Paxson jumps on NBC buyout possibility; market awaits $1 billion-plus Crown mega-deal

By Paul Deckelman and Paul A. Harris

New York, Nov. 7 - Paxson Communications Corp.'s bonds were seen having firmed smartly on Monday, driven by the news that NBC-Universal had taken out an option to buy a controlling stake in the West Palm Beach, Fla.-based television station owner within the next 18 months.

On the downside, Dura Automotive Systems Inc.'s bonds were down more than a point, although nobody saw any specific news out on the Rochester, Hills, Mich.-automotive systems supplier that might explain the move.

In the primary sphere, price talk emerged on Crown Holdings Inc.'s two-part $1.1 billion offering, which is expected to price during Tuesday's session. Talk was also heard on upcoming issues from Tunica-Biloxi Gaming Authority and UmumProvident Corp. Deals were heard to have slated from prospective issuers TeamHealth, Accellent and Network Communications. And terms were heard on SemGroup LP/SemGroup Finance Corp.'s upsized issue of 10-year senior notes, which had priced on Friday evening.

Overall sources described the junk market as "quiet" and "listless" on Monday, with one sell-sider marking the broad market as much as one-quarter of a point better.

Meanwhile a buy-side source told Prospect News that with a building forward calendar attention now has shifted to the primary market.

A busy Tuesday

Although no issues priced during the Monday session, Tuesday figures to be a "fish-or-cut-bait" day in junkland, with as much as $2.7 billion of bonds expected to price in seven tranches.

Assorted details were heard on most of those deals.

Four-B drive-by deals

Terms are expected Tuesday on a pair of quick-to-market offerings of notes with ratings on both sides of the slash just one notch below investment grade.

San Antonio-based oil refiner Tesoro Corp. talked its $900 million two-part offering of senior notes (Ba1/BB+).

A tranche of seven-year bullets is expected to come at 6 1/8% to 6 3/8%, while Tesoro's 10-year notes are talked at 6½% to 6¾%.

Lehman Brothers, Goldman Sachs & Co. and JP Morgan are joint bookrunners.

Meanwhile Chattanooga, Tenn.-based UnumProvident Finance Co.'s $400 million offering of 10-year senior notes, also Ba1/BB+, is talked at Treasuries plus 235 basis points area.

JP Morgan and Citigroup are joint bookrunners.

Crown talks $1.1 billion

Tuesday's biggest deal, in terms of dollar amount, is from Philadelphia packaging firm Crown American LLC.

The company issued price talk Monday on $1.1 billion of senior unsecured notes in two parts (B1/B).

A $600 million tranche of 10-year notes is talked at a yield of 7½% to 7¾%, while a $500 million tranche of eight-year notes is talked 12.5 to 25 basis points inside the 10-year notes.

Citigroup, Lehman Brothers, Deutsche Bank Securities and Banc of America Securities are leading the deal.

Also in the single-B credit-range are deals from the Tunica-Biloxi Gaming Authority and Targus Group International, Inc.

Louisiana-based tribal gaming concern, Tunica-Biloxi Gaming, is talking its $150 million offering of 10-year senior notes (B2/B+) at 8¼% to 8½%.

Deutsche Bank Securities has the books.

Meanwhile Targus Group's $150 million offering of eight-year senior subordinated notes (B3/CCC+), via Goldman Sachs & Co. and UBS Investment Bank is talked at 11¼% to 11½%.

A building calendar

News circulated Monday on three offerings that will be marketed via investor roadshows.

Knoxville, Tenn.-based Team Health, Inc. plans to begin a roadshow Tuesday for its $265 million offering of eight-year senior subordinated notes.

JP Morgan, Lehman Brothers and Merrill Lynch & Co. are bookrunners for the LBO deal from the outsourced medical staffing, management, administrative and other support services provider.

Elsewhere, news emerged on two deals being led by Credit Suisse First Boston.

Accellent Inc. is in the market with a $325 million offering of eight-year senior subordinated notes (Caa1/B-) that is expected to price during the week of Nov. 21.

JP Morgan is the joint bookrunner for the acquisition deal from the Wilmington, Mass.-based medical device manufacturer.

And Network Communications, Inc., is expected to price its $175 million offering of eight-year senior subordinated notes (B3/CCC+) during the same week.

The Lawrenceville, Ga. real estate information service will use the proceeds to refinance debt.

SemGroup up in trading

When the new SemGroup 8¾% senior notes due 2015 were freed for secondary dealings, they were seen having firmed to 98.75 bid, 99.75 offered from their 98.376 issue price.

Paxson jumps on NBC option

Back among the established issues, Paxson Communications looked like the day's big winner, quoted up three to four points across the board on the NBC-Universal news.

A trader saw the company's bonds "quoted up three or four points on the news, without a lot of trading, which is mostly bid-for."

At another desk, those bonds were likewise seen higher, with a trader pegging the 10¾% notes due 2008 at 101.25 bid, 102.25 offered, up 3¼ points on the day, while the company's 12¼% notes due 2009 were up 4½ points, at 102.5 bid, 103.5 offered.

Paxson's American Stock Exchange-traded shares jumped 46 cents (112.20%) to 87 cents per share, on volume of 4.2 million shares, nearly 24 times the norm.

The bonds and shares rose after broadcasting giant NBC said that it had paid $25 million for an 18-month option to buy a controlling stake in Paxson. NBC currently has a 29% stake in the company. The voting control of the company is currently in the hands of the company's founder, Lowell "Bud" Paxson, who put together his 60-station network in the early 1990s, with the announced intention of offering "family friendly" programming as an alternative to that offered by NBC and the other major TV networks.

The NBC option, if exercised would let the General Electric Co. unit buy out Paxson's 63% controlling interest in his eponymous company. As part of the deal, Paxson agreed to step down as chairman and chief executive officer, with an NBC executive, Brandon Burgess, moving into those posts.

The deal also settles all outstanding litigation between the two companies. Paxson and NBC had sparred for several years over whether Paxson was obligated to buy back the stake held by NBC when the latter declined to proceed with a buyout of Paxson and instead chose to acquire the Spanish-language Univision network.

NBC currently cannot exercise its option to take control of Paxson, since acquiring the company would put it over the station ownership limits currently imposed by the Federal Communications Commission. It could, however, sell or otherwise transfer the option to a third-party company.

Paxson's broadcast TV stations, including a UHF station in New York City, along with its cable platforms, currently reach 83% of the nation's television households. While it still presents original programming in prime time, much of the rest of its schedule is filled with paid infomercial programming.

Delphi lower but quiet

Elsewhere, elsewhere, traders were using such words as "bland," and "boring" to describe the day's dealings. Borrowing the signature catch phrase of legendary rock-and-roll singer Jerry Lee Lewis, one said that there "was not a whole lot of shakin' going on."

Issues which had been moving around on Friday were generally becalmed on Monday. One such name was Delphi Corp., whose bonds had been hammered down from the upper 60s to around the 63ish level on Friday , when an auction to determine the value of some derivatives contracts that protected against the bankrupt Troy, Mich.-based automotive electronics manufacturer defaulting on its debt established a value in that area.

One trader quoted Delphi's 6.55% notes due 2006 and all of the company's other bonds in a 62.5-63.5 context, which he said was unchanged.

At least two other trader saw those bonds trade at 61 bid, 62 offered, which they called down two points, but the said there had not been much activity there.

They saw little market reaction to the news that a coalition of unions representing some 33,000 active Delphi workers announced its intention of vigorously fighting the company's demand for sharp rollback in pay and benefits it pays to its workers, claiming that Delphi is using the bankruptcy process "to dictate the radical destruction of the living standards of America's industrial workers."

Delphi meantime said it planned to continue negotiations on a new labor structure with the United Auto Workers union and the other five unions in the coalition - the International Union of Electrical Workers-Communications Workers of America, the United Steelworkers, The International Brotherhood of Electrical Workers, the International Association of Machinists and Aerospace Workers and the International Union of Operating Engineers. Delphi has demanded cuts of as much as 60% in wages and benefits, saying it cannot survive otherwise.

Dura drops

Also on the automotive front, Dura Automotive Systems' benchmark 9% notes due 2009 were seen down as much as 1½ points, a trader said, to around the 57 bid, 58 offered area.

A market source at another desk also saw the Dura bonds down by that same amount, but said that only brought the bonds down to about the 58.5 area.

Calpine steady

Calpine Corp. - whose bonds were down Friday as junk marketeers delivered a vote of no confidence in the San Jose, Calif.-based power generating company, following its embarrassing withdrawal late Thursday of erroneous third-quarter earnings data it had released earlier that day - seemed to have pretty much stabilized, traders said, with the decline pretty much limited to a little bleeding around the edges.

Calpine's 8½% notes due 2008 was seen down half a point at 53 bid, 54 offered, said a trader who saw activity in the company's as "very, very quiet. There's a hearing on the 11th about the funds that are tied up with the trustee, the Bank of New York, and I think people are waiting around to see if they get that cash or not."

Calpine's access to several hundred million dollars of the proceeds from an asset sale were blocked by several bondholders, who contended that Calpine's purchase of natural gas for its plants was an improper use of the sale proceeds - a contention Calpine rejects.

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