LIN TV, Mirant bonds gain on M&A speculation; Neff Rentals cuts deal size

By Paul Deckelman and Paul A. Harris

New York, May 18 - Mergermania was the dominant theme in secondary dealings on Friday, with the bonds of LIN TV Corp., and its shares, up on the announcement that the Providence, R.I.-based television station operator was studying various strategic options - including the possible sale of the whole company.

Mirant Corp.'s bonds were seen better, as a website that covers the power generating industry was reporting that a Northeastern utility was considering making a bid for Mirant, which last month said it would consider strategic options.

Although the conventional wisdom has been that a leveraged buyout of Clear Channel Communications Inc. would be bad for the company's bondholders, several issues of its bonds were seen higher on the official announcement that the San Antonio, Tex.-based radio broadcasting and outdoor advertising giant's board had unanimously voted to accept a sweetened buyout offer from Thomas H. Lee Partners LP and Bain Capital LLC.

And Trump Entertainment Resorts Inc.'s bonds, which had firmed smartly on Thursday on the news that the company has received several expressions of interest from potential buyers looking at acquiring some - or perhaps even all - of its assets, were again actively traded Friday, although they came off the peak levels at which they had gone home on Thursday.

A sell-side source told Prospect News that high yield held in on Friday.

Noting strength in the equity market, the source said that junk was up as much as ¼ point in spite of the fact that Treasuries were "off a little."

Mid-Friday afternoon another sell-side source spotted 10-year government paper yielding 4.81%, and added that the yield was 12 basis points higher on the week, with the result that high yield spreads were grinding to all-time tights.

In the primary sphere, not much was happening, as the market was busy digesting the more than $3 billion which had been priced on Thursday, including a pair of giant-sized two-part deals for Dynegy Holdings Inc. and Rite Aid Corp. In Friday's slim activity, Neff Corp. was heard by high yield syndicate sources as having downsized its proposed eight-year deal from the $250 million originally anticipated.

LIN leaps upward

LIN TV was up on both the bond and the stock side after the company announced that it had hired JP Morgan Securities to explore strategic alternatives, including its possible sale.

A trader saw LIN's 6½% notes due 2013 up 2 points on the session to 100.5 bid, 101.5 offered.

Another source saw those bonds up 2½ points to around the 101.5 level.

The company's New York Stock Exchange-traded shares were up $2.17 (12.99%) to close at $18.88. At one point in the afternoon, they were up more than 14% to an intraday peak level of $19.09. Closing volume of 1.6 million shares was more than six times the average daily turnover.

In announcing the JP Morgan hiring, LIN took pains to stress that "no decision has been made to sell the company at this time," and said that it could not predict whether the review of strategic alternatives would result in any transaction.

LIN said it does not expect to make any further statements, unless the strategic alternatives review results in a deal.

The company owns and operates about 29 stations and web sites in 17 cities, reaching about 9% of U.S. television homes. Some of its stations are affiliated with the three major networks, while others affiliate with smaller groupings like the new CW and MyNetworkTV networks, and the Hispanic broadcaster Univision.

Mirant powers up on acquisition story

Another client for whom JP Morgan is currently beating the bushes to find any would be buyers is Mirant, and that company's bonds rose after SparkSpread.com, a website which tracks developments in the electric power industry, reported that PPL Corp. is considering a bid for Mirant.

A trader saw the Atlanta-based utility operator's 9 1/8% notes due 2031 up 3½ points at 112 bid, 114 offered, although he said that another Mirant issue, its 7 3/8% notes due 2013, were only up ½ point at 106 bid, 107 offered.

Its NYSE-traded shares were up a modest 3% on the day.

SparkSpread attributed its report to two unidentified industry sources. It also said the Allentown, Pa.-based utility owner and power producer may have lined up Morgan Stanley as an adviser.

Calpine bonds boosted

Out of that same electric power generating sector, Calpine Corp.'s bonds continued to see gains on Friday, with one trader stating that the notes were "up several more points" across the board.

He pegged the bankrupt San Jose, Calif.-based power generator's 8½% notes due 2008 at 124 bid, 125 offered, and saw its 8½% notes due 2011 at 126 bid, 127 offered.

That trader didn't know what was driving the advance, although he suggested the Mirant news was giving a positive tone to the power sector by sparking consolidation speculation.

The trader also added that, "somebody's been a huge buyer in all Calpine issues.

"The paper just continuously gets sucked up by somebody," he said. "It doesn't sit around for long."

Another trader, who saw the 2011s at 126.5 bid, 127.5 offered, up 2½ points on the day, had a different explanation for Calpine's climb, saying it was due to the most recent monthly numbers, which he called "fair." In other words, he said "good - nothing spectacular, but pretty good anyway."

At yet another desk, a trader also saw Calpine's debt as firm, quoting the 81/2s up a couple of points at 127 bid, 128 offered.

Calpine's 8¾% notes due 2007 were see 3 points better at 124.

The trader attributed the recent gains to a story in Wednesday's Wall Street Journal, which indicated a private equity firm was looking to pick up the company post-bankruptcy.

Lyondell gains on renewed deal talk

Lyondell Chemical Co.'s bonds have recently been firming, with traders citing speculation that the Houston-based chemical manufacturer could be in play, and on Friday, that paper was up again, as a potential suitor was seen as now more likely to do a deal for it.

A trader saw its 8¼% notes due 2016 up a point at 110.75 bid, 111.75 offered.

At another desk, those 81/4s were seen up 3/8 at 110.75, although its 8% notes due 2014, while actively traded, finished unchanged on the day, at 107.75.

Some market-watchers said the decision by General Electric Co. to sell its plastics division to Saudi Arabia's state-controlled Saudi Basic Industries Corp. frees another company which had been in the running to buy that division, Dutch chemicals maker Basell, to possibly make an offer for Lyondell instead. Basell is controlled by Access Industries, a New York-based private equities group run by billionaire coal and oil entrepreneur Leonard Blavatnik. Access Industries' recent confirmation that it has taken an 8.3% stake in Lyondell sparked the upturn in the company's debt and shares.

Trump backs off gains

Trump Entertainment Resorts' 8½% notes due 2015 - which were seen having gained anywhere from 2 to 3 points on Thursday, after the company announcement that it "has recently received preliminary and conditional indications of interest from parties proposing to acquire the company" - were seen unchanged to perhaps a littler lower on Friday.

A trader said that the bonds were "basically unchanged," around 101.5 bid, 102.5 offered, while another source saw them actually off ¼ point at 102.

Thursday's late-in-the-session announcement gave no details as to the identity of the potential suitors, the amount of the offers, or what conditions any bid would carry.

Trump, which operates three hotel-casino complexes in Atlantic City, announced in March that it had hired Merrill Lynch to assist it in evaluating strategic alternatives, including the possible sale of some or even all of the company.

Board clears way for Clear Channel deal

Also on the M&A merry-go-round, some issues of Clear Channel Communications were actually seen better, as the company announced that one of the last obstacles to its planned nearly $20 billion acquisition had been cleared, with all of the major stockholders now on board.

Although the bonds have recently been struggling, reflecting apparent bondholder unease over the sure increase in leverage from the LBO, some were seen firmer on Friday, mostly in late dealings.

Its 5¾% notes due 2013 were seen up 3 points at 95.5, as were its 6 7/8% notes due 2013, at 94.5. However, traders cautioned that volume levels were thin, so the bond movements might not necessarily be that representative of reality.

Primary catches breath

The new issue market produced very little news on Friday.

Neff Corp. downsized to $230 million from $250 million its offering of eight-year senior unsecured notes (Caa2/B-), according to informed sources.

The Miami-based construction equipment rental company shifted $20 million of the acquisition financing to its second-lien term loan, upsizing it to $290 million from $270 million. Neff also cut the price talk on the second-lien loan by 100 basis points, to Libor plus 350 basis points from Libor plus 450.

Price talk on the bond deal, now on the road, is expected to surface on Monday.

Banc of America LLC, CIBC World Markets and UBS Investment Bank are leading the bond offering.

$7 billion week

With no issues pricing on Friday the May 14 to May 18 week came to a close having seen slightly more than $7 billion of issuance in 13 dollar-denominated tranches.

Hence the high yield primary topped the $5 billion weekly issuance mark for the third week in a row.

May is poised to become the biggest month for issuance thus far in 2007.

With eight sessions remaining in the month, May issuance was nearing $19 billion at the Friday close. So May should easily top the current leader, March, which saw $19.4 billion.

At Friday's close year-to-date issuance stood at just under $78 billion in 203 dollar-denominated tranches, which might compel some observers to start wondering whether the all-time issuance record of $156.6 billion, set last year, will stand.

With 4½ months of 2007 now in the bag, the dollar-amount of issuance for the present year is 52% higher on a year-over-year basis compared to the record-setting year of 2006, which had seen slightly less than $51.25 billion at the May 18 close.

The week ahead

Aside from the above-mentioned Neff transaction, there was practically no news on the deals stationed on the forward calendar as business expected to clear the market during the holiday abbreviated May 21 to May 25 week.

In addition to Neff, the week's deals are expected to include:

• Claire's Stores Inc.'s $935 million two-part offering via Bear Stearns, Credit Suisse and Lehman Brothers;

• Fontainebleau Las Vegas with $675 million of eight-year second-mortgage notes, a transaction being led by Banc of America Securities, Barclays Capital, Deutsche Bank Securities and Merrill Lynch & Co.;

• UHS Merger Sub, Inc. (Universal Hospital Services, Inc.) with a $460 million two-part offering of eight-year second-lien senior secured notes, being managed by Merrill Lynch & Co., Bear Stearns & Co. and Wachovia Securities; and

• Bonten Media Acquisition Co.'s $125 million offering of eight-year senior subordinated PIK toggle notes (Caa1/CCC+), a deal which is being led by bookrunner Lehman Brothers.

Stephanie N. Rotondo contributed to this story.

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