American Cellular, Ball Corp. price deals; AK firmer on financing news

By Paul Deckelman and Paul A. Harris

New York, July 25 - ACC Escrow Corp. came to market with nearly $1 billion in new bonds Friday - an event which secondary traders said should relieve some of the pressure that has recently been weighing the wireless telecommunications sector down. Also pricing were add-on deals from Acetex Corp. and from Ball Corp. - the latter a quickly shopped-around deal which had only surfaced the day before.

Secondary market activity was described as mostly becalmed, although AK Steel Corp. seemed to get a boost from the Middletown, Ohio-based steelmaker's announcement of a new $400 million credit facility.

Four deals priced during Friday's primary market session including American Cellular Corp.'s $900 million, which was reported to have struggled somewhat before getting done at 10%, even.

The Oklahoma City wireless operator's deal, sold through financing vehicle ACC Escrow Corp., came as $900 million of eight-year non-call four senior notes (B2/B-) via Bear Stearns & Co. and Morgan Stanley. It had been talked at 9½%-9¾% but talk widened out to the 10% area before the notes priced at par to yield 10%.

One market observer told Prospect News on Friday that even though the Rural Cellular Corp.'s recent offering of $325 million of seven-year senior notes (which priced Wednesday to yield 9 7/8%) had a lower rating (Caa1/CCC) than American Cellular, Rural Cellular nevertheless seemed to be providing a useful comparison to investors.

"We just saw the new Rural Cellular notes trading at 98, 99, which is comparable to a 10% yield to maturity," the source said. "So at 9½%-9¾% American Cellular might have been just a little tight."

In other primary market action Friday, Ball Corp. canned an additional $250 million onto its 6 7/8% senior notes due Dec. 15, 2012 (Ba3/BB). The add-on, via Lehman Brothers and Deutsche Bank Securities, priced at 102 for a yield to worst of 6.53% and was increased from $200 million. That gave the Broomfield, Colo.-based food and beverage packaging firm a better interest rate than the original deal, sold in December 2002, by more than 30 basis points.

Also on Friday MSX International priced $75.5 million of notes units (B2/B) comprised of MSX International, Inc.'s 11% senior secured notes due Oct. 15, 2007 and MSX International Ltd.'s 11% senior secured notes due Oct. 15, 2007. The units priced at 99.14 to yield 11¼% via bookrunner Jefferies & Co.

And Acetex Corp., a Vancouver, B.C.-based chemical company, priced a $75 million add-on to its 10 7/8% senior notes due Aug. 1 2009 (B2/B+) at 109.5 for a yield to worst of 8.19%. UBS Investment Bank was bookrunner.

It took the investment banks no time at all to fill the four vacancies left on the forward calendar by Friday's transactions, as news of four new deals was heard during the session.

Chicago manufacturer Amsted Industries Inc. will start a roadshow Wednesday and run it through Aug. 7 for a $275 million offering of eight-year non-call-four senior notes (B3/B) via Citigroup and Banc of America Securities.

The market also heard Friday that the roadshow will start Tuesday for Concentra Operating Corp.'s $150 million of seven-year non-call-four senior subordinated notes (B3 expected/B-), which are expected to price during the week of Aug. 4 via Credit Suisse First Boston and Citigroup.

The roadshow starts Monday and runs through August 6 for GenCorp Inc.'s $175 of 10-year non-call-five senior subordinated notes (B2/B+). Deutsche Bank Securities was heard to be the bookrunner on the Sacramento, Calif.-based manufacturer's deal.

Finally on Friday Monitronics International Inc. was heard to be coming with $200 million of senior subordinated notes via Banc of America Securities. The Dallas-based monitored security alarms systems provider is also obtaining a $325 million credit facility.

One high yield source who spoke to Prospect News on Friday referred to the $91.5 million outflow from high yield mutual funds which AMG Data Services reported for the week ending July 23, as "flat."

However, the source added, the outflow is more interesting when considered in the context of the flows into equity funds, where some investors might be anticipating greater returns.

"We saw $3.2 billion of inflows into equities this week," the official said. "Even though that was something of a surprise if it is a continuing trend that would be something to think about."

When the new ACC Escrow 10% notes due 2011 were freed for secondary dealings, they were heard to have moved to 101.25 bid on the break, up from their par issue price, and the new paper continued to firm for the remainder of the session, going home quoted at 102.625 bid, 103.125 offered.

A trader opined that "I guess why we found out why all of this pressure was on this wireless stuff [which had been generally easier over the past few sessions]. American Cellular seemed like it got done pretty well and it lifted the pressure off of that market."

No secondary activity was seen in either the relatively small $75 million Acetex add-on deal, or in Ball Corp.'s add-on offering, which priced around mid-afternoon - around the time, a trader said, that "most of the guys cut out. " In fact, when contacted around 4 p.m. ET, this hardy soul opined that "most everyone already cut out three hours ago. It was kind of like a holiday, with not much happening."

Not surprisingly, given that it was a mid-summer Friday afternoon, the trader added: "I didn't see anything new or different and didn't see any one sector getting killed," although he assessed the overall market tone as "definitely a tad weaker." The only "flurry of activity" had come in the morning, and then "things just died as the day lingered on."

There was a bit of a flurry in AK Steel, which announced Friday that it has closed on a $400 million five-year senior secured revolving credit facility with a syndicate of lenders led by lead arranger, book running manager and administrative agent Credit Suisse First Boston LLC. The new facility is secured by the company's inventory, and borrowings would be used for general corporate purposes.

AK added that it also has a $300 million revolving credit facility secured by accounts receivable.

AK's bonds - which on the previous Friday had gyrated wildly in response to disappointing earnings numbers before ending about five points lower across the board - had been gradually moving back up over the course of the week - here half a point, there a point - and they got a further boost Friday from the credit facility news.

A trader quoted AKs 7 5/8% notes due 2009 as having moved up to 78.5 bid,79.5 offered post-news, a point better, while its 7¾% notes due 2012, which had been around 74 bid, 75 offered, hardened to 75/5 bid, 76.5 offered.

"They traded up a little," the trader said, "not a whole lot, but at least a little."

Elsewhere, Alderwoods Group's 12¼% notes due 2009 were quoted better than two points higher at 106 bid - although at another desk, its 11% notes due 2007 were seen unchanged at 101.

The Cincinnati-based funeral home and cemetery operator - which in its previous life had been the troubled Loewen Group, before being reincarnated as Alderwoods following its January 2002 emergence from Chapter 11 - continued to bury the bad memories associated with that former existence, reporting second-quarter net income of $6.9 million (17 cents per share) on revenues of $175.1 million, up from $1.7 million (four cents per share) on $168.7 million of revenues a year earlier.

Calpine Corp. - whose recently issued and more established bonds alike were heard lower Thursday in apparent response to news that a subsidiary, Gilroy Energy Center LLC, will be bringing a $270 million senior secured note deal to market - rebounded a bit Friday, its new 8½% and 8¾% notes firming about seven-eighths of a point, to 93.875 bid, 94.375 offered .

On the downside, Charter Communications Holdings LLC's 8 5/8% notes due 2009 were seen having fallen to 76 bid from prior levels at 77.75, obviously not helped by the news that four former executives of its parent company, St. Louis-based cable operator Charter Communications Inc., had been indicted Thursday by a federal grand jury probing alleged manipulation of subscriber numbers and other key data.

One of the four - David McCall, formerly a senior vice president - pleaded guilty on Friday to charges that he had participated in a scheme to defraud company shareholders by keeping the subscriber numbers artificially pumped up. McCall is expected to cooperate in the prosecution of his three former colleagues - former chief financial officer Kent D. Kalkwarf and former chief operating officer David Barford and former senior vice president James Smith, all of whom have pled innocent to the federal charges.

A trader saw Charter's zero-coupon/12 1/8% discount notes ease a point to 51 bid, 53 offered, while its 10% notes due 2009 dipped three-quarter of a point, to 77 bid from 77.75 previously. "Everything was down half a point or so," he said.

Also on the downside, he said, was airline paper, with Continental Airlines' 8% notes due 2005 dropping down to 87.5 bid, 89.5 offered from 90 bid, 92 offered, and AMR Corp.'s 9% notes due 2012 losing altitude to 68 bid, 70 offered from 69.5 bid, 72 offered.

But the general consensus was there wasn't a lot going on; among companies reporting earnings whose debt was seen largely unchanged were Great Atlantic & Pacific Tea Co., whose 9 1/8% notes due 2011 were unchanged at 94, despite A&P's considerably smaller-than-expected fiscal first-quarter loss (53 cents, excluding certain items, versus analysts' estimates of 93 cents) ; AMC Entertainment, whose 9 7/8% notes due 2012 were steady at 108 despite handily beating second quarter estimates of a 2-cent per share loss by posting an 11 cent gain; and Standard Pacific Corp., whose 8% notes due 2008 were quoted unchanged 103, even though the homebuilder blew through analysts' earnings projections, earning $1.26 per share versus the 96 cents consensus, and upped its guidance.

B/E Aerospace Corp., whose bonds had firmed over the previous several sessions in response to investor feeling that the aircraft component manufacturer's burgeoning order backlog bodes well for the next few quarter, was also unchanged, its 9½% notes due 2008 steady at 88 bid.

"The problem is," a source said in explaining the generally inactive market, "there's just not a lot of people around. People are all starting to take their vacations."

One of the traders chimed in that "it was just a very summery afternoon."

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