Suisse First Boston was the bookrunner for the debt refinancing deal.

Brenntag enters crowded euro pipeline

Brenntag Finance GmbH became the latest company to announce a roadshow start for a euro-denominated high yield deal.

The Mόlheim an der Ruhr, Germany-based distributor of specialty and industrial chemicals will start a roadshow Wednesday for €190 million of 10-year senior notes, which are expected to price mid-to-late in the week of May 10, via Goldman Sachs & Co.

Also on Tuesday, although no specific timing was heard, Quebec bathroom and kitchen cabinet maker Maax Inc. was heard to be bringing a $160 million high-yield bond offering, with a roadshow expected to start during the present month.

Goldman Sachs & Co. and Merrill Lynch & Co. will be the underwriters for the acquisition financing deal.

Five deals talked

Five offerings that are expected to price during the present week, three of them euro-denominated deals, were talked during the Tuesday session.

Price talk is 8¼%-8½% on Cirsa Finance Luxembourg SA's €260 million of 10-year senior notes (Ba3/B+), expected to price on Wednesday via Deutsche Bank Securities.

Price talk of 9¾%-10% emerged on LBC Luxembourg Holdings' €150 million of 10-year senior subordinated notes (Caa1/CCC+), also expected to price on Wednesday, with Deutsche Bank Securities and Lehman Brothers running the books.

Price talk of 8¾%-9% was heard on Polypore Inc.'s $400 million equivalent offering of eight-year notes (Caa1/B-), which expected to be priced in tranches of $200 million and €165 million on Thursday via JP Morgan.

The price talk is 8 5/8%-8 7/8% on a €125 million 10-year senior subordinated notes offering (B2/B-) from Preem Petroleum AB, expected to price on Wednesday out of Deutsche Bank Securities.

And the price talk is 7 1/8%-7 3/8% on Whiting Petroleum Corp.'s upcoming $150 million of eight-year senior subordinated notes (B2/B-), with pricing expected late Wednesday or early Thursday. Merrill Lynch & Co. and Lehman Brothers are joint bookrunners on that offering.

Varying fortunes of recent euro deals

With the euro forward calendar continuing to build on Tuesday, one senior sell-side official in Europe took time to share some color on recent transactions in that market.

The source commented on TUI AG's massively upsized €625 million deal that priced on April 30 via The Royal Bank of Scotland.

"That was the first genuine un-rated high yield bond deal in Europe," asserted the official, adding that the bonds would likely have a BB "shadow rating."

The bonds have a 75 basis points step up in the first 18 months if the company does not get a rating, the official noted, adding that TUI is two-thirds of the way through its disposal program, and wants to finish the program before it receives the rating.

The seven-year bullets upsized to €625 million from €350 million and came to market at the tight end of the 6 5/8%-6 7/8% price talk.

"Out of the box, the deal traded up to 100.5 bid, and has ground higher today," added the source who spotted the new TUI bonds at 101.875 bid, 102 offered.

The source added that the TUI offering had over 300 accounts in the book, with "a good cross section among high yield, high grade, alternative funds and German-speaking retail."

The European investment banker also noted Tuesday that the euro cable sector was "backing up a little now," and spotted the new Tele Columbus euro-denominated bonds at 94 bid, 95.5 offered, the new euro-denominated NTL Cable 8¾% notes due 2014 at 97, the Cablecom Luxembourg 9 3/8% notes due 2014 at 98, and the euro-denominated Telenet 9% notes due 2013 at par.

The above official also commented on the Tele Columbus AG deal that priced on April 29.

The Hanover, Germany cable television and communications services company €475 million of bonds in an upsized €245 million six-year floating-rate tranche (B1/B) and a downsized €230 million eight-year fixed-rate senior subordinated piece (B3/B-). The floaters came at three-month Euribor plus 375 basis points, in line with revised price talk while the fixed-rate portion priced to yield 9 3/8% against revised talk in the area of 9¾% and initial talk in the 9% area.

"The Tele Columbus fixed-rate tranche is getting smacked," the source commented.

Noting that Monday was a bank holiday in the United Kingdom, the source added that "today, what bids that have been out there have been smacked.

"There are no real bids now," added the source, who spotted the Tele Columbus notes "probably in a 94 bid, 95.5 offered context."

Evergreen rises

In the secondary sphere, Evergreen Resources' 5 7/8% notes due 2012 were heard to have pushed up to 104 bid from prior levels around 99.75 in response to the news that the company will be acquired by Pioneer Natural Resources, a Dallas-based independent oil and gas exploration and production company.

Terms of the deal call for the Evergreen shareholders to get $850 million in cash plus 25 million Pioneer shares. Pioneer will assume $300 million of debt.

Calpine down again

Elsewhere, a trader said that from where he sat, a major story of an otherwise pretty lackluster day was "more weakness in Calpine [Corp.]," ahead of Thursday's scheduled quarterly earnings release by the San Jose, Calif.-based power generating company; the bonds had moved lower Monday on apparent pre-earnings jitters among investors.

On Tuesday, the trader saw Calpine's 8½% notes due 2008 as having fallen to 65.5 bid, 66.5 offered from prior levels at 68 bid, 68.75 offered. He saw Calpine's 2005 notes as having dipped as low as 90 bid, 90.5 offered from prior levels, although he saw them ending up a point off their lows, but still down a point on the session at 91 bid. "They've gotten beaten up a little bit," he observed.

However at another desk the Calpine 81/2s were seen actually slightly better on the day, at 67.75 bid.

Among other energy generation names, Williams Cos.' 7 1/8% notes due 2011 were seen up about a quarter point at 103.25, although its 8 5/8% notes due 2010 were at 109/25 bid, 110.25.

Tulsa, Okla.-based Williams announced on Monday that it had obtained a new three-year, $1 billion revolving credit facility, primarily for general corporate purposes and issuing letters of credit. Under certain circumstances, the facility can be increased by an additional $500 million.

Also among the energy operators, AES Corp.'s 8½% notes due 2007 were a quarter point better at 102.5 bid, while the Arlington, Va.-based power generator's 8 3/8% notes due 2007 were half a point better at 101 bid. Dynegy Holdings Inc.'s 9 7/8% notes due 2010 were up a quarter point at 106.75.

El Paso rebounds a little

El Paso Corp.'s notes had fallen on Monday, after the Houston-based energy operator announced that its proven oil and gas reserves were being revised downward by 1.8 trillion cubic feet of natural gas equivalent.

But on Tuesday, a trader said, the company's 7 ¾% notes due 2032 firmed and tightened slightly to 77.75 bid, 78.75 offered from the previous session's 77 bid, 79 offered.

Apart from the energy names, "steels continued to be bounced around a bit," with AK Steel Corp.'s 7¾% notes due 2012 at 87.5 bid, 88.5 offered, little changed on the day, while its 7 7/8% notes due 2009 were at 89.5 bid, 90.5 offered, half a point better, "or it stabilized, at least."

Oregon Steel up

At another desk, Oregon Steel Mills's 10% notes due 2009 were up a point at 103.5 bid.

The steels had gotten clocked on Monday amid market worries that anti-inflation statements by the Chinese government would lead to a shutdown of the Chinese market for the metal amid a slowing economy. China has been a major consumer of Asian-produced steel this year, tightening supplies worldwide and thus driving up prices, helping the U.S. steelmaking industry rebound as well.

Little movement was generally seen among gaming bonds Tuesday, even though the shares of many gaming companies were lower, after CIBC World Markets and later Merrill Lynch downgraded number of sector names, citing their own modest guidance for the rest of the year, as well as regulatory issues

Argosy Gaming's 9% notes due 2011 were seen a quarter point easier at 112.5, while its 7¼% notes due 2014 were at 102, a quarter point off, and its 10 ¾% notes due 2009 unchanged at 105.875.

MGM Mirage's 8 3/8% notes due 2011 were unchanged at 110.5 bid and its 9 ¾% notes due 2007 were likewise steady at 113.5. Ameristar Casino's notes were at 115.5 bid, unchanged.

News that Wynn Resorts Ltd. will spend $198 million more on its still-under-construction gambling palace on the Las Vegas Strip had no impact on the company's 12% notes due 2010, holding steady at 119.

And Trump Hotel & Casino's Trump AC 11¼% notes due 2006 were unchanged at 85 bid. Trump Holdings' 11 5/8% notes were quoted steady at 101.

But at another desk, Station Casinos Inc.'s 6% notes due 2012 were quoted off more than two points at 99 bid.

Tenet little moved

Tenet Healthcare Corp.'s bonds were "unchanged, with not a lot of reaction," a trader said, even n though the Santa Barbara, Calif.-based hospital operator posted a wider first-quarter net loss of $122 million (26 cents per share), versus $20 million (four cents per share), as it continues to try to sell underperforming assets and get on top of its swollen bad-debt expenses racked up by patients not paying their bills (see separate article elsewhere in this issue).

Tenet's 5 3/8% notes due 2006 were a quarter point better at 94.5 bid, 95.25 offered, the trader said, while its 5% notes due 2007 were unchanged at 91.5 bid, 93 offered.

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