Accellent, Credit Acceptance slate deals, SEAT Pagine hits road; Williams up on merger plan

By Paul Deckelman and Paul A. Harris

New York, Jan. 19 - High yield market players returned to work Tuesday after their three-day holiday hiatus, although things had slowed considerably from the frenzied pace seen last week, when over $9 billion of new paper priced.

There were no pricings seen on Tuesday, although several new deals did climb aboard the forward calendar, for likely pricing later in the week. Medical devices company Accellent, Inc. announced plans for a $400 million offering of 10-year secured notes, with syndicate sources indicating that the Wilmington, Mass.-based company's deal could come to market as early as Wednesday afternoon or on Thursday morning.

Credit Acceptance Corp., a provider of consumer auto loans, plans to be doing a little borrowing itself, with a $225 million issue of 10-year senior secured paper seen coming to market either Friday or Monday, following a short roadshow.

There were also primary-side developments from a pair of overseas issuers, with Italian telephone directory publisher SEAT Pagine Gialle SpA hitting the road to market €650 million of seven-year paper, structured as a two-part offering of fixed- and floating-rate notes. Brazilian meat processor Minerva Overseas II Ltd. was heard shopping around a $250 million issue of 10-year notes, with pricing likely some time during the week.

Traders meantime saw only relatively limited activity and little price movements in the notable new deals which came to market last week, including Friday's offering from Teekay Corp., the mega-deal from Hexion Finance Escrow LLC/Hexion Escrow Corp. and the add-on issue from Ford Motor Credit Co., all priced on Thursday.

Among established bonds with no new-deal impact, Williams Cos. Inc.'s bonds were seen improved on the news that the Tulsa, Okla.-based natural gas company will merge its pipeline and processing units, yielding some $3.5 billion for the parent company.

Out of the distressed-debt precincts came word that Lyondell Chemical Co.'s bonds rose after several rulings by the bankruptcy court judge overseeing its reorganization. There was little market response to the news that American International Group Inc. is in talks to sell a major unit to MetLife Inc. NewPage Corp.'s bonds fell in the wake of the unexpected resignation of its chief executive officer.

Primary quiet

The high yield primary market passed a relatively quiet Tuesday, as U.S. players returned from the three-day weekend that concluded with Monday's federal holiday commemorating Dr. Martin Luther King, Jr.

Money continues to come into the high-yield asset class in a meaningful volume, an East Coast fund manager commented.

Accellent starts marketing $400 million

Accellent Inc. plans to price a $400 million offering of seven-year senior secured notes on Wednesday afternoon or Thursday morning.

Credit Suisse, Wells Fargo Securities and UBS Investment Bank are joint bookrunners for the bank debt refinancing from the Wilmington, Mass.-based provider of outsourced design, engineering and manufacturing of custom components, primarily for medical device firms.

Credit Acceptance for this week

Meanwhile Credit Acceptance Corp. will roadshow a $225 million offering of seven-year first-priority senior secured notes this week.

The deal is expected to price on Friday or on Monday.

Proceeds will be used to pay down the company's revolver and a portion of its revolving secured warehouse facilities.

The prospective issuer is a Southfield, Mich.-based provider of auto loans to consumers.

Brazil's Minerva to bring $250 million

Brazil's Minerva Overseas II Ltd. plans to price a $250 million offering of 10-year senior fixed-rate notes (B3/expected B-/B) this week.

Goldman Sachs & Co. and BB Securities are joint bookrunners for the debt refinancing deal from the Sao Paulo, Brazil-based meat processing company.

SEAT Pagine starts roadshow

Elsewhere, Italian yellow pages publisher SEAT Pagine Gialle SpA began a roadshow in Europe, on Tuesday, for its €650 million two-part offering of senior secured notes (B+).

The deal is structured in tranches of seven-year fixed-rate notes, which come with 3.6 years of call protection, and seven-year floating-rate notes which come with two years of call protection.

Deutsche Bank is in the lead.

Proceeds will be used to refinance the Turin, Italy-based company's senior credit agreement.

Teekay paper trades easier

A trader said that Teekay Corp.'s 8½% notes due 2020 were trading around 101½ bid, which he characterized as "a little bit down from where they were on Friday," while cautioning that he had not seen an offered level.

At another shop, a trader said that the bonds had traded within a 1013/4-102¾ context, but then retreated to a final level around 101-102.

The Hamilton, Bermuda-based ocean tanker fleet operator priced its $450 million of notes, upsized from the originally planned $300 million, last Thursday at 99.181 to yield 8 5/8%.

Ford Credit bonds back off, temporarily

A trader said that Ford Motor Credit's new 8 1/8% notes due 2020 - priced last week as an add-on to the company's identical existing issue - "were off just a little bit today," seeing them "trade down a little" around the 100 3/8 bid, 100½ offered level, before ending the day having moved back up to around the 100¾ bid, 101 offered level at which they had gone home on Friday.

Another trader saw the bonds at 100 5/8 bid, 100 7/8 offered, while a third pegged them at 100¼ bid, 101 offered.

Dearborn, Mich.-based Ford Credit, the automotive financing arm of parent carmaker Ford Motor Co., priced $500 million of the notes - upsized from the originally planned $250 million -- at par on Thursday to yield 8 1/8%. Unlike the original $750 million issue, which priced on Dec. 7 at 98.304 to yield 8 3/8%, the new bonds broke above their issue price from the get-go, and have been staying there ever since then.

Hexion heads lower

Thursday's $1 billion offering of 8 7/8% senior secured notes due 2018 by Columbus, Ohio-based specialty chemicals producer Hexion was quoted by a trader on Tuesday at 98 7/8 bid, 99 1/8 offered, although another trader said he had not seen the issue in action on Tuesday.

Those levels were slightly easier than the 99 3/8 bid, 99¾ offered level at which they had been seen going home on Friday.

Hexion's mega-deal - solidly upsized from the originally announced $700 million -- had priced on Thursday at 99.296 to yield 9%. In Friday's dealings, the bonds had moved as high as 100¾ bid, before giving substantially all of those gains back to end a little bit above their issue price.

Market indicators ease off

Among the established bonds with no new-deal connections, a trader saw the CDX Series 13 index down 1/8 point on Tuesday, ending at 99 3/8 bid, 99 5/8 offered, after having retreated by 3/8 point on each of the two previous sessions.

The KDP High Yield Daily Index meanwhile lost 8 basis points on Tuesday to 71.95, after having fallen by 16 bps on Friday.

Advancing issues fell behind decliners on Tuesday, breaking a three-session winning streak, although the margin of difference was about two dozen issues out of more than 1,500 tracked.

Overall market activity, as measured by dollar volume levels, eased about 2% from Friday's pace.

A trader characterized Tuesday's market as "pretty quiet. Things seem to be not as fast and furious as it was two weeks ago, right after the [year-end] break - but it seems that bonds are still being lifted."

"We got off to a quiet start this morning" agreed another trader, who added "I guess people were coming back from the three-day weekend, and it just took a couple of hours to get things going back up to speed." Even after that, though, he allowed that "there was nothing too exciting to report."

Yet another trader flatly declared that "it was a little boring here."

Williams deal wows market

Among specific issues not linked to the new-deal realm, traders saw Williams Cos. bonds heading higher, propelled by news of its planned consolidation of several affiliates.

A trader saw the Williams 8¾% notes due 2020 trading at 128½ bid, for a 5% yield on volume of over $10 million. The bonds were trading about 6 points over their last previous round-lot level, which was notched a week ago.

Williams' 8¾% bonds due 2032 saw "decent trading" of over $8 million, the trader said, calling the issue "up a couple of points" versus Friday, to around the 125 level. He also saw the company's 7½% bonds due 2031 up 4 points on the day at 114, with $6.5 million traded.

He said there "really wasn't anything going on" with the other bonds in the company's capital structure.

However, a market source saw Williams Partners LP's 7¼% notes due 2017 up more than 9 points, on brisk trading, to the 112 level.

Williams' paper rose after the company announced its plans to merge Williams Partners, its natural gas processing company, and another affiliate, Williams Pipeline Partners. As a result of the $12 billion deal, which includes $2 billion in debt, parent Williams stands to get about $3.5 billion in cash from Williams Partners, and will also reap a handsome reward of 203 million units of the partnership, upping its stake from 24% to 80%.

Lyondell leaps forward

A trader said that Lyondell Chemical Co.'s bonds rose amid news that the New York bankruptcy court judge overseeing the Houston-based chemical company's restructuring had granted an extension of the company's exclusive rights to file a reorganization plan until April 15, had turned down a creditor request that an independent examiner who had already filed a report on certain aspects of the case be allowed to continue examining how Lyondell is evaluating a takeover bid from India's Reliance Industries Ltd., and likewise nixed a creditor motion to halt "adequate protection" payments of about $40 million per month to Lyondell's first-lien lenders; Judge Robert Gerber warned that doing so would cause the company to default on its bankruptcy financing agreement.

Against that news backdrop, the trader said that there was 'good volume" in Lyondell's 9.80% notes due 2020, which he saw in an 81-82 context, up around 7 points on the day, while its 7.55% notes due 2026 moved up 5 points to 80. He noted that the last time there had been any size trading in the credit was a week ago, but added that "today, for a $150 million issue, there was very good trading."

While he saw Lyondell's 10¼% notes scheduled to come due on Oct. 1 trading at 80, which he called up 4 points on the day, he added that this was just one trade at that level. "I didn't see a lot of volume" in that issue, he added.

AIG little moved on news

A trader saw little or no real movement in the bonds of American International Group, or its various subsidiaries, despite news reports that the troubled New York-based insurance giant was in talks to sell its American Life Insurance Co. subsidiary to more financially solvent rival MetLife Inc. for somewhere around $14 to $15 billion . Late reports Tuesday said that the two big insurers -- who have been in discussions for months about a potential sale of Alico - were nearing a deal.

He saw "not much difference" in the levels at which AIG unit American General Financial Corp.'s 6.90% notes due 2017 and 4% notes due 2011 were trading, with the 6.90s around 76 bid, and the 4s around 93½ bid.

"You wouldn't see it [i.e. the news about the MetLife talks, reflected in the levels for those bonds] in that, unless I'm missing the issues that they're talking about," he declared.

A second trader said that about $8 million of the 4s had traded between 92½ and 931/2, which he called unchanged to maybe up a point. He also saw $11 million of the 4.70% notes due later this year unchanged around the par bid level.

The rest of AIG, he said "was all odd lots," with not much volume or price change."

However, at another shop, AIG's 6¼% bonds due 2036 were seen having gained 2 points to the 75 bid level, while its International Lease Finance Corp.'s 5.65% notes due 2014 were quoted down nearly 3 points, around 83.

Visteon gyrates, ends little moved

A trader saw Visteon Corp.'s bonds "moving around a little" and "bouncing back and forth" before ending pretty much unchanged, apparently not much impacted by the news that the bankrupt Van Buren Township, Mich.-based auto parts supplier is studying a reorganization proposal put forward by its bondholders and other unsecured creditors - who are looking to make a case for an alternative to the company's own plan, which would virtually transfer ownership of the company to its secured lenders.

He saw the company's 7% notes due 2014 finishing around 45 bid. "There were some trades in it," he said, "but I'd leave it unchanged." He said that the company's other issue, the 8¼% notes slated to come due this coming Aug. 1 were around 46, but on "not much activity."

The scheduled Jan. 28 hearing before the U.S. Bankruptcy Court in Wilmington, Del., to consider approval of the company's disclosure statement, was postponed to Feb. 18 to allow company executives more time to consider the alternative plan.

Also in the autosphere, the trader saw General Motors Corp.'s benchmark 8 3/8% bonds due 2033 unchanged around 28 bid, on "not much volume," adding that "those two auto types [i.e. Visteon and GM] didn't seem to have much activity."

However, a trader at another shop called the GM long bonds up ¾ point at 28½ bid, 29 offered, while GM domestic arch-rival Ford 's 7.45% bonds due 2031 were unchanged at 91 bid, 92 offered.

NewPage slips on CEO exit, numbers

NewPage's 10% notes due 2012 were "pretty active," a trader said, as the Miamisburg, Ohio-based papermaker announced its top executive had resigned.

The trader said the bonds were down "probably 3 to 4 points" on the news, ending around 78.

He added that the company "also put out some numbers, which I guess people took negatively."

Richard D. Willett Jr.'s resignation from the chief executive post was effective Jan. 18. He will remain as a consultant until March 31. In the interim, until a new CEO is found, former CEO and current executive chairman Mark A. Suwyn will act as CEO.

"After considerable personal reflection on my longer term career interests, I have made the difficult decision to leave NewPage to pursue opportunities in other industries," stated Willett in a press release. "A smooth transition is important to me, and I have agreed to assist Mark Suwyn and the NewPage management team as needed as a consultant to the company, and then further through a two-year consulting arrangement with Cerberus Operations."

"While there is never a perfect time for a transition, Rick and I, along with the board of directors, have mutually agreed on this timing and feel that NewPage is well positioned for the future now that the acquisition of Stora Enso North America has been successfully integrated," stated Suwyn. "Rick has made enormous contributions to NewPage over the past four years and we all wish him well in the future."

In addition to the management change, NewPage also gave preliminary fourth-quarter results in an 8-K filing with the Securities and Exchange Commission.

For the quarter, NewPage is estimating net sales between $853 million and $861 million, compared to $977 million in the same quarter of 2008.

Net loss is expected to be between $52 million and $57 million. The company posted $42 million loss in the fourth quarter of 2008 and a loss of $138 million in the third quarter of 2009.

As of Dec. 31, 2009, NewPage had $4 million in cash and equivalents and $219 million available under its revolving senior secured credit facility.

-Stephanie N. Rotondo contributed to this report

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.