New Nielsen bonds rebound from Tuesday slide, Dura extends gains

By Paul Deckelman and Paul A. Harris

New York, Aug 2 - VNU NV/Nielsen Finance LLC's new bonds - which priced Tuesday but then ran into trouble when they were freed for secondary dealings, were seen bouncing off those initial post-pricing lows and moving up during Wednesday's session.

New-deal activity was meantime relatively restrained, compared with the red-hot activity seen on Tuesday, when over $3 billion of new paper came to market. Qwest Communications International Inc. was heard to be shopping around a half-billion-dollar offering of new eight-year notes via its Qwest Corp. subsidiary. Elsewhere on the primary scene, PNA Group Inc. was reported to have restructured its upcoming issue of 10-year notes, making changes in some of the indenture covenants. Price talk on that deal emerged.

A senior official on a high yield syndicate desk said it was a "strong day" on Wednesday. All markets were up with a decent tone, the source said, adding that the broad high yield market was up maybe half a point.

In the secondary market, besides the improved performance of the VNU/Nielsen bonds, traders noted the continued rebound of Dura Automotive Systems Inc.'s paper, which was run off the road late last week amid investor dismay over the Rochester Hills, Mich.-based automotive components maker's quarterly results, but which has been coming back all this week so far.

Also in the automotive realm, Ford Motor Co.'s bonds firmed smartly - just a day after the Number-Two domestic carmaker reported terrible July sales figures - as Ford reportedly began a strategic review of its more poorly performing operations, with the possibility of some sales, and hired a high-powered Wall Street merger expert to advise company chairman Bill Ford.

General Motors Corp. bonds were little changed on the news that the Detroit giant had restated its second-quarter net loss, pushing the deficit upward by $200 million, and that it had warned that there could be delays in completing its sale of a controlling 51% stake in its General Motors Acceptance Corp. financing unit. GMAC bonds, however, were seen easier on the news.

Outside of the autosphere, a trader reported that the bonds of Six Flags Inc. were lower after Moody's Investors Service cut its ratings on the theme park operator.

"The new Nielsen deal that came [Tuesday] really got beat up out of the chute," a trader said.

"There were a lot of guys shorting it," and that caused the new dollar-denominated 10% senior notes due 2014 to fall to an offered level at 99.5 in those initial dealings Tuesday, down from their par issue price, and the dollar-denominated zero-coupon/12½% senior subordinated discount notes due 2016 to fall back to 53, after having priced at 54.686.

However, on Wednesday, he said, "the underwriters stepped in and cleaned up a lot of that, and the bonds moved up sharply, at least a point from [Tuesday's] lows, and 1¾ on the zeroes." He saw the 10s ending the day at 100.25 bid, and the zeroes at 54.25.

"They're still below issue," he said of the latter bonds, "but they were being offered at 52.75" on Tuesday.

A second trader agreed, quoting the 10% notes at 100.25 bid, 100.75 offered, and pegging the zero-coupon notes at a tight 54.5 bid, 54.875 offered.

That trader also saw the new Ashtead Group plc 9% second priority senior secured notes due 2016 at 101 bid, 101.5 offered, up ¼ point on the day, as were the new Station Casinos Inc. 7¾% notes due 2016, finishing at 100.75 bid, 101 offered. Both issues had priced at par on Tuesday and then moved up modestly after breaking into the secondary.

Ford gains on review

Back among the established issues, Ford "rallied in the morning," the trader said, on the news that the troubled carmaker would scrutinize its underperforming units, such as the Jaguar luxury sports car division, with a possible eye toward looking to unload those operations.

That news, he said, pushed the Ford 7.45% notes due 2031 up 1¾ points on the session to 75.25 bid, 75.75 offered. He also saw the 7% notes due 2013 of the carmaker's financing arm, Ford Motor Credit Co., a point better at 89 bid, 89.5 offered.

The Ford bonds "moved pretty much early in the day, and then stayed there. They did not move much after the initial rally up."

The Wall Street Journal reported that Ford was starting a review of its poorly performing units, including the pricey Jaguar, and might consider selling some operations as it attempts to turn itself around.

Ford - which on Tuesday reported that its July sales slid 35.2% from last year's incentive-swollen levels, paced by a 44% dive in light truck and SUV sales - said Wednesday in a Securities and Exchange Commission filing that its second-quarter loss was $254 million (14 cents per share), more than double the previously announced $123 million (seven cents per share) of red ink, blaming higher-than-expected pension costs. The bigger loss stands in even starker contrast to the year-ago profit of $946 million (47 cents per share) posted by the carmaker.

Ford also warned that its Premier Auto Group luxury car division, which includes Jaguar, Volvo, Land Rover and James Bond's favorite vehicle, Aston-Martin, won't turn a profit this year, based on recent sales trends.

That warning puts Jaguar, and possibly the other high-end nameplates, in the sights of company executives who will be reviewing those models' performance, as the Journal reported.

And as Ford looks itself over to determine what it should keep and what it might jettison, the company announced that it has contracted with former Wall Street M&A wizard Kenneth Leet - who formerly oversaw big deals for Goldman Sachs &Co. and Bank of America - to serve as a strategic adviser to chairman/CEO Bill Ford.

The Journal said that Leet will head Ford's review of its ailing operations.

GM steady, GMAC slips

Elsewhere within the auto sector, Ford arch-rival GM announced late Tuesday that it was restating its second-quarter net loss, upping it by $200 million to reflect a tax provision related to the sale of a majority stake in GMAC. GM said that the revised net loss for the quarter would now be $3.4 billion ($5.97 per share) up from $3.2 billion ($5.62 per share) that the carmaker reported last week.

GM also said that completion of its $14 billion deal to sell a 51% stake in GMAC to an investor consortium could be delayed beyond the previously predicted end of the year, because of difficulty in obtaining needed regulatory approval.

But while a trader saw GMAC's 8% notes due 2031 down a point at 97.5 bid, 98.5 offered, and its 6 7/8% notes due 2012 half a point lower at 96.5, he said that the parent company's benchmark 8 3/8% notes due 2033 were unchanged at 82.5 bid, 83 offered.

Dura recovery continues

Dura's 9% notes due 2009 were seen by a market source to have jumped 3 points on the session, to 30.5 bid, continuing the big rebound in those bonds from the lows they hit in the lower 20s last week after Dura reported an unexpected fall deep into the red from its year-earlier profit.

However, those bonds still remain well off the levels around 50 bid they held before Dura reported its unfavorable numbers.

Another trader saw the Dura bonds up only a point, at 29 bid, 31 offered, but said that its 8 5/8% senior notes due 2012 were at least 2 points up on the day at 79 bid, 81 offered. While that is up from the levels in the low to mid 70s to which the bonds fell in the two sessions following last week's poor earnings report, it is still well below their pre-results level in the mid-80s.

Dole Food bounces

Apart from the auto names, traders saw rebound in the beleaguered bonds of Dole Food Co., which had been getting sliced and diced over the previous several sessions; traders mentioned all kinds of reasons ranging from weakness in fruit and vegetable pricing in Europe under trade agreements with the European Union, to investor concern over what some people might interpret as the seemingly eccentric behavior of Dole controlling shareholder, billionaire David H. Murdock, who was reported by The Wall Street Journal last week to have become a vocal and free-spending crusader trying to promote healthier eating and living at age 83.

At any rate, those oversold bonds were bouncing back on Wednesday, with Dole's 7¼% notes due 2010 up 1¼ points at 91 bid, 92 offered, while its 8¾% notes due 2011 were "up two [points] and change," a trader said, at 90.5 bid, 91.5 offered.

Dole's rival fruit importer, Chiquita Brands International Inc., was also higher Wednesday, its 7½% notes due 2014 and 8 7/8% notes due 2015 each up 1½ points, a trader said, at 86 bid, 87 offered and 90.5 bid, 91.5 offered, respectively.

Six Flags dips

Six Flags' 9 5/8% notes due 2014 were a point lower at 89 bid, 90 offered, while its 9¾% notes due 2013 were 2 points off the pace at 90 bid, 91 offered after Moody's downgraded its ratings, citing cash-flow concerns.

The agency downgraded the Six Flags' corporate family rating to B3 from B2, and cut the ratings on its senior unsecured notes to Caa2 from Caa1.

Qwest doing $500 million fly-by

Meanwhile, trailing a Tuesday session that topped $3 billion equivalent of issuance, little news trickled out of the primary market during the mid-week session.

The session's biggest news was generated by Qwest, the fourth largest regional Bell operating company.

The Denver-based company plans to do a drive-through $500 million offering of eight-year senior notes (Ba3/BB/BB+) on Thursday afternoon, trailing an investor call in the late morning.

Deutsche Bank Securities, Credit Suisse and Merrill Lynch & Co. are joint bookrunners for the debt refinancing and general corporate purposes deal.

PNA restructures

Elsewhere a quiet end to the July 31 week continued to take shape.

News was heard on the deal from PNA Group, the Atlanta-based steel processing and distribution company.

The company talked a restructured $250 million offering of 10-year senior notes (B3/B-) at a yield of 10¼% to 10½%.

Banc of America Securities LLC and Citigroup are joint bookrunners for the offering which is being distributed via Rule 144A with registration rights, which represents a restructuring, as the notes had previously been marketed without registration rights.

In addition to the registration rights covenant changes have also been introduced limiting restricted payments.

The debt refinancing and dividend funding deal is expected to price on Friday.

Barrington for Thursday

In addition to the above-mentioned Qwest deal Barrington Broadcasting Corp. is expected to price its $125 million offering of eight-year senior subordinated notes (B3/CCC+) on Thursday afternoon, according to a buy-side source.

The deal, which is being led by Banc of America Securities and Wachovia Securities, was talked at 10% to 10¼%, which remained the price talk on Wednesday, according to the buy-side source.

Polyfin launches notes-warrants

Finally, aside from the above-mentioned Qwest Wednesday-Thursday drive-by, the only new addition to the forward calendar came from Indonesia-registered PT Polyfin Canggih, an integrated producer of polyester chips and synthetic yarn.

The company, which is to be incorporated in The Netherlands, is marketing a $75 million offering of unrated units comprised of a five-year senior secured note and 250 warrants to purchase shares.

There is a roadshow this week in the United Kingdom. The roadshow moves to Asia on Monday and Tuesday and to the United States on Wednesday. The offering is expected to price during the week of Aug. 7.

Jefferies & Co. is the bookrunner for the notes which are being marketed as a private placement and via Regulation S.

Proceeds will be used to repay existing debt, for working capital and for general corporate purposes.

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