Oxford Automotive scraps $240 million deal, cites market conditions

By Paul Deckelman

New York, Aug. 19 - Oxford Automotive Inc. was heard by high yield syndicate sources Tuesday to have cancelled its planned $240 million offering of senior secured second lien notes - the latest of several deals which have bitten the dust recently due to deteriorating market conditions.

There was no immediate indication as to when the deal might possibly come back - or even if it would return at all in some form or another.

Oxford (B3/B-) had been expected to come to market with between $140 and $170 million of fixed-rate notes due 2011, and between $70 million and $100 million of floating-rate notes due 2008.

Pre-deal price guidance on the fixed-rate tranche had indicated a yield of around 12 5/8%, while the floaters had been expected to price at Libor plus 875 basis points.

The notes were to have been sold in units with warrants to buy 2% of the company.

The deal - which showed up on investors' radar screens the first week in August - was originally shopped around by joint book-running managers Lehman Brothers and Credit Suisse First Boston as a single-tranche of eight-year fixed-rate notes, with no warrants, and had been expected to price last week.

Last Thursday, however, syndicate sources said that the deal had been split into two parts with the addition of the floating-rate tranche and the equity component had been added as a sweetener, apparently after initial investor reluctance to hitch a ride with Oxford, a Troy, Mich.-based supplier of metal-formed assemblies for the automotive industry.

With market activity curtailed on Friday by the blackout-related early close, the deal was floated over until this week and was one of the few features on a nearly-empty forward calendar.

With the demise - at least for now - of the Oxford deal, "we have our forward calendar for the rest of the week showing nothing," a primary-side source declared late Tuesday.

The source said that the buzz he had heard even before news of the postponement spread around had been that "Oxford was struggling for days on end, even after revising the structure to include the floating-rate tranche, the warrants and the 12 5/8% talk, they just couldn't get the book together. So I guess it was not a surprise actually that it postponed."

Company officials could not be reached late Tuesday to comment on the deal's postponement.

Oxford's spiked offering was the latest of several deals to be pulled back in the wake of recently worsening conditions in the fixed-income markets.

High yield players have seen four straight weeks of net outflows from junk bond mutual funds, a closely watched barometer of overall market liquidity trends, with over $1 billion more of cash leaking from the funds than seen coming into them in each of the past three weeks. During that time, the formerly robust secondary market has weakened and the formerly red-hot new-issue market has cooled considerably.

Last week, Charter Communications Inc. said that it had decided not to go ahead with plans to sell $1.7 billion of new junk bonds and then use the proceeds to tender for over $1 billion of mostly straight and some convertible bond debt, and to repay $500 million of bank debt as well. Other recently shelved deals included Gristede's Foods Inc.'s $150 million seven-year offering, a $250 million five-year senior secured offering from Panavision Inc. and $250 million eight-year senior notes from FHC Health Systems, Inc.

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