Holly deal prices, HiLite deal pulled; Huntsman gains on IPO, Winn-Dixie still falling

By Paul Deckelman and Paul A. Harris

New York, Feb. 11 - Holly Energy Partners LP was heard by high-yield syndicate sources to have priced a $1150 million offering of 10-year notes Friday, while EB Holdings and Antenna TV successfully brought euro-denominated deals to market. On a more sobering note, HiLite International Inc. was heard to have withdrawn its planned bond offering.

In the secondary market, Huntsman LLC's bonds were seen higher after its corporate parent, Salt Lake City-based chemical producer Huntsman Corp., successfully completed a $1.6 billion initial public offering proceeds of which are slated for debt reduction. On the downside, Winn-Dixie Stores Inc. - whose 8 7/8% notes due 2008 swooned Thursday on poor quarterly numbers - continued to head downward.

The week of Feb. 7 came to a quiet close Friday in the primary market.

Euro issuance dominated the day's news, with two issuers pricing €370 million in two tranches. EB Holdings, Inc. (Eco-Bat) led with an upsized €250 million which priced on top of talk.

Only a single $150 million tranche, from Holly Energy Partners LP, priced - also on top of talk - in the U.S. market.

That brought the week to a close with a total of $2.24 billion having priced across an even dozen tranches in the U.S. market.

Hence the week to Feb. 11 amounted to less than half of the previous week's $4.75 billion in 19 tranches and was far below the almost $7 billion that priced in the week to Jan. 25.

And, as sources have been predicting, the forward calendar continued to dwindle as the week wound to a close.

At the Friday close, three dollar-denominated issues were thought to be in the market as business expected to price during the Feb. 14 week, as the forward calendar slipped below half a billion dollars.

And Cleveland precision valve maker Hilite International Inc. became the third company to leave the high-yield market empty-handed thus far into 2005 as it withdrew its $150 million of seven-year notes.

One source told Prospect News on Friday that, amid light volumes, the high-yield market seemed to lack a clear sense of direction.

EB Holdings upsizes

European issuers dominated the junk bond primary market action on Friday, with a pair of deals apparently receiving noteworthy executions.

EB Holdings, Inc., the recently created parent of Eco-Bat Technologies Ltd., priced an upsized €250 million issue of 10-year senior PIK notes (CCC+) at par to yield 10%, right on top of the 10% area price talk. The deal was increased from €200 million.

Citigroup and Credit Suisse First Boston were the bookrunners for the dividend-funding deal from the U.K.-based battery recycling company.

Also Antenna TV SA priced a €120 million issue of 10-year senior notes (B1/B+) at par on Friday to yield 7¼%, at the tight end of the 7¼% to 7½% talk.

Citigroup ran the books for the debt refinancing issue from the Athens, Greece, broadcast television and radio company.

A buy-side source had advised Prospect News late Thursday the deal was a blowout.

Holly Energy on top of talk

Meanwhile only one dollar-denominated deal priced during the week's final session.

Holly Energy Partners LP brought a $150 million issue of nine-year senior notes (Ba3/B+) at par to yield 6 ¼%.

The UBS Investment Bank-led transaction came right on top of the 6¼% area price talk.

The acquisition and debt refinancing transaction from the Dallas petroleum product transportation and terminal services company was also heard to have been a blowout.

FPL Energy plans roadshow

Only one prospective issuer was heard to have stepped forward on Friday, continuing the trend of little to no buildup on the forward calendar that dominated much of the Feb. 7 week.

FPL Energy National Wind Portfolio, LLC will hold a roadshow Tuesday in New York City for a $100 million offering of senior secured bonds due March 25, 2019 (Ba2) via Credit Suisse First Boston.

Concurrently FPL Energy National Wind LLC is in the market with an investment-grade offering of $351 million senior secured bonds due 2024 (Baa3).

Proceeds from both issues will be used to fund required reserves and to return about $435 million to FPL Energy LLC, the indirect parent of both issuers, Juno Beach, Fla.-based wind energy producer FPL Group.

The deal has very little company - or apparent competition for investor attention - from other prospective issuers that are expected to price deals during the coming week.

In fact there are just two: Bear Creek Corp. (Harry and David)'s $245 million two-part offering (B3/B-), expected to price Friday via UBS Investment Bank and Banc of America Securities, and CPI Holdco Inc.'s $80 million (Caa1/B-), also via UBS. The roadshow for the latter deal was carried over into the Feb. 14 week due to an illness on the management team.

One source suggested late Thursday that the thin forward calendar can in part be attributed to potential issuers presently being distracted by having to complete their Sarbanes-Oxley accounting disclosure requirements.

The source added that within a fortnight the primary market could easily pick up the pace.

Lights go out on Hilite

Finally on Friday Hilite International Inc. became the third company to pull a junk bond deal thus far into 2005 as it withdrew its $150 million offering of seven-year senior subordinated notes (B3/B).

One source told Prospect News that talk on the deal was pushing out toward 11% from the 10 ¾% official price talk heard earlier in the week.

JP Morgan had the books.

The company will seek new to repay its bank debt through new financing in the leveraged loan market.

On Jan. 27 Carteret, N.J.-based independent food distributor Di Giorgio Corp. postponed its $150 million offering of eight-year senior notes (B2/B-), and also went in search of other financing alternatives.

Then on Feb. 3 Atlantis Plastics Inc., of Atlanta, postponed a $125 million offering of seven-year senior subordinated notes (Caa1/CCC+), citing market conditions.

Huntsman climbs

In the secondary market, a trader saw Huntsman's 11 5/8% notes due 2010 having pushed up to 119 bid, 120 offered from prior levels at 116.5 bid, 117.5 offered after parent Huntsman Corp. priced an offering comprising 60.23 million common shares at $23 a share and 5 million convertible preferred shares at $50 a share. The well-received IPO was upsized from the originally planned 55.68 million shares, and priced at the top end of an anticipated $21 to $23 range.

Huntsman plans to use the proceeds to reduce its $6 billion debt load.

The trader said that the bonds "were up a couple of points once the IPO was done."

He noted that the bonds have a standard equity clawback feature that would allow up to 35% of them to be redeemed using equity proceeds, and opined that he didn't think they could go "a heck of a lot higher, but we'll see what happens."

Hollywood Entertainment higher

Also on the upside, he said, were Hollywood Entertainment Corp.'s 9 5/8% notes due 2011, which firmed to about the 114 bid, 115 offered level from 112 bid, 113 offered previously after the Wilsonville, Ore.-based video rental chain's larger industry rival, Blockbuster Inc., announced a tender offer for those bonds as part of its hostile takeover attempt against Hollywood, the second-largest U.S. video chain after Dallas-based Blockbuster (see "Tenders and Redemptions" elsewhere in this issue for full details).

Hollywood has so far spurned Blockbuster's advances, instead agreeing to a merger with the Number-Three player in the industry, The Movie Gallery Inc.

Charter gains on call

News that Charter Communications Inc.'s subsidiary, CC V Holdings, LLC - the company formerly known as Avalon Cable LLC - has called for redemption all $113 million of its outstanding 11 7/8% senior discount notes due 2008 pushed Charter's other bond issues up pretty much across the board, "but then they settled back down" to end with only relatively small gains, a trader said.

He quoted the St. Louis-based cable operator's benchmark 8 5/8% notes due 2009 as having gone as high as 82 bid, 83 offered from their Thursday close at 80 bid, 81 offered, but then coming off that peak level to go out up a point on the day at 81 bid, 82 offered.

At another desk, Charter's 8% notes due 2012 were initially seen up a point to nearly 103 but finished up about half a point at 102.25.

Charter was "a mixed bag," a market source at another shop said. He saw the Charter Communications Holdings 11¾% notes due 2010 up nearly a point on the session at 89.75 bid, but also saw the cabler's 10¼% holding company paper due 2010 down a point at 83.

The 11 7/8% notes being called, he said, were unchanged at 105.25 bid, - somewhat above their announced call level of 103.958.

MCI up again

The source also saw MCI Inc.'s 8 7/8% notes due 2014 push up to 114.125 bid from 113.5, helped by news reports that merger talks between the Ashburn, Va.-based long-distance carrier and Verizon Communications Inc. seem to be progressing, although there has been no official confirmation yet of those talks from either company.

Verizon, the regional Bell operating company that provides most local telephone service in the Northeast, was reported by The Wall Street Journal on Thursday to have made an informal bid for MCI, around the same size as the $6.3 billion bid it had previously gotten from another RBOC, Denver-based Qwest Communications International Inc. On Friday, the Journal reported, the Verizon-MCI talks were "advancing."

MCI's 7.688% notes due 2009 were meanwhile up a quarter point at 105.75, and its 6.908% notes due 2007 were unchanged at 102.5.

Playtex edges higher

On the earnings front, Playtex Products Inc.'s bonds "were up a little on the results" a trader said, quoting the Westport, Conn.-based personal-care products maker's 9 3/8% notes due 2008 half a point better at 107.5 bid, 108.5 offered, while the company's 8% notes due 2008 likewise firmed to 110 bid, 111 offered.

Playtex reported a fourth-quarter net loss, excluding charges and gains, of $200,000 or breakeven - zero cents per share - while a year earlier it had posted net earnings, excluding charges, of $3.2 million (five cents per share).

But company executives, on their conference call following the release of the numbers, also outlined plans to, in the words of CEO Neil DeFeo, "meaningfully" reduce debt, using the savings from the company's corporate realignment initiatives. CFO Kris Kelley said it would spend more than $100 million of a $138 million cash build-up on reducing debt this year (see related story elsewhere in this issue).

Winn-Dixie continues down

Also earnings related, Winn-Dixie Stores 8 7/8% notes - which on Thursday had plunged to levels around 72 bid from prior levels at 88 on poor fiscal second-quarter numbers and analysts' concerns that the Jacksonville, Fla.-based supermarket operator's vendors might put the squeeze on the company's liquidity by toughening their terms - were heard to have continued to plummet, all the way down to 62 bid, before coming back from that nadir to end around 66 bid, 67 offered, still down six points on the day and 22 since the numbers came out.

Bally drops on downgrade

Bally Total Fitness bonds were lower, after the Chicago-based fitness club chain operator's debt ratings were taken down a notch by Standard & Poor's, which cited the possibility of further delays in filing the company's financial reports, and a smaller margin of error for staying in compliance with its bank facility covenants.

But a trader said the Bally bonds "held up pretty well post-downgrade" to finish not too far below recent levels - and he compared that to the way the Winn-Dixie bonds had been sent into absolute freefall by that company's bad news.

He quoted Bally's 10½% notes due 2011 at 98.5 bid, 99.5 offered versus 100.5 bid, 101.5 offered earlier in the week, while its 9 7/8% notes due 2007 at 86 bid, 88 offered, down from 90 bid, 91 offered recently.

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