Outerwall, Polymer, Air France price; Quiksilver rebounds; RadioShack ends run up; JCPenney gains

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, June 4 - Two medium-sized dollar-denominated new deals priced along with a substantial European offering during Wednesday's session in the high-yield market.

Outerwall Inc. sold a $300 million issue of seven-year senior notes on top of talk and Polymer Group, Inc. priced an upsized $210 million issue of five-year senior notes. Polymer's deal came at the tight end of talk that had been cut significantly from early guidance.

But both dollar deals were overshadowed by activity in Europe where Air France KLM priced €600 million of seven-year notes. That deal also came at the tight end of talk which had been revised downward from initial levels.

Several new deals were added to the calendar, but again Europe took the limelight as Ardagh Group announced a $1 billion equivalent transaction that will be split between dollar-denominated and euro-denominated notes, all of them to be sold as senior PIK debt.

In the secondary, the high-yield bond market was holding its ground Wednesday, even amid weak economic data.

The ADP National Employment Report for May was released Wednesday, showing that private employers added 179,000 jobs during the month of May. That was down from the 215,000 jobs added in April and well below expectations of 210,000 jobs.

Still, the data indicated that employers needed only 113,000 additional jobs in order to break even with pre-financial crisis levels.

The Commerce Department also released a report at midweek that showed the U.S. trade deficit widening to its highest point in just over a year. The trade deficit grew by 6.9% in the last month.

The number was attributed in part to an increase in imports, especially in consumer goods. However, that could indicate that demand is picking up, which could then result in increased supply domestically - a move that could spur economic growth.

But while the overall market was treading water, Quiksilver Inc. debt rallied after taking a beating on Tuesday on the back of disappointing earnings. One trader opined that the rebound was due to the losses being overdone.

Elsewhere, RadioShack Corp.'s recent run-up came to a halt Wednesday. The company held its annual shareholder meeting on Tuesday and said that it was continuing to negotiate with lenders regarding its plans to close underperforming stores.

Also in retailing, J.C. Penney Co. Inc. paper remained busy ahead of the company's launch of a new credit facility on Thursday.

Outerwall prices $300 million

In Wednesday's primary market, Outerwall priced a $300 million issue of seven-year senior notes (Ba3/BB-) at par to yield 5 7/8% on Wednesday, according to a press release from the company.

The yield came on top of yield talk, and in line with earlier whisper that had the deal coming in a high 5% yield context, according to a trader.

HSBC Securities (USA) Inc., BofA Merrill Lynch, US Bancorp and RBC Capital Markets were the joint bookrunners.

Proceeds will be used to repay bank debt, with a portion of the proceeds possibly set aside for general corporate purposes which may include but are not limited to maintenance or repayment of other outstanding debt, acquisitions or other investments, and the payment of other corporate expenses.

Polymer upsizes

Polymer Group priced an upsized $210 million issue of five-year senior notes (Caa1/CCC+) at par to yield 6 7/8% on Wednesday, according to a syndicate source.

The yield printed at the tight end of yield talk in the 7% area. Early guidance was 7¼%.

The deal was increased from $200 million.

Citigroup Global Markets, Barclays, RBC Capital Markets and HSBC were the joint bookrunners.

Proceeds will be used to help fund the acquisition of 71.25% of Companhia Providencia Industria e Comercio, a Brazilian manufacturer of nonwovens used in hygiene, health-care and industrial applications. Additional proceeds resulting from the $10 million upsizing will be used for general corporate purposes.

Polymer Group is a Charlotte, N.C.-based producer of engineered materials with a focus on nonwoven products.

Jack Cooper sets price talk

Jack Cooper talked its restructured $150 million offering of five-year senior PIK toggle notes (Caa2/CCC-) with a coupon of 9¾% to 10% pricing at 99 to yield approximately 10% to 10¼%, according to an informed source.

The Rule 144A and Regulation S for life deal is set to price on Thursday.

Wells Fargo Securities LLC is the left bookrunner. Barclays is the joint bookrunner.

In structural changes, call protection was increased to two years from one year. The first call premium remains unchanged at 102.

The equity clawback was also restructured, with the callback premium increased to 105 from 102.

The issuer will by JCH Parent, Inc.

The Kansas City, Mo.-based transport distribution services provider plans to use the proceeds to pay cash dividends, to make a contribution to Jack Cooper Holdings Corp. for the purpose of repaying bank debt, to make the first interest payment due on the notes and for other general corporate purposes.

Ardagh's $1 billion dollar/euro

Ardagh Finance Holdings SA plans to hold a global investor conference call on Thursday to discuss a $1 billion equivalent offering of five-year senior PIK notes (existing ratings Caa2/CCC+), which it will offer in dollar- and euro-denominated notes, according to an informed source.

The deal is expected to price late Thursday or early Friday.

Citigroup Global Markets is the bookrunner for the Rule 144A and Regulation S for life offer.

The issuer is a financing subsidiary of Dublin, Ireland-based glass and metal container manufacturer Ardagh Group, which plans to use the proceeds to refinance its 11 1/8% senior secured PIK notes due 2018 and fund a €73 million shareholder dividend.

LMI Aerospace starts Thursday

LMI Aerospace, Inc. plans to start a roadshow on Thursday for a $250 million offering of five-year senior secured second-lien notes, according to a syndicate source.

The deal is set to price late in the week ahead.

RBC Capital Markets Corp. is the left bookrunner for the Rule 144A and Regulation S with registration rights offer. Wells Fargo Securities LLC and SunTrust Robinson Humphrey are the joint bookrunners.

The St. Charles, Mo.-based company plans to use the proceeds to repay its existing term loan and to repay revolver borrowings.

LMI Aerospace is a supplier of components and provider of engineering services to the aerospace and defense industries.

All Aboard plans PIK toggle

All Aboard Florida plans to price a $390 million offering of five-year senior secured PIK toggle notes on Friday, according to a market source.

J.P. Morgan Securities LLC and Morgan Stanley are the joint bookrunners for the Rule 144A and Regulation S for life offer. BMO Securities is the co-manager.

Proceeds will be used to finance all or part of the Miami to West Palm Beach portion of a higher speed intercity passenger train line from Miami to Orlando.

The deal comes with a mandatory redemption at par if the company abandons the project before the opening deadline, and with an offer to purchase the notes at par if the project fails to open by the opening deadline.

The issuing entities are AAR Holdings LLC and AAF Finance Co.

All Aboard Florida, a subsidiary of Florida East Coast Industries, is a Coral Gables-based privately owned passenger rail system.

Air France prices

In the European market, Air France KLM priced a €600 million non-rated issue of 3 7/8% seven-year notes at 99.25 to yield 4% on Wednesday, according to a market source.

The yield printed at the tight end of revised yield talk in the 4 1/8% area. Earlier talk was 4 1/8% to 4¼%.

HSBC and Natixis were global coordinators and active bookrunner. ING and SG CIB were also physical bookrunners. HSBC will bill and deliver.

The Paris-based French-Dutch airline holding company plans to use the proceeds to repay debt and for general corporate purposes.

Markets holds steady

Back in the secondary, market indicators were little changed during midweek trading.

The KDP High Yield index came in to 74.9, versus 74.92 on Tuesday. Its yield held steady at 5.1%.

The CDX North American High Yield index was meantime down a shade at 108 5/16 bid, 108 7/16 offered, according to a market source.

But while the market was barely changed from the previous session, one trader did remark that there was "a little bit more volume today."

Quiksilver rebounds

Quiksilver debt was the day's "big winner," a trader said, just one day after the company's bonds took a pretty serious hit.

The trader saw the 10% notes due 2020 gaining "almost 4 points" to end at 104 3/8.

The bonds had fallen as much as 14 points in the previous session following the company's earnings release late Monday.

Another trader called the issue up 4 points at 104.

"That one definitely rebounded," he said. "Some guys probably looked at it and said [the losses] got overdone."

Even the stock (NYSE: ZQK) rallied a bit, closing up 8 cents, or 2.35%, at $3.49.

The shares had ended Tuesday's session down over 41%.

Late Monday, the Huntington Beach, Calif.-based clothing manufacturer reported second-quarter earnings that were less than stellar, causing investors to question a plan to increase profitability that was unveiled last year.

For the second quarter, Quiksilver reported a net loss of $53.1 million, or 27 cents per share. That compared to a loss of $32.4 million, or 20 cents per share, the year before.

Revenues fell 11% to $408 million.

Analysts were expecting a loss of 2 cents per share on revenues of $448.8 million.

Total wholesale revenue was down 15%, but e-commerce sales increased 23%.

The company is making moves to cut costs and focus on its core brands in an effort to increase its bottom line. However, given the quarter's dismal results, the company said it would now take longer to realize its goal.

RadioShack retreats

RadioShack's 6¾% notes due 2019 retreated on Wednesday, just one day after the company's annual shareholder meeting.

"[The bonds] were a little bit weaker after that big run up," a trader said, seeing the notes dip to 48 from levels around 50 previously.

At its annual meeting on Tuesday, the Fort Worth-based electronics retailer said that it hoped to overcome an "impasse" with lenders regarding its plan to shutter 1,100 stores in the next year. Lenders have vetoed that plan, which violates debt covenants.

For now, the company is moving ahead with plans to close 200 stores per year for the next three years.

However, Joseph Magnacca, chief executive officer, said that he is in "almost daily" conversations with lenders in the hopes a compromise can be reached.

Magnacca also said that the company is in talks with landlords in an effort to reduce rents.

J.C. Penney to launch loan

Among other retailers, J.C. Penney "continued to be pretty active," according to a trader.

He saw the 7.4% notes due 2037 ending at 84½ and the 6 7/8% notes due 2015 - which he said had "a lot of volume" - in a 101½ to 101¾ range.

Another trader said the 7.4% notes were up ½ point at 841/2, while the 6 7/8% notes were unchanged at 1013/4.

Another market source deemed the 5.65% notes due 2020 off a point at 861/4.

The Plano, Texas-based retailer is launching a new $2.35 billion credit facility on Thursday. It is expected to consist of a $500 million term loan and a $1.85 billion asset-based revolver.

Proceeds will go toward refinancing an existing credit facility and for general corporate purposes.

Bank of America Merrill Lynch, Wells Fargo Securities LLC, J.P. Morgan Securities LLC, Barclays and Goldman Sachs Bank USA are the lead banks on the deal, with Bank of America the left lead on the term loan and Wells Fargo the left lead on the revolver.

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