Severstal Columbus prices, moves up, McJunkin sells add-on; market awaits Stallion, NFR deals

By Paul Deckelman and Paul A. Harris

New York, Feb. 8 - Severstal Columbus, LLC priced a $525 million offering of eight-year senior secured notes on Monday. When the Mississippi-based steelmaker's new bonds were freed for secondary dealings, a trader saw them having firmed by around a point over their issue price.

The session also saw an opportunistically times and quickly shopped offering from McJunkin Red Man Corp., structured as a $50 million add-on to the $1 billion of 2016 bonds which the Tulsa, Okla.-based maker of steel piping, valves and fittings sold back in December.

Price talk was meantime heard on a pair of deals out of the energy sector which are expected to come to market on Tuesday - NFR Energy LLC/NFR Energy Finance Corp.'s $250 million of seven-year notes, and Stallion Oilfield Holdings, Inc.'s prospective $225 million issue of five-year senior secured notes. Talk also surfaced on another deal expected Tuesday, not an energy operator - Huntsville, Ala.-based communications company ITC^DeltaCom Inc.'s $325 million offering of secured notes.

While that was going on, the forward calendar was growing, with new-deal announcements from Bombardier Inc. and Chaparral Energy Inc. - both hitting the road to market two-part offerings, with Bombardier's sized at $1 billion. Additionally, Freescale Semiconductor, Inc. was heard by syndicate sources to be starting a short roadshow for its $750 million issue of 10-year senior secured notes, aiming towards a mid-week pricing - but the deal is by no means a sure thing; the Austin, Tex.-based computer-chip maker cautioned in a regulatory filing that that its plans to sell the bonds, as well as amending its credit facility covenants to allow such a bond sale, could be jeopardized by legal maneuverings on the part of some of its credit facility lenders.

Recently priced bonds from Hilcorp Energy I, LP,/Hilcorp Finance Co. and Appleton Papers, Inc. continued to struggle in the secondary market.

Among issues not connected with the new-deal arena, Appleton competitor NewPage Corp.'s bonds took a beating, not helped by talk of a new research report out discussing the problems of the coated-paper industry.

Severstal Columbus sells $525 million

Severstal Columbus Escrow, LLC priced a $525 million issue of 10¼% eight-year first-priority senior secured notes (B3/B) at 98.008 to yield 10 5/8%, on Monday, according to an informed source.

The notes had been talked to yield 10½% to 10¾%, at a discount.

Credit Suisse Securities and Citigroup Global Markets Inc. were joint bookrunners.

Proceeds will be used to repay bank debt and project debt and for general corporate purposes.

McJunking taps 2016 notes

Elsewhere, McJunkin Red Man Corp. priced a $50 million add-on to its 9½% senior secured notes due Dec. 15, 2016 (B3/B) at 97.544 to yield 10%, on Monday, according to an informed source.

Goldman Sachs & Co. was the left lead bookrunner for the quick-to-market Rule 144A with registration rights add-on. Barclays Capital was the joint bookrunner.

Proceeds will be used to repay revolver debt.

The issuer is a Tulsa, Okla.-based manufacturer of pipes, valves and fittings.

Talking Tuesday's deals

ITC^DeltaCom talked its $325 million offering of six-year first-lien senior secured notes to yield 10¾% to 11%, with 2 to 3 points of original issue discount.

Books close at 11 a.m. ET on Tuesday.

Credit Suisse and Jefferies & Co. are joint bookrunners.

NFR Energy LLC and NFR Energy Finance Corp. set price talk for their $250 million offering of seven-year senior unsecured notes (Caa1/B) at a 9¾% area yield.

The books close at 11:30 a.m. ET on Tuesday, and the notes are expected to price shortly after.

UBS Investment Bank is the left lead bookrunner. Bank of America Merrill Lynch, J.P. Morgan Securities Inc. and BNP Paribas Securities Corp. are joint bookrunners.

Meanwhile Stallion Oilfield Holdings, Inc. set price talk for a $225 million offering of five-year first-lien senior secured notes (B3/B-/) at 10¼% to 10½%.

The books close at 10 a.m. ET on Tuesday, and the notes are expected to price after that.

Credit Suisse Securities, Bank of America Merrill Lynch and Jefferies & Co. are joint bookrunners.

Bombardier to bring $1 billion

Bombardier Inc. began a roadshow on Monday for a $1 billion two-part offering of non-callable senior notes (expected ratings Ba2/BB+).

The roadshow wraps up on Thursday. Pricing is set for the middle to late part of the present week.

The notes come with eight- and 10-year maturities. Tranche sizes remain to be determined.

JP Morgan, Deutsche Bank Securities and UBS Investment Bank are joint bookrunners for the debt refinancing and general corporate purposes deal.

Freescale starts roadshow

Freescale Semiconductor, Inc. began a roadshow on Monday for its $750 million offering of 10-year senior secured first-lien notes (B2/B-).

Marketing is expected to last two to three days, and the deal is expected to price during the middle part of the present week.

JP Morgan, Citigroup and Credit Suisse are joint bookrunners.

Proceeds will be used to repay the company's senior credit facilities.

However, Freescale may be forced to delay or withdraw the notes offer, as well as its recently launched credit facility amendment and extension proposal, according to an 8-K filed with the Securities and Exchange Commission on Monday.

On March 25, 2009, some credit facility lenders filed a complaint challenging the issuance of incremental term loans.

The trial court proceedings were stayed pending the disposition of Freescale's appeal from the denial of its motion to dismiss the case, but that stay could be lifted if Freescale issues new debt.

After announcing its amendment and note sale plans, the complaining lenders filed a motion on Feb. 5 to vacate the stay and to stop the company from continuing with the amendment and extension until a ruling on a temporary restraining order is obtained.

Freescale has agreed to an expedited briefing process on the plaintiffs' motion, with all briefings to be completed by Tuesday.

Currently, there is no timeline as to when the appellate court will rule on the complaining lenders' motion, or, if the stay is lifted, when the trial court might rule on a temporary restraining order.

Chaparral starts Tuesday

Meanwhile Chaparral Energy, Inc. will begin a roadshow on Tuesday for a $400 million two-part notes offer.

The deal is set to price on Friday.

The Oklahoma City-based oil and gas exploration and development company is offering $200 million of five-year senior secured second-lien notes, non-callable for three years, and $200 million of eight-year senior unsecured notes, non-callable for four years.

UBS Investment Bank is the left bookrunner. Credit Suisse and RBS are joint bookrunners.

Proceeds will be used to repay the company's revolver.

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Tops to tap 10 1/8s on Tuesday

Tops Holding Corp. and Tops Markets, LLC plan to price a $50 million add-on to their 10 1/8% senior secured notes due Oct. 15, 2015 on Tuesday.

Morgan Stanley and Bank of America Merrill Lynch are joint bookrunners.

Proceeds will be used to repay the company's $25 million bridge facility incurred to purchase assets of Penn Traffic Co., and to reduce the balance outstanding under Tops' ABL facility.

The original $275 million issue priced at 98.354 to yield 10½% on Oct. 1, 2009.

Severstal Columbus bonds climb

When Severstal Columbus' new 10¼% first priority senior secured notes due 2018 were freed for secondary dealings, a trader said that the new bonds had traded up by around a point to a 99 bid level. That was up from the 98.008 level at which the Columbus, Miss.-based steelmaker's bond offering had priced earlier.

At another desk, a trader quoted the new bonds at 98½ bid, 99½ offered.

Existing McJunkin bonds trade around

A trader said that he did not seen McJunkin Red Man's $50 million add-on offering of 9½% notes after they had priced at 97.544. He did, however, see some of the company's original $1 billion of those bonds - which priced on Dec. 16 at 97.533 to also yield 10% -- being offered. He quoted the existing bonds in a 971/2-98½ context in the early part of the session, before the add-on priced, "and there was nothing afterwards."

Media General trades below issue...

A trader said that Media General Inc.'s 11¾% senior secured notes due 2017 "did not perform well, I gather." He quoted the Richmond, Va.-based newspaper and television station group owner's new paper trading around 97 bid, 97½ offered, "so they ended up trading below issue," which in this case was the 97.69 level at which the $300 million offering - downsized from an originally announced $350 million - had priced on Friday to yield 12¼%.

...as does Hilcorp...

A trader said that Hilcorp Energy's 8% notes due 2020 were still trading in a 96½ bid, 97½ offered context, around the levels to which the Houston-based oil and gas exploration and production company's $300 million deal had eased to after it priced last Wednesday at 98.315, to yield 8¼%.

....and Appleton too

Appleton Papers' recent offering of 10½% senior secured notes due 2015 continued to be pushed lower, with a trader quoting the Appleton, Wis.-based coated paper producer's new bonds at 92½ bid, 94½ offered - well below the 98.035 level at which that $305 million issue priced on Jan. 29.

"When I saw the Appletons, I was surprised that they had come in that much," another trader said, quoting the bonds at 93½ bid, 95½ offered, noting that he had even double-checked the price "because it had come in so much" from issue.

Yet a third trader pegged the bonds as low as 92 bid, 94 offered, which he called down more than 2 points on the day.

Market indicators fall again

Among established bonds with no new-deal connections, a trader saw the CDX Series 13 index plummet by 1¼ points on Monday to 94 5/8 bid, 95 1/8 offered, after having retreated by ¾ point on Friday. Another noted that the index - which opened 2010 trading above the 100 level - had "reached a new low for the year."

The KDP High Yield Daily Index meanwhile slid by 25 basis points on Monday to end at 70.05, after having nosedived by an additional 43 bps on Friday. Its yield widened by 8 bps to 8.50%, after having gapped out by 10 bps the session before, and by a total of 21 bps in Thursday and Friday's activity.

Advancing issues remained behind decliners Monday for a third straight session, by a nearly eight-to-five margin.

Overall market activity, as measured by dollar-volume levels, fell about 14% from Friday's pace.

A trader said "not enough" was going on, but called the overall market "softer. It looks like the path of least resistance is lower.

"Overall, things just felt heavy." He said that "depending upon the name," cash bonds, on average, were down anywhere from ¼ point to a full point. "Cash is still lagging the index a little - but it feels like we're trying to chase it."

A second trader agreed that "not a whole lot" was going on in the aftermarket, describing the session as "a quiet [post-] Super Bowl Monday. Whether people are [still] hung over, or traveling or who knows what, things just seemed a little softer and quiet."

New woes for NewPage

A trader said that he saw NewPage Corp.'s 10% notes due 2012 "go on a really big ride - they were down a lot."

He saw the Miamisburg, Ohio-based coated-paper manufacturer's bonds fall to a 53-55 context, with the bonds going home at the end of the day at 54 bid, "down like 8 points. I'm sure that anybody you called would have seen that."

A market source noted that a week ago, the bonds had been trading around 66.

At another desk, the NewPage 11 3/8% secured notes due 2014 were quoted down nearly 5 points on the day at around the 90 level, on heavy volume of more than $25 million.

The company's 10% notes, which were trading around 82 bid back on Jan. 19, and its 11 3/8s, which had been trading around par, have been steadily falling since then, pushed lower by the double whammy of news that its chief executive officer, Richard D. Willett Jr., had abruptly resigned from that position, combined with preliminary fourth-quarter numbers which were seen as weak, reflecting the troubles of the overall coated-paper industry, including such rivals as Appleton Papers, whose new bonds, as noted, have been struggling ever since their Jan. 29 pricing.

On Monday, there was talk in the market of a new research report on the paper industry making the rounds, which discussed some of the negatives facing the coated-paper segment in which both NewPage and Appleton operate; the business has been hurt by, among other things, the effects of the recession on ad-dependent media like magazines, which are big users of coated paper.

MGM moves after Moody's

A trader said that MGM Mirage "kind of hung in there," post news, after the Las Vegas-based casino giant announced that it is seeking to extend the maturities on a "substantial portion" of its credit agreement debt currently scheduled to mature next year to February 2014. Some $5.5 billion of debt is involved. If approved, $1.4 billion of the revolving loans and commitments would be converted into term loans. The transaction would also let MGM Mirage issue more secured debt.

However, at another desk, MGM's 6 5/8% notes due 2015 were being quoted off a point at 79 bid, while its 5 5/8% notes due 2014 were down about 1 3/8 points at 81 5/8. The latter bonds, with over $15 million traded as of mid-afternoon, was one of the most active junk issues on the day.

Despite bondholders' apparent skepticism about the deal, Moody's Investors Service meantime said Monday that it is reviewing MGM Mirage's debt ratings for a possible upgrade, assuming the desired debt transactions do go through.

Autos spin their wheels

A trader said that Cooper Standard Automotive Inc.'s 7% notes due 2012 unchanged around 113 bid, while the bankrupt Nov, Mich.-based car-parts company's 8 3/8% notes due 2014 were at 47 bid, 48 offered, also unchanged, as the bonds - which had shot up sharply last week on the filing of the company's reorganization plan giving a big chunk of its proposed new equity to the bondholders - were "really very inactive."

However, another trader pegged those 2014 bonds at 47¼ bid, which he called up 1½ points.

Elsewhere in the autosphere, a trader saw little movement in the benchmark bonds of carmakers General Motors Corp. and its domestic arch-rival, Ford Motor Co.

He saw the latter's 7.45% bonds due 2031 unchanged at 86 bid, 88 offered, while GM's 8 3/8% bonds due 2033 were around 27-28, also about unchanged, with "not much trading."

Harry & David bounces back

Despite the overall heaviness seen in Junkbondland on Monday, here and there a gainer would stand out, such as Harry & David Operations' 9% notes due 2013. The Medford, Ore.-based specialty retailer, famed for its gift baskets of delicacies, had put out quarterly results last Thursday - which caused its bonds to nosedive on Friday all the way down to 58 1/8 bid from closing levels around 69-70, even though, according to at least one trader, the numbers weren't that bad.

With Friday's downturn having perhaps been overdone, another trader on Monday saw the 9% notes having bounced off their Friday lows to finish at 60½ on Monday, up nearly 2½ points on the day.

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