Playtex up on earnings; Dura steadies; Textron restructures deal

By Paul Deckelman and Paul A. Harris

New York, July 31 - Playtex Products Inc.'s bonds were seen better Monday, along with its shares, after the Westport, Conn.-based consumer products company reported a big jump in second-quarter net income from a year ago.

Dura Operating Co.'s bonds - which got solidly pounded on Thursday and Friday after the automotive components maker reported poor quarterly numbers - were seen finally having bottomed out and actually beginning to head back upward a little from their recent lows.

Overall, a source from a hedge fund said late Monday afternoon that the broad high-yield market was extremely quiet and unchanged on the session.

In a primary market that was also generally quiet, TFS Acquisition Corp. (Textron Fastening Systems) was heard to have restructured its upcoming bond offering, shortening the maturity of the notes it will offer by several years.

Pre-deal market price talk emerged on Ashtead Group plc's upcoming half-billion-dollar offering of senior secured notes, which will help to finance the cost of the British company's pending acquisition of U.S. equipment rental firm NationsRent Inc.

Back among the established issues, a trader saw Playtex Products' 8% notes due 2011 up 5/8 point post-earnings at 104.25 bid. At another desk, a market source called the Playtex bonds up ½ point at 104, and saw the company's 9 3/8% notes due 2011 also ½ point better at 104.5

However, another trader saw the 8s at 103.75 and the 9 3/8s at 104.5, but said that both levels seemed unchanged to him.

Playtex's New York Stock Exchange-traded shares were meantime up $1.17 (11.53%) to $11.32, on volume of 1.57 million shares, more than triple the usual turnover.

Playtex's bonds and shares were given a boost when the maker of such familiar consumer products as its namesake baby bottles, rubber gloves and feminine hygiene products, Banana Boat suntan lotion and Wet Ones disposable hand and face wipes, reported a 67% gain in second-quarter profits versus a year ago to $10.3 million (16 cents a share) on $180.3 million of total net sales, up from $6.2 million (10 cents a share) on $177 million of sales a year ago.

Excluding unusual one-time items such as charges and gains, the company earned 17 cents a share, up from 14 cents a share on a similar basis a year ago, and beat Wall Street estimates of earnings of 15 cents per share on revenue of $170.8 million.

Playtex cited strength in the Banana Boat and Wet Ones product lines as key factors behind the improved earnings.

The company also reiterated its previously announced guidance, which projects operating income this year of between $103 million and $108 million, with sales rising in the mid-single digit percentage range, excluding divested brands. Including those divested assets, 2006 sales are expected to come in somewhere in the low-single digit range.

Playtex also said it continues to expect to buy back $100 million in of bonds this year, having already repurchased $94.5 million so far toward that goal. As a result of those debt repurchases, interest expense is expected to decline by about $8 million in 2006 versus last year.

Ziff Davis gains

Also on the earnings front, Ziff Davis Holdings Inc.'s bonds were up after the New York-based magazine publisher and website operator announced better second-quarter operating results and additionally said that it would explore strategic alternatives, possibly including the sale of some or all of the company.

Ziff Davis' floating-rate senior notes due 2012 were being quoted at 96.5 bid, up from 94 previously, while its 13% subordinated notes due 2009 were at 46, up from 44.5.

Ziff Davis, whose Ziff Davis Media Inc. unit includes a portfolio of seven magazines and 32 websites serving the technology and videogame markets, said its consolidated EBITDA increased 84% to $5.7 million for the second quarter, from $3.1 million a year earlier, primarily due to the growth in the company's online businesses as well as cost reductions in its print businesses.

Besides reporting its results, Ziff Davis announced that it has retained Evercore Partners and Lehman Brothers as its financial advisors to assist it in exploring strategic alternatives aimed at maximizing investor value, including the possible sale of some or even all of its groups. The company cited "recent interest" in its assets by unidentified potential purchasers.

Regal steady despite earnings

Traders said there was little bond market reaction to disappointing earnings reported by Regal Entertainment Group, the Knoxville, Tenn.-based parent of movie theater operator Regal Cinemas Corp.

The latter's 9 3/8% notes due 2012 were seen unchanged at 106.25 bid. "They're already very tight," said one trader, who added that the issue doesn't trade around much.

Regal's NYSE-traded shares, meantime, fell $1.16 (5.57%) to $19.66 on volume of 2.9 million shares, more than triple the norm, after the company said that its net income fell to $16.6 million (11 cents per share), a 37% drop from $26.4 million (17 cents per share) in the year-ago period. Wall Street was looking for earnings of 27 cents per share.

Regal said that the latest quarter included a loss of $19 million related to early debt repayment. During the quarter, Regal increased its senior secured credit facility by $100 million, to fund the conversion of its holding company notes.

Excluding the charge, profits totaled $35.6 million (23 cents per share).

ArvinMeritor better

ArvinMeritor Inc.'s bonds firmed despite lower earnings in the Troy, Mich.-based automotive parts manufacturer's fiscal third quarter - with investors apparently more impressed by the company's better full-year guidance.

A market source saw Arvin's 8¾% notes due 2012 a point better at 97.5, while its 8 1/8% notes due 2015 were also up a point, at 92 bid.

The company reported that net income fell to $20 million (29 cents per share) in the fiscal third quarter ended June 30 from $46 million (66 cents per share) a year ago. However, income from continuing operations excluding special items was 73 cents per share, beating the company's previously announced guidance projecting earnings in a range of 60 cents to 70 cents per share.

ArvinMeritor raised its full-year outlook for earnings from continuing operations excluding special items to a range of $1.65 to $1.75 per share, up from its previously released forecast of $1.60 to $1.70 per share.

Auto names little changed

Elsewhere in the automotive realm, "there was not too much going on," said a trader who saw sector bellwether General Motors Corp.'s benchmark 8 3/8% notes due 2033 at 82 bid, 82.5 offered, while its General Motors Acceptance Corp. financing arm's 8% notes due 2031 were likewise unchanged, at 98 bid, 98.5 offered. GM arch-rival Ford Motor Co.'s 7.45% notes due 2031 were at 73.25 bid, 74.25 offered, and its Ford Motor Credit Co.'s 7% notes due 2013 were seen at 87.75 bid, 88.25 offered, both down ¼ point.

Dura bounces back a little

The trader did see Dura Automotive Systems Inc.'s bonds "settle down a little," after two tumultuous sessions which saw the Rochester Hills, Mich.-based automotive parts supplier's bonds in freefall, with its Dura Operating 9% subordinated notes due 2009 drop some 20 points on Thursday and then a couple of more points on Friday, to levels in the mid 20s, losing half of their value, in response to poor earnings. The company's 8 5/8% notes due 2012 meantime fell about 10 points over the two days to the mid 70s.

In Monday's dealings, he said, the bonds came back and regained "a little" of their lost ground, although he acknowledged that in the final analysis "it was not much."

He saw the 9s up 1½ points at 26 bid, 27 offered, while the 8 5/8s were 1¼ points higher at 76.25 bid, 77.25 offered.

Adelphia up as sale closes

Also out of the distressed precincts, another trader said, came the word that Adelphia Communications Corp.'s 10¼% notes due 2011 were a point better at 61.5 bid, 62.5 offered while the bankrupt Greenwood Village,. Colo.-based cable company's Century Communications 9½% notes due 2005 were 2 points better at 108 bid, 109 offered.

He noted that Monday was the day that Adelphia formally completed its long-awaited $17 billion-plus sale of its assets to Time Warner Cable and Comcast Corp. - a deal that, at times, looked like it might never get done due to incessant wrangling between various Adelphia creditor classes - including the parent company's bondholders and Century's - over who would get what share of the deal proceeds.

Those questions still have not been fully hashed out - although Adelphia said last week that some of its creditors had reached an agreement with the company.

Adelphia was also helped in its efforts to get the sale done by a favorable ruling from the judge overseeing its case, allowing the sale of the assets to proceeds even though the creditor disputes remained unresolved and the company had accordingly not yet filed a final formal plan of reorganization.

Dole lower

Elsewhere, the trader saw Dole Food Co. 8 5/8% notes due 2009 down 2 points at 93.75 bid, 94.75 offered, and theorized that with no firm news out about the Westlake, Calif.-based fruit and vegetable giant, investors were a little "disconcerted" by an article that appeared in Friday's editions of The Wall Street Journal, about Dole owner David H. Murdock's new passion - the 83-year old billionaire is putting large chunks of his sizable personal fortune into projects aimed at promoting better nutrition, including the building of the new California Wellbeing Institute, just across the street from Dole's corporate headquarters. The Journal said it would be "a combination Four Seasons luxury resort, conference center and nutrition-counseling school."

While such an avocation is not necessarily in conflict with Dole's corporate activities - indeed, the paper said that when Murdock sees visitors, he "preaches that the secret to a long and healthy life lies in eating more of the fruits and vegetables his company grows in 94 countries around the world" - the trader said "there's some lingering concern" about what some people might consider to be eccentric behavior by the octogenarian tycoon and "people are nervous."

On the other hand, another trader who saw Dole's 8¾% notes due 2013 at 88 bid, down 2 points on the session, chalked it up to pricing weakness in fruits and vegetables, particularly in Europe, and said that Dole rival Chiquita Brands International Inc.'s bonds were also affected by those dynamics, with the Cincinnati-based company's 7½% notes at 84 bid, 85 offered and its 8 7/8% notes at 87 bid, 88 offered, both down a point.

Textron restructures

Meanwhile the primary market, which had anticipated seeing terms emerge on a pair of junk offerings, also remained mostly quiet.

Neither offering had priced by the close. One of the two had undergone restructuring, while the other was rumored to have been downsized.

TFS Acquisition Corp. (Textron Fastening Systems) restructured its $190 million offering of high yield notes on Monday, according to market sources.

The company now plans to sell eight-year senior secured floating-rate notes, with three years of call protection. Textron had previously been marketing fixed-rate 10-year senior secured notes with five years of call protection.

Price talk remained unchanged at the 11¾% area, one source said, adding that the notes will presumably price on Tuesday.

Credit Suisse has the books for the acquisition financing from the Troy, Mich.-based fastening systems company.

The other deal that market observers had been expecting to price on Monday was U.S. Shipping Partners LP's downsized $175 million offering of eight-year second-lien senior secured notes, restructured from senior notes.

Lehman Brothers and CIBC World Markets have the books on the deal, which was reduced from the original size of $200 million.

Rumors had circulated the market on Monday afternoon that the deal had undergone a further downsizing, to $100 million, with the company cutting the amount it would spend on capital expenditures, and shifting some of the proceeds to its credit facility.

Ashtead talks $550 million

Elsewhere on Monday Ashtead Group talked its $550 million offering of 10-year second-priority senior secured notes (B3/B) at a yield of 9% to 9¼% on Monday.

Pricing is expected on Tuesday, via Citigroup, Deutsche Bank Securities and UBS Investment Bank.

The VNU/Nielsen deal

Also expected to price Tuesday is the VNU NV and Nielsen Finance LLC combined $1.67 billion equivalent five-part deal, which has been receiving the lion's share of attention, according to market sources.

Nielsen Finance, the operating company, plans to sell $835 million equivalent of eight-year senior notes due 2014 (B3/CCC+), talked at a yield in the 9¾% area, and $600 million equivalent of 10-year senior subordinated discount notes (Caa1/CCC+), talked 225 to 250 basis points behind the senior notes. Both of those structures will be sold in dollar- and euro-denominated tranches.

Meanwhile VNU, the holding company, plans to sell €200 million of 10-year fixed-rate senior subordinated discount notes, which are talked at the equivalent of Euribor plus 625 to 650 basis points.

Deutsche Bank Securities, JP Morgan, Citigroup, ABN Amro and ING are joint bookrunners.

The source from the hedge fund said that the eight-year senior notes, in both the euro and dollar-denominations, are seeing a considerable amount of interest.

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