Milacron, Lazydays deals price; secondary market steps back

By Paul Deckelman and Paul A. Harris

New York, May 12 - Milacron Inc. and Lazydays R.V. Center Inc. were heard by high-yield syndicate sources to have successfully priced new issues during Wednesday's session, while new deals - which will be used to take out old bonds - were announced by Appleton Papers Inc. and US Unwired.

In the primary market, there were no disasters on the magnitude of Tuesday's collapse of Salton Inc.'s bonds, although the Lake Forest Ill.-based maker of the popular George Foreman home hamburger grills and other small appliances continued to retreat another few points.

Overall, a market observer said, "it seemed like stuff came down - but then, some of it was seen coming back up, especially after 3 p.m. (ET)." That late rise was in tandem with a final-hour recovery in the battered stock market that left two of the three major equity indices - the Dow Jones Industrial Average and the S&P 500 - in positive territory at the closing bell.

"It was a little confusing," the junk market observer said, "but [Thursday] should be an interesting day."

Two issues priced during the mid-week session as evidence continued to appear that indicates to some sources that the mid-spring 2004 new issue market is not accommodating issuers to the extent it had been at winter's end.

News spread throughout the session of widening price talk, shortening maturities and lengthening call provisions with regard to various junk bond deals now in the market.

"Not too long ago we had a frothy market," remarked one sell-side official, late Wednesday.

"But now it has backed up a lot. Now you could call this a 'tough market.'

"This afternoon it sold a little better," the official added, "more or less tracking equities."

When Prospect News asked this official whether or not it is surprising to see issuers continuing to take new deals on the road in a tough market, the response was "Not really.

"From an issuer's perspective you want to get in before rates go up and spreads widen," the official explained.

"Who can say that conditions are going to get much better than they are right now."

Milacron, Lazydays do deals

The largest of Wednesday's two completed transactions came from Cincinnati-based plastics-processing technologies and industrial fluids firm Milacron Inc.

The company sold $225 million of 11½% seven-year senior secured notes (Caa1/CCC+) at 97.673 to yield 12%, spot on the 12% area price talk.

Credit Suisse First Boston ran the books on the debt refinancing deal.

Milacron restructured the note into a bullet, extending call protection from the original non-call-four structure.

Also pricing at a discount Wednesday were the $152 million of new 11¾% eight-year senior notes (B3/B-) of Lazydays R.V. Center Inc.

The notes priced at 98.735 to yield 12%, wide of the 10¾%-11% price talk.

Deutsche Bank Securities ran the books for the acquisition financing deal from the Tampa, Fla.-based recreational vehicle company.

Alpha Natural widens talk

Further evidence of a tougher new issue market came in the form of revised price talk from Abingdon, Va. coal company Alpha Natural Resources.

Talk on the company's $200 million of eight-year senior notes (B3/CCC+) via Credit Suisse First Boston and UBS Investment Bank widened to 9½%-9¾% from 8½%-8¾%.

Pricing is expected Thursday.

Elsewhere, Denver luggage-maker Samsonite Corp. released talk on both tranches of its $325 million equivalent offering on Wednesday.

The deal is expected to price on Friday morning.

Price talk is 8½%-8¾% on the planned $200 million of eight-year non-call four fixed-rate senior subordinated notes (B3/B-). Merrill Lynch & Co. and Deutsche Bank Securities are joint bookrunners.

Meanwhile price talk is three-month Euribor plus 400-425 basis points on Samsonite's €105 million of seven-year non-call-two floating-rate notes (B1/B+).

Price talk is 6%-6¼% on ProSiebenSat Media AG's restructured €150 million offering of senior notes (Ba2/BB+) that is expected to price Thursday via JP Morgan and Deutsche Bank Securities.

The tenor of the bonds was decreased to five years from seven years. And the German television broadcaster and media services provider changed the note into a bullet from the previous non-call-three structure.

Price talk is 9 3/8%-9 5/8% on Da-Lite Screen Co. Inc.'s planned $160 million of seven-year senior notes (B2/B-), which are expected to price on Thursday via Morgan Stanley

And price talk of 10½%-10¾% emerged Wednesday on Gundle/SLT Environmental Inc.'s upcoming $150 million of eight-year senior notes (Caa1/B-), which are expected to price Thursday afternoon, with UBS Investment Bank running the books.

Clean Harbors coming with $150 million

Among the newer names on the forward calendar, Clean Harbors Inc. is heard to be the road with a $150 million offering of 10-year senior subordinated notes (Caa1/B), which it expects to price on Tuesday.

Credit Suisse First Boston and Goldman Sachs & Co. are running the books on the deal from the Braintree, Mass. company, which provides environmental remediation and hazardous waste management services.

And although timing remains to be determined, two other prospective issuers appeared on the radar screens during Wednesday's session.

Appleton Papers Inc. plans to sell $350 million of high yield notes in two tranches, via Bear Stearns & Co. and UBS Investment Bank, The Appleton, Wis. carbonless paper and printing products company intends to sell $150 million of seven-year senior notes and $200 million of 10-year senior subordinated notes, with proceeds slated to repay debt.

And Language Line Inc. is expected to come to the high yield with an offering of $170 million of eight-year senior subordinated notes (Caa1/CCC+), via Merrill Lynch & Co.

Proceeds will be used to help fund Abry Partners LLC's acquisition of the Monterey, Calif. over-the-phone interpretation services company from Providence Equity Partners.

When the new Lazy Days 11¾% senior notes due 2012 were freed for secondary dealings, they were seen closing at 98.625 bid, 99.625 offered, "just a shade below" their issue price earlier in the session at 98.745, a trader said.

Market cautious

The overall junk market, the trader said was "very cautious, very panicky, very sporadic. There was a lot of volatility. Bids were not very deep and there were offerings a plenty. I heard there were deals being cancelled."

The late upturn on Wall Street certainly was nice, but "it's going to take a sustained rally in the equity markets before people stick their heads out as far as buying in our market," he warned.

He added: "I didn't really see a whole lot [Wednesday]. I called around to accounts - and they were playing it pretty close to the vest. They didn't really want to commit to much of anything."

At another desk, a trader saw "money was changing hands in the morning - but then it kind of slowed down. He saw among the downsiders Six Flags Inc. and RJR Tobacco Holdings - the former off on a credit ratings downgrade by Moody's Investors Service, while the latter was lower as a Florida appellate court agreed to review a lower court's dismissal of a $145 billion judgment against the tobacco industry, scheduling arguments for the fall.

The fact that the court is reopening the Engle case, in which a Miami Beach doctor sued RJR and other tobacco giants, claiming they had misled the public about the dangers of prolonged smoking for literally decades, sent RJR's 6½% notes due 2007 down to 96.5 bid, 98.5 offered, he said, from prior levels at 99 bid, 101 offered.

Six Flags lower

He meanwhile saw Six Flags' 9½% notes due 2009 closing at 99 bid, 101 offered, down two points from their opening level, in response to the Moody's downgrade, which had been announced late Tuesday after the market was closed. The ratings agency said the theme park operator's senior unsecured rating was cut to B3 from B2 previously, citing its weak free cash flow characteristics and high debt burden.

At another desk, Six Flags' 9¾% notes due 2013 lost nearly three points to close at 99 bid, while its 8 7/8% notes due 2010 were off two points, to 96.75.

Salton down again

And the trader quipped that Salton "was getting the salt beat out of it," although the decline was nowhere near the more than 25 point slide which the company's s bonds suffered on Tuesday.

The trader saw Salton's 12¼% notes due 2008 - which had fallen to levels around 59-60 on Tuesday from prior levels in the upper 80s following the release of poor earnings data - dropping to 55.5 bid, 57.5 offered from Tuesday's finish around 59.5 bid, 60.5 offered.

Salton's 10¾% notes due 2005, however, "kinda stayed where they were," around 64 bid, 66 offered, Tuesday's closing level, as "all of the action was in the 121/2s."

Levi Strauss gives up some gains

And he saw Levi Strauss & Co.'s bonds "a little heavier, maybe on profit-taking," following the rise Tuesday in the San Francisco-based blue jeans maker's debt on the company announcement that it would look into possibly selling its popular Dockers line of khaki trousers and other clothing, with any proceeds from a sale expected to be used to pare down Levi's debt load.

That news - the first time the company has officially acknowledged market scuttlebutt that has had Dockers on the auction block for weeks, maybe even months - had boosted the Levi bonds about two points on Tuesday, but in Wednesday's dealings, he said, Levi gave it right back, the 7% notes due 2006 dipping to 87.5 bid, 88.5 offered from Tuesday's finish at 90.5 bid, 91.5 offered - although the trader said that the bonds, even though the bonds were down two or three points on the session, "they're still higher than they were [Tuesday] morning before the [Dockers] news, and are up three points or so for the week."

Levi's other bonds - the 11 5/8% notes due 2008 and the 12¼% notes due 2012 - followed the same pattern, with the former ending at 92 bid, 94 offered, while the latter closed at 90 bid, 92 offered.

At another desk, however, a trader saw the Levi notes "hanging in there," disagreeing with the first trader's assessment of the direction the Levi notes were going in while seeing the levels around the same - 87.25 bid, 88.25 offered on the 7s, 91 bid, 92 offered on the 121/4s, and 92 bid, 94 offered on the 11 5/8s, all "just tighter than [Tuesday's] context."

The trader saw lower levels for airline paper, as Delta Air Lines continues to rapidly lose altitude after the Atlanta-based carrier officially acknowledged for the first time in a government filing that it might face bankruptcy if it cannot get its pilots to agree to much bigger paycuts than the captains are willing to take.

Delta's 8.30% notes due 2029 were at 37 bid, 39 offered, while its 7.70% notes due 2005 ended at 59 bid,60 offered and its 7.90% Notes closed at 42 bid, 44 offered, all down a point on the day.

Also a point lower was American Airlines parent AMR Corp., whose 9% notes due 2012 dipped to 78 bid, 80 offered (see related story elsewhere in this issue).

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