CGG, Simmons deals price; Hayes Lemmerz jumps on equity-for-debt plan

By Paul Deckelman, Paul A. Harris and Stephanie N. Rotondo

New York, Feb. 2 - Compagnie Generale de Geophysique-Veritas was heard by high yield syndicate sources to have successfully priced its $600 million two-part note offering Friday. The new bonds were seen by participants in the secondary market as having firmed smartly when they were freed for trading.

Simmons Mattress was also heard to have priced an offering of holding company payment-in-kind toggle debt - paper which though technically a loan, prices off high yield desks. French paper manufacturer Lecta SA meantime tapped the market for an upsized two-part offering of euro-denominated notes.

Price talk was heard on CEVA Logistics' euro-denominated PIK paper, while Jarden Corp. announced plans for a $400 million note offering.

In the secondary arena, apart from the good reception the new CGG notes got, the major story was strength in the automotive parts sector, particularly in Hayes Lemmerz International Inc., which said that it would seek the consent of its senior lenders to exchanging stock for its outstanding notes, and which also announced an asset sale and a plant closing.

Also among the automotives, ArvinMeritor Inc. announced plans for a $310 million asset sale, which helped the Troy, Mich.-based parts maker's bonds. And American Axle & Manufacturing Holdings Inc.'s bonds got a boost from the company's optimistic 2007 forecast.

Outside of the autosphere, Sea Containers Ltd. paper was seen cruising along at higher levels, although there seemed to be no fresh positive news out on the company.

Friday's primary market saw two issuers, both of them based in France, price a total of four tranches of notes for proceeds of $600 million and €748 million.

Three of the four tranches came inside of price talk while the remaining tranche - the slacker of the session, so to speak - merely came at the tight end of the price talk.

CGG rejigs

Compagnie Generale de Geophysique-Veritas (CGG) priced a restructured $600 million two-part senior notes transaction (Ba3/B+) on Friday.

The Massey, France-headquartered seismic data services provider to the oil and gas exploration and production industry priced a downsized $200 million add on to to its 7½% senior notes due May 15, 2015 at par, inside of the 99.00 to 99.50 price talk. The add on was downsized from $300 million.

The original $165 million issue priced at par in April 2005, and a $165 million add-on priced at 103.25 in January 2006, resulting in a yield to worst of 6.9%, and a yield to maturity of 7.016%. The total size of the existing issue is $330 million.

In addition CGG priced an upsized $400 million issue of new 10-year senior notes at par to yield 7¾%, on the tight end of the 7¾% to 7 7/8% price talk. The new senior notes tranche was upsized from $300 million.

Credit Suisse led the issue, which is being used to refinance debt related to a merger.

Lecta upsizes

Elsewhere, French paper manufacturer Lecta SA priced an upsized, restructured €748 million two-part seven-year floating-rate notes transaction on Friday.

The Paris-based company priced an upsized €598 million tranche of senior secured notes (Ba3/BB-) at par to yield three-month Euribor plus 262.5 basis points. The interest rate came 12.5 basis points inside of the Euribor plus 275 to 300 basis points price talk. The secured notes tranche was upsized frm €648 million.

Meanwhile Lecta priced a downsized €150 million tranche of senior unsecured notes at par to yield three-month Euribor plus 400 basis points, 12.5 basis points inside of the Euribor plus 425 basis points area price talk. The unsecured notes tranche was downsized from €175 million.

Deutsche Bank Securities ran the books for the two-part debt refinancing transaction which was upsized from €648 million.

$3.675 billion week

Friday's dollar-denominated issuance from CGG took the week's issuance tally to $3.675 billion in 13 dollar-denominated tranches.

That takes 2007 year-to-date issuance - with slightly more than a month in the books - to just under $14.4 billion in 45 tranches.

Hence at the close of the January-February crossover week, 2007 issuance continues to lag that of the record breaking year of 2006, which had seen slightly less than $15.9 billion price in 34 tranches at the Feb. 2 close.

PIK loan deals

Friday also saw action on the "holdco PIK toggle"-front.

Simmons Holdco, Inc. priced its $275 million five-year senior unsecured PIK toggle term loan with a cash-pay coupon of Libor plus 525 basis points on Friday at an issue price of 99.00.

The deal came on top of price talk.

Deutsche Bank Securities, Goldman Sachs & Co. and Citigroup were joint bookrunners.

The notes will feature a 75 basis points coupon step up in the event the issuer elects to make an in-kind (as opposed to cash) interest payment.

Elsewhere Netherlands-based Louis Topco Ltd., the holding company for CEVA Logistics, talked its €250 million PIK loans due June 2017 to price at 99.00 and pay interest at a 775 basis points spread to Libor.

The loans, which will be exchangeable into notes, are expected to price on Monday.

Credit Suisse is the bookrunner.

Proceeds from both Simmons' and CEVA's deals will be used to fund dividends.

And a syndicate source confided to Prospect news that that Neiman Marcus Group might be thinking about doing a dividend-funding bond deal at the holding company level.

"People are speculating that's one of the reasons that they pre-released earnings," the official said, adding that "it could happen because of where the operating company bonds are trading."

Jarden launches $400 million

Jarden Corp. launched a $400 million SEC-registered offering of 10-year senior subordinated notes (B3/B-) on Friday via joint bookrunners Lehman Brothers and Citigroup.

The debt refinancing deal is expected to price on Wednesday.

CGG bonds up in secondary

When the new Compagnie Generale de Geophysique notes were freed for secondary dealings, a trader saw the 7¾% notes due 2017 at 102 bid, 102.75 offered, while its 7½% notes due 2015 had risen to 101.75 bid, 102.25 offered. Both were well up from their par issue price earlier in the session.

A trader saw the new Simmons Holdco toggle debt at 99.25 bid, 100.25 offered, up from a 99 issue price.

At another desk, a trader did not see that new paper - but did see the mattress maker's outstanding 7 7/8% senior notes due 2014 at 102.25 bid, 103.25 offered, while its zero-coupon/10% notes, also due 2014, were at 82.5 bid, 83.5 offered.

Also among the just-priced issues, Yankee Candle Co.'s new 8½% senior notes due 2015 firmed to 101.75 bid, 102.25 offered - up about ¼ point on the bid side and 3/8 point on the offered side from the levels those bonds had moved to in Thursday dealings, after having priced earlier that session at par.

The South Deerfield, Mass.-based scented candle company's 9¾% senior subordinated notes due 2017, which had also priced Thursday at par and then firmed smartly on the break to 102.25 bid, 102.625 offered, were maybe 1/8 to ¼ point firmer Friday at 102.375 offered, 102.875 offered.

Hayes rolls up big gains

Back among the established issues, Hayes Lemmerz was the big wheel in the automotive sector as the Northville, Mich.-based company's HLI Operating Co. 10½% notes due 2010 were seen by one trader to have gained as much as 5 points on the session to 99, before dropping off that peak to end at 97.5 bid, 98.5 offered - still up nearly 4 points he said.

At another desk, those bonds were seen having firmed as high as par from Thursday's levels just above 93, although by the end of the day, they had come off that peak to finish just below 97, a gain of 3 points-plus on the day.

The bonds got a boost when the company said that it is seeking consent from its secured lenders that would permit it to exchange its senior notes for equity.

The wheel maker also announced several measures to streamline its operations. It entered into a definitive agreement for the sale of its suspension business facilities located in Bristol, Ind., and Montague, Mich., to Diversified Machine Inc. for about $32 million - thus getting out of that segment of the industry - and also said it would relocate its Automotive Components Group headquarters and technical center to the corporate headquarters site in Northville, and would close its Ferndale, Mich. technical center.

While bondholders were excited that the prospect that Hayes Lemmerz might give them equity for their bonds, if the lenders will allow it, the ratings agencies held their applause.

Standard & Poor's kept the company's ratings unchanged, noting that while Hayes' actions "increase the possibility" that the company would pursue a debt-for-equity exchange at some point in the future, it does not believe that such a transaction is likely in the very near term, in part because of the recent rise in the market price of Hayes' senior unsecured notes and its decent liquidity.

However, S&P also added that it does not believe that Friday's announcement in itself foreshadows a decline in Hayes' credit profile from current levels.

ArvinMeritor gains

Another gainer in the automotive arena was ArvinMeritor, which announced plans for a $310 million asset sale.

A trader saw the company's 8 1/8% notes due 2015 firm to 99.5 bid, 100.5 offered, up from levels below 99 previously.

Another source saw its 8¾% notes due 2012 at around the 105 level, up from 103 on Thursday.

ArvinMeritor said it signed an agreement to sell its emissions technologies group to One Equity Partners for $310 million, expecting to complete the transaction during its fiscal third quarter ending June 30.

ArvinMeritor - which last year shed most of its light vehicle aftermarket business - said that it sold the emissions technologies unit in order to concentrate on its more profitable light and commercial vehicle business, which includes the assembly of chassis systems, drivetrain systems and vehicle safety systems.

American Axle up on forecast

American Axle's 5¼% notes due 2014 were seen up 2 points on the session to 87 bid, 88 offered, a trader said, citing the Detroit-based parts company's projections that it will generate $100 million in cash this year, helped by lower overhead costs following employee layoffs.

That hopeful outlook contrasted with negative quarterly results - a net loss of $188.6 million on revenue of $781.1 million, versus net income of $4.5 million on revenue of $852.6 million for the same period last year.

Remy weakens, Delphi steady

Elsewhere among the auto names, after several days of gains, automotive parts maker Remy International Inc. weakened, losing up to 3 points, according to one trader. The 9 3/8% notes due 2012 came in at 35 bid, 36 offered.

The Anderson, Ind.-based company jumped several points since Wednesday when the company announced the sale of its light- and medium-truck diesel engine and component manufacturing business to Caterpillar Inc. The sale, at a purchase price of $150 million, was made as Remy attempts to pay down some of its debt.

Delphi Corp. was one of the "most active" names of the day, though there was "not a lot of trading," a trader said. He said the notes saw "wide" price fluctuations throughout the day.

Still, the 6½% notes due 2009 closed unchanged at 110.50. The Troy, Mich.-based auto parts maker's 6.55% notes due 2006 eased a bit, off ½ point at 110 bid, 111 offered.

Meanwhile, another trader saw Dura Automotive Systems Inc.'s 8 5/8% notes due 2011 "trickling back down" to 31.5 bid, 32.5 offered ­ giving up gains they had notched on the rebound Thursday from Wednesday's nosedive. The bankrupt Rochester Hills, Mich.-based automotive components maker's senior bonds tumbled as much as 10 points on Wednesday¹s session, down into the mid 20s, before coming back from those lows to finish in the low 30s - still down 5 points on poor earnings data and market rumors that a large bondholder had bailed out.

Sea Containers keeps afloat

Outside of the auto sector, bankrupt Bermuda-based Sea Containers is "continuing to surge higher," one trader said. Another distressed trader agreed, placing the debt up about 3 points across the board on the day, adding, "I don't know why."

The trader pegged the bankrupt maritime and railroad transportation company's 10¾% notes due 2006 at 87 bid, 88 offered, a figure echoed from another desk, and showing the notes up from 84 bid, 85 offered earlier. Its 7 7/8% notes due 2008 were at 84 bid, 85 offered, up from 81 bid, 82 offered, and its 10½% notes due 2012 at 86 bid, 87 offered, up from 83 bid, 84 offered.

Elsewhere, a trader said the 103/4s were seen up 1¾ on the session to 87, the 101/2s were a bit easier at 86, while the 7 7/8% notes were up perhaps ½ point at 80.5. Trading volume was described as thin.

The recent activity in the bankrupt company comes despite a major stakeholder selling his shares of the company. Last week, Appaloosa Partners Inc.'s David Tepper reported selling 1.5 million shares, more than 50% of his stake at $1.6167 per share, according to a form 4 filed with the Securities and Exchange Commission.

Before the sale, Appaloosa owned 2.96 million shares, about 11.3% of the company's stock. The investment firm retained 1.46 million shares.

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