GulfMark Offshore, Intertape price; await Freescale mega-deal; J.L. French jumps on tender news

By Paul Deckelman

New York, July 14 - The high-yield primary market got busier than it has been for a while on Wednesday, with GulfMark Offshore Inc. and Intertape Polymer US Inc. successfully pricing deals - the first new U.S.-originated junk bond deals in nearly a week. The calendar meanwhile fattened, with anticipated offerings by PanAmSat Corp. and J.L. French Automotive Casting Inc. joining the slate.

But all of this was seen as appetizers to what promises to be a hearty meal during Thursday's session, with Freescale Semiconductor Inc. expected to bring a three-part $1.25 billion offering to market - the first such billion-dollar-plus offering to come down the chute in a number of weeks - the last giant deal was Tenet Healthcare Corp.'s $1 billion sold on June 15.

In the secondary market, news that J.L. French will tender for its outstanding 11½% notes due 2009, using the proceeds from its planned new deal and some concurrent new bank debt, sent the 111/2s sharply higher in late-day trading.

Those bonds were quoted as high as 74 bid late in the day, well up from levels about eight to 10 points lower before the news.

There had been some activity in the bonds before the official announcement, with a trader saying there had been indications out on the internet even before the news was released that French, a Sheboygan, Wis.-based maker of die-cast metal parts for the automotive industry will tender for the bonds using the new-deal proceeds.

A trader who saw the bonds make a 10 point move up to around the tender-offer consideration level at 75 (early-tendering holders get a three-point consent fee on top of that), cautioned that "there's still a lot of 'what ifs?' attached to this, a lot of moving parts that must fall into place" before the 111/2s are taken out. Key is the financing, which includes $165 million of new preferred equity and, it is believed, $440 million of bank debt.

The bank financing and bond deal are being led by Goldman Sachs.

PanAmSat plans $1.01 billion bonds

Also on the upcoming-deal front, PanAmSat Corp. announced plans for several refinancing transactions totaling more than $4 billion, including the proposed sale of some $1.01 billion of new 10-year notes and the launch of new credit facilities totaling nearly $3 billion. Proceeds would be used to fund tender offers for two existing series of the Wilton, Conn.-based satellite communications company's bonds - its $800 million outstanding 8½% senior notes due 2012 and its $275 million of outstanding 6 1/8% notes due 2005.

There was no official word on who would be leading the bond deal, although it was expected that Citigroup - the lead manager for the tender offers - would be heavily involved in the funding.

Citigroup and Credit Suisse First Boston are the joint lead arrangers and joint bookrunners on the bank deal. Bear Stearns, Lehman Brothers and Bank of America are co-documentation agents.

Intertape brings $125 million

Citigroup meantime was the sole book-running manager for Intertape Polymer US Inc.'s $125 million offering of new 8½% senior subordinated notes that mature on Aug. 1, 2014, which was heard to have priced Wednesday.

The notes priced at par to yield 8½% for a spread of 401 basis points over the 10-year U.S. Treasury.

TD Securities was co-manager on the Rule 144A/Regulation S offering.

The Bradenton, Fla.-based plastic and paper packaging maker plans to use the deal proceeds, plus those of a new $250 million senior secured facility, to repay bank debt and redeem all three series of the company's existing senior secured notes.

GulfMark upsizes a little

Also pricing heard Wednesday was GulfMark Offshore Inc.'s offering of new 10-year notes, which was slightly upsized to $160 million.

The new 7¾% senior notes priced at 99.575 to yield 7.813%.

The Rule 144A/Regulation S offering was brought to market following a short roadshow that began Monday via sole bookrunning manager Lehman Brothers.

GulfMark, a Houston-based provider of marine transportation services to the energy industry, is expected to use most of the proceeds of the offering to fund its pending tender offer and related consent solicitation for any and all of its $130 million of outstanding 8¾% senior notes due 2008, which is scheduled to expire on July 30, subject to possible extension. New-deal proceeds are also slated to be used to repay bank borrowings and for general corporate purposes.

Besides the two deals that priced, syndicate sources said that American Home Mortgage Investment Corp. was expected to price a $5 million add-on Wednesday evening to its recent offering of 9¾% perpetual preferred shares. The Melville, N.Y.-based mortgage real estate investment trust priced a downsized $35 million issue of $25 par preferred shares on June 29, via bookrunner Citigroup.

Coming up

All of those deals, however, were seen as a prelude to Thursday's anticipated big deal - the $1.25 billion offering by Austin, Tex.-based microchip manufacturer Freescale Semiconductor, which is bringing a three-part issue to market consisting of 10-year and seven-year fixed-rate notes and five-year floating-rate notes.

The tranche of 10-year fixed-rate notes is expected to price to yield between 250 and 275 basis points over the U.S. Treasury note coming due in May 2014. The coupon on the fixed-rate seven-year notes is expected to be 25 basis points inside the 10-year coupon, while the five-year floating-rate notes will price at 275 basis points over Libor.

The megadeal is being brought to market by a large team of underwriters, led by joint book-running managers Goldman Sachs, Citigroup and JP Morgan.

The company is currently a subsidiary Motorola inc.; proceeds will be used to help fund its planned spin-off from the Schaumburg, Ill.-based electronics giant.

Elsewhere, syndicate sources said that Duane Reade Inc. was getting ready to take its planned $195 million offering of new seven-year senior subordinated notes on the road, starting Friday.

The New York-based drugstore chain operator - being acquired by Oak Hill Capital Partners LP - is expected to price its Rule 144A deal sometime during the week of July 26, via book-running managers Banc of America Securities, Citigroup and Credit Suisse First Boston, as well as UBS Securities.

Proceeds from the note offering and a companion proposed $155 million six-year term loan will be used together with $245 million in equity and utilization of $150 million from a $250 million revolving credit facility to fund the $700 million acquisition of the company.

GulfMark gains in trading

When the new GulfMark 7¾% notes due 2014 were freed for secondary trading, they were heard to have firmed to 100.25 bid, 100.75 offered, up from their 99.575 issue price.

Amkor rebound continues

Back among the established bonds, Amkor Technologies Inc.'s notes - which had fallen earlier in the week after Moody's revised its outlook for the West Chester, Pa.-based high-tech manufacturer down to negative from stable, citing expected operating losses - continued a rebound which was seen having begun Tuesday.

"I told you they were going to get cheap," said a trader, who previously predicted the bonds would bounce off the lower levels. "They were up pretty good," he said, quoting the company's 7 1/8% notes at 89.5 bid, 90.5 offered, up from 87 bid, 88 offered.

"They hit 10% [yield] and then bounced off the lows," he said.

At another desk, the Amkor 9½% notes due 2008 were seen up better than two points at 100.25 bid, while its 7¾% notes due 2013 were up nearly two points at 89.5 bid.

Caesar's gains

A trader saw the bonds of Ceasars' Entertainment Inc. up about two points across the board as news reports circulated that the Las Vegas-based gaming giant - the former Park Place Entertainment - is close to being bought by another huge gaming operator, Harrah's Entertainment, in a deal expected to be valued at about $10 billion, including the assumption by Harrah's of nearly $5 billion of Caesars' debt.

If it comes to pass, it would be the second huge gaming industry merger in the last few weeks, behind the recent deal forged by MGM Mirage and Mandalay Bay Resorts.

Caesar's 7½% notes due 2009 rose to 107 bid, 109 offered, while its 8½% notes due 2006 firmed to 108.l5 bid, 110.5 offered. Its 9 3/8% notes due 2007 improved to 110 bid, 111 offered.

Caesars' New York Stock Exchange-traded shares jumped $2.08 (14.94%) to close at an even $16, on volume of 33 million, more than 16 times the usual turnover.

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