RDS, NewPage, upsized Kodak price, trade up; Blockbuster up on adviser hiring; Concrete climbs

By Paul Deckelman and Paul A. Harris

New York, Feb. 24 - Eastman Kodak Co. brought an upsized drive-by offering of eight-year senior secured notes to market on Wednesday, with the Rochester, N.Y.-based photography products company's new deal heard quoted higher in initial aftermarket dealings.

Syndicate sources also saw a slightly upsized deal from RDS Ultra-Deepwater, Ltd. price earlier in the session, and then trade up about 2 points after the issue broke.

NewPage Corp. announced late in the day that it had successfully priced a $70 million add-on to its existing $1.7 billion of senior secured notes due 2014.

Also in the primary sphere, talk emerged on Ladbrokes Group Finance plc's sterling-denominated issue of seven-year notes, which is expected to price on Friday morning.

In the secondary market, Blockbuster Inc.'s bonds firmed on a news report that the company had hired an investment bank and a law firm to evaluate possible ways of cutting its $1 billion debt load, as well as other potential business options.

U.S. Concrete, Inc.'s bonds were seen having moved up by multiple points in active dealings, with the bonds trading flat, or without their accrued interest.

Several Qwest Capital Funding Inc. issues firmed on news of a tender offer.

On the downside, traders saw Rouse Co.'s notes in retreat, as corporate parent General Growth Properties Inc. announced an agreement with an investor that it hopes will head off a hostile takeover by its major rival -- even though the official committee representing its unsecured creditors has endorsed that latter bid.

Kodak upsizes

In Wednesday's primary market session, Eastman Kodak priced an upsized $500 million issue of 9¾% eight-year senior secured notes (Ba3/B-/BB-) at 97.967 to yield 10 1/8%, in a quick-to-market deal.

The yield printed in the middle of the 10% to 10¼% price talk. The amount was increased from $400 million.

Citigroup and KKR were the managers for the issue.

Proceeds will be used to repurchase all $300 million of the company's 10½% senior notes due 2017 and to repurchase a portion of its 7¼% senior notes due 2013.

RDS prices atop talk

RDS Ultra-Deepwater, Ltd. priced an upsized $270 million issue of 11 7/8% seven-year senior secured notes (B3/B-) at 97.131 to yield 12½%.

The yield printed on top of the yield talk. The original issue discount came in line with the approximately 3 points of discount talk. And the size was increased from $260 million.

Jefferies & Co. ran the books.

Proceeds will be used to purchase PetroRig III, a sixth generation ultra-deepwater semi-submersible drilling rig.

The company will enter into a long-term charter contract for the lease of the rig with Pemex Exploracion y Produccion, a wholly owned subsidiary of Petroleos Mexicanos, the national petroleum company of Mexico.

RDS Ultra-Deepwater is a special purpose finance subsidiary of Portuguese parent Rubicon

Drilling Services-Alguer de Equipamentos Tecnologicos, Unipessoal, LDA.

NewPage taps 11 3/8% notes

NewPage Corp. announced that it has priced a $70 million add-on to its 11 3/8% senior secured notes due 2014, according to a late Wednesday press release from the company.

The add-on came "with essentially same terms as the existing $1.7 billion 11 3/8% senior secured notes due 2014," the release added.

The original notes priced at 93.996 to yield 13% last September, in a deal led by Credit Suisse, Goldman Sachs & Co. and Citigroup Global Markets Inc.

"The transaction was an opportunity to issue debt at a premium to the market and without underwriting fees," stated David J. Prystash, senior vice president and chief financial officer of NewPage, in Wednesday's press release announcing the add-on.

"The net proceeds from the issuance of the notes will positively affect our overall liquidity position and will be used to repay existing borrowings under the revolver and for general corporate purposes," Prystash added.

The deal is believed to have been done as a quasi-private club-style transaction, market sources said.

It was likely driven by reverse inquiry and taken down by one account, a sell-side source said.

Ladbrokes gives price talk

Meanwhile, Ladbrokes Group Finance plc set price talk for its £200 million minimum offering of non-callable seven-year senior unsecured fixed-rate notes at 7 5/8% to 7 7/8%, on Wednesday.

The books close at 12 p.m. ET on Thursday. Pricing is set for Friday morning, London time.

Barclays Bank plc is leading the Regulation S deal.

Proceeds will be used to fund a concurrent tender offer for the Harrow, England-based gaming company's 7 1/8% notes due 2012.

The final size of the new seven-year notes issue is contingent upon the results of that tender.

New RDS deal moves up

When the new RDS Ultra-Deepwater 11 7/8% senior secured notes due 2017 were freed for secondary market dealings, a trader saw the offshore oil drilling company's paper at 99½ bid, 100½ offered, well up from the 97.131 level at which the deal had come to market earlier in the session.

He said that "we had a couple of guys looking to buy them below par."

Another trader, also seeing the 2 point gain, agreed that "that did very well."

Kodak comes up

A trader said that the new Eastman Kodak offering of 9¾% senior secured notes due 2018 was being quoted in initial aftermarket dealings at 99 bid, up from the 97.697 pricing level.

Another trader predicted that the Kodak issue "will probably do okay" when it begins trading around in earnest.

NewPage add-on appears

A trader said that he had seen a 95-97 market in NewPage Corp.'s $70 million add-on offering of 11 3/8% senior secured notes due 2014. Apart from the sketchy outline which the Miamisburg, Ohio-based coated-paper company provided in its press release announcing the add-on, pricing details were not immediately available.

"It's amazing someone bought that," a trader marveled, noting the recent problems of the coated-paper industry in which it operates.

He theorized that the deal - which was not announced beforehand - may have been the result of a reverse inquiry by a buyer looking for paper

Viewing the new deals

A secondary market trader meantime predicted that the Central Garden & Pet Co., Equinix Inc., Niska Gas Storage, and Oshkosh Corp. deals "are all going to be somewhere between 8%and 8¾%. Each of them has qualities that will attract investors."

He said, however, that "the jury is still out" on ArvinMeritor Inc.'s upcoming eight-year note offering

He also said he did not know "how wide distribution will be" on Eastman Kodak's new deal.

Market indicators slightly firmer

Among bonds not connected with the new-deal market, a trader saw the CDX Series 13 index unchanged Wednesday at 96 5/8 bid, 97 1/8 offered, after having lost 7/8 point on Tuesday.

The KDP High Yield Daily Index meanwhile rose by 4 basis points on Wednesday to close at 70.46, after having fallen by 26 bps on Tuesday. Its yield narrowed by 1 bp to 8.41%, after having widened out by 9 bps the session before.

Advancing issues topped decliners for a seventh consecutive session on Wednesday, leading by a seven-to-six margin.

Overall market activity, as measured by dollar-volume levels, was virtually unchanged from Tuesday's pace.

A trader characterized Wednesday's session as "sort of a quiet day."

Another said that "the secondary market traded in spurts today." He declared that Tuesday's

selling "seems to have subsided."

It being only Wednesday, he continued that "we haven't gotten the AMG number, but I would assume, based on the feedback I've gotten from accounts, that we're probably going to get a positive number" from the closely watched indicator of Junkbondland liquidity trends, which had recorded outflows of nearly $1 billion from the weekly-reporting funds in each of the last two weeks.

Another trader called the market "firm - stuff was getting lifted," although he added that it was "generally very quiet."

Blockbuster better as company hires advisers

Blockbuster Inc.'s bonds firmed by around 2 points across the board on a Wall Street Journal story indicating that the Dallas-based movie rental company has hired an investment bank and a law firm to help it explore options for trimming its billion-dollar debt load, as well as other possible business moves.

A trader said that Blockbuster's 9% senior subordinated notes due 2012 had risen about 2 points to around 20 bid, on "pretty good volume" - estimated at over $33 million by the close -- while its 11¾% senior secured notes due 2014 likewise finished up a point or two at 73-74.

Another trader, also seeing the latter bonds going out around 73-74 or 73-75, pegged the bonds up 2 or 3 points on the day. He saw the 9% notes at 20.

The Journal, citing unidentified "people familiar with the matter," said that in recent days Blockbuster tapped the law firm of Weil, Gotshal & Manges and the Rothschild Inc. investment bank to study ways to reduce its roughly $1 billion debt burden and explore other strategies, such as acquisitions or partnerships - even possibly including the purchase of some assets from the again-bankrupt Movie Gallery Inc., which operates Blockbuster's main rival among traditional brick-and-mortar rental stores, Hollywood Video. Blockbuster's chairman , James W. Keyes, told the paper that his company "does not contemplate" following its smaller competitor into Chapter 11.

The paper also reported that company bondholders "have begun organizing and talking with potential advisers to prepare for possible negotiations over reworking the company's capital structure, such as converting debt to equity."

Traders said that Blockbuster's quarterly numbers, released late in the session, likely did not have much impact on the bonds.

As part of its earnings announcement, Blockbuster said it "continues to actively explore various recapitalization opportunities, which may include a recapitalization of the company's outstanding debt or equity securities." It added that Rothschild has been working with the company since February 2009 and continues to assist it.

U.S. Concrete climbs

A trader said that U.S. Concrete "was a big trader, today, with a lot of activity."

He saw the Houston-based cement producer's 8 3/8% senior subordinated notes due 2014 move up to a 55-57 trading context before ending about 57 bid, 57¾ offered - well up from the previous day's late trading range of 48-50, which saw the bonds go out at 50.

There was "a lot of volume," he said twice, as if for emphasis. "It was up a good bit."

A market source at another desk estimated that over $33 million of the bonds had changed hands, mostly in round-lot trading, going home north of 56 bid - not much change from Tuesday looking only at round-lot trades, but at least a 6 point gain from the closing trades Tuesday, which were all odd-lot pieces.

A trader noticed that the bonds were no officially trading flat, or without their accrued interest, which frequently raises the nominal price of a bond by several points. He saw a "fair amount of trades" in the 56-58 area, opining that "someone came in to buy some bonds today."

Qwest trades up on tender

Several Qwest Capital Funding issues were seen having moved up, after parent Qwest Corp. and Qwest Capital announced plans to tender for those $1.2 billion of notes.

News that the Denver-based telecommunications company is seeking to buy back its $800.98 million of 7¼% notes due 2011 pushed the bonds up more than 2 points on the session to about the 104¾ mark, although volume was relatively modest, coming in a little above $3 million.

Qwest is also looking to take out its $402.923 million of 7.9% notes slated to come due this coming Aug. 15, which caused those bonds to firm about ¾ point to 1023/4, on about $7 million of turnover. The offer is scheduled to expire at 5 p.m. ET on March 24, with an early tender deadline of March 9.

Possibly the most active Qwest issue, the parent company's 7 7/8% notes due 2011, which a market source said had traded some $18 million at mid-afternoon, was also up - even though it is not involved in the tender offer - gaining a point to the 106 level.

Rouse retreats as parent finds a white knight

The news that General Growth Properties has embraced an investment offer from Brookfield Properties to help it emerge from bankruptcy, while spurning last week's unsolicited takeover bid from rival shopping mall operator Simon Property Group, was not greeted with enthusiasm by its bondholders; a trader said its Rouse Co. 7.20% notes due 2012 traded in a 111-112 context, while its 5 3/8% notes due 2014 finished around 106; he saw each issue down about a point to 1½ points.

Under the deal, Brookfield would provide $2.625 billion to General Growth in return for a 30% stake, leaving the company independent. The company values the offer at $15 per share, versus the $9 per share of the Simon offer. However, General Growth's unsecured creditors have already endorsed the Simon offer and have urged management to do likewise.

General Growth also said that the Brookfield offer would function as a stalking horse, and said it was open to any better offers as well.

Western Refining rallies

A trader said that Western Refining Inc.'s 11¼% senior secured notes due 2017 had firmed a little to 83 bid, with no offering seen. He said that the El Paso, Texas-based petroleum refiner's quarterly earnings, due to be released on March 4, likely will "look pretty good," noting that year-over year comparisons "are pretty easy".

Paper names seen little moved

A trader said that Appleton Papers Inc.'s 10½% senior secured notes due 2015 were "probably unchanged" around a 93-94 level, on not much activity. He also said that NewPage's 10% notes due 2012 were likewise steady at 56 bid, 57 offered, while Smurfit Stone Container Corp.'s bonds, like its 8¼% notes due 2012, were also not much changed, around 82. The latter saw "some activity."

Another trader also saw the Appleton bonds - which had priced at 98.035 nearly a month ago, and then had dropped as low as 89-90 over the subsequent sessions - as having firmed its way back to around 93½ over the last few days, while Verso Paper Corp.'s 9 1/8% notes hung in at 90-91.

Auto names spin wheels

A trader saw General Motors Corp.'s benchmark 8 3/8% bonds due 2033 unchanged at 29¼ bid, 30 offered, though on "good volume," while GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 were steady around 88 bid, on "not much activity."

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