Ainsworth, Buffet's, Consolidated Container price; Salton dives on earnings

By Paul Deckelman and Paul A. Harris

New York, May 11 - Consolidated Container Co. LLC was heard by high-yield syndicate sources to have priced a downsized offering of five-year notes Tuesday, while terms were also heard on issues brought to market by Ainsworth Lumber and by Buffets Inc. FelCor Lodging Trust Inc. unveiled plans for a new bond issue, with proceeds to be used to take out existing debt.

In the secondary market meantime, investors pounded Salton Corp.'s bonds even harder than George Foreman got pummeled during his famous "Rumble In The Jungle" championship fight against Muhammed Ali 30 years ago, as the maker of small appliances posted a wider quarterly loss - despite the popularity of the ubiquitous home hamburger and hot dog grills promoted by the smiling ex-pug. Losses were as big as 20 to 30 points on the day. Lake Forest Ill.-based Salton also said that it had breached a credit covenant.

Three offerings priced during Tuesday's primary session, during which the broad high yield market continued to give up ground, according to sources.

Tuesday's deals included two zero-coupon issues, one each from Consolidated Container Co. LLC and Buffet's Inc., and a restructured issue of 10-year senior notes from Ainsworth Lumber that priced at a significant discount.

Meanwhile the forward calendar took aboard freight, with three new prospective issuers presenting themselves Tuesday at the front door of the junk market.

Consolidated Container Co. LLC priced a downsized issue of $151.101 million proceeds of five-year senior secured PIK notes (B3/CCC) at 72.513 to yield 10¾%.

The Atlanta plastic container manufacturer's debt refinancing deal, via Deutsche Bank Securities, came wide of the 10½% area price talk.

Buffet's, Inc., the Eagan, Minn.-based buffet-style restaurant company, meanwhile, sold $132 million of zero-coupon senior discount notes due Dec. 15, 2010 at 56.926, in a Tuesday drive-by transaction via Credit Suisse First Boston.

The new Buffet's notes came with a 13 7/8% yield to maturity.

And Ainsworth Lumber Co. completed a restructured $110 million 6¾% 10-year senior notes offering (B1/B+).

The Vancouver, B.C.-based forest products company sold the new notes at 90.043 to yield 8¼%, wide of the 7¾%-8% price talk

Initially the company had been in the market with an add-on to its 6¾% notes due March 15, 2014. And aside from the issue price, the yield and the settlement date, May 19, the new notes come with the same terms as the 63/4s due March 2014.

Goldman Sachs & Co. ran the books.

Calendar continues to build

Although some market sources, pointing to postponed deals, downsized deals, and transactions pricing wide of price talk, have recently anticipated a slowdown in the volume of new deals coming into the pipeline, no fewer that three offerings came into view during Tuesday's session.

The roadshow starts Wednesday for Leiner Health Products' planned $150 million of eight-year senior subordinated notes (expected ratings B3/CCC+), which are expected to price on May 20 or 21.

UBS Investment Bank, Credit Suisse First Boston and Morgan Stanley will run the books on the deal from the Carson, Calif.-based manufacturer of supplements, diet aids and over-the-counter pharmaceuticals.

One source commented late Tuesday that Leiner Health Products represents a "defensive sector," and hence could expect to get a deal done whether the market is choppy or not.

A two day roadshow is set to get underway on Wednesday for FelCor Lodging LP's proposed $350 million of seven-year senior floating-rate notes (B1/B-). The roadshow wraps up Thursday, with pricing expected on the same day.

Deutsche Bank Securities will run the books for the debt refinancing deal from the Irving, Tex.-based lodging REIT.

And although no precise timing was heard, one informed source told Prospect News that the launch was imminent for ThermaClime, Inc.'s $90 million offering of 10-year senior secured notes.

In any case, the deal figures to price before the end of May, according to Jack E. Golsen, chairman and chief executive officer of LSB Industries, the parent company, who added that Jefferies & Co. will run the books.

The Oklahoma City-based chemical manufacturer will use the proceeds to repay debt.

Two deals talked

Price talk emerged Tuesday on the only sterling deal in the present junk market: Debenhams Finance Holdings plc's £325 million equivalent of eight-year senior notes in sterling and euro tranches (B2/B).

Price talk is 9¾%-10% on the sterling tranche and 8¾%-9% on the euro tranche, with the deal expected to price on Thursday via Credit Suisse First Boston and Morgan Stanley.

And price talk is 8½%-8¾% on Alpha Natural Resources' upcoming $200 million of eight-year senior notes (B3/CCC+), which are expected to price Wednesday afternoon via Credit Suisse First Boston and UBS Investment Bank.

FelCor 9½% notes gain

Traders did not see any of the new issues moving around in the secondary sphere on Tuesday.

One market source noted that FelCor's 9½% notes due 2008, one of the issues being taken out with the proceeds of the lodging company's new bond issue, was firmer at 107 bid, up from 105.75 previously, although the other issue slated for repayment, FelCor's 7 3/8% notes coming due later this year, actually retreated to 100.5 bid from prior levels at 101.25.

The company's 9% notes due 2011 meantime dipped to 102.75 bid from previous levels at 105.5.

Salton plunges

Apart from new-deal linked activity, Salton was "the disaster du jour," as one trader put it, quoting the company's 12¾% notes due 2008 as having swooned some 30 points on the session to 60.5 bid, 62.5 offered, while its 10¾% notes due 2005 ended at 64.5 bid, 66.5 offered, also down about 30.

"It was a debacle," he exclaimed. "They went out on their back."

At another desk, a trader agreed that Salton was "the big loser [Tuesday]. Pegging the 121/4s as low as 59 bid, 61 offered, while the 103/4s ended at 60 bid, 62 offered, although he only saw the bonds as having fallen from the upper 80s.

Salton reported that in the first quarter, it had a loss of $58 million ($5.14 a share) on sales of $191.4 million versus year-ago losses of $12.1 million ($1.08 a share) on sales of $166.4 million.

"How can they be losing money?" demanded a market source who saw the 2008 bonds fall to 56 bid from 88.5 and the 2005 bonds to 61 bid from 90. "Those things [the George Foreman brand burger grills] are everywhere."

Perhaps the key is that costs are outrunning sales; the company also said it was restructuring its U.S operations to bring costs in line with sales, hoping to slash some $40 million of expenses.

Salton further said that it had breached a covenant and had begun talks with senior lenders on revising its financial agreements.

aaiPharma lower

Elsewhere, aaiPharma's 11% notes due 2010 were seen having fallen to 84 bid from prior levels at 87, after the troubled Wilmington, N.C. -based pharmaceuticals maker announced that effective immediately its chief financial officer, William L. Ginna Jr. had resigned and was being replaced on an interim basis by management consultant Gina Gutzeit.

It was the third major change in senior management over the past several months, following the departures of then chief operating officer David Hurley, who was replaced by Gregory Rayburn, and then chief executive officer Dr. Philip Tabbiner, replaced with the company's founder and chairman, Frederick D. Sancilio. Rayburn and Gutzeit both joined the company from FTI Consulting, a turnaround specialist. aaiPharma continues to probe what it terms irregular results in the sales of some of its products last year and in past years.

Levi gains on sale possibility

On the upside, Levi Strauss & Company's bonds firmed on the announcement by the San Francisco-based blue jeans maker that it might consider selling its popular Docker's line of khaki pants.

While such a sale has been rumored for some time in the market, Tuesday market the first time that Levi's said that it would consider the idea.

The upside of such a sale is that sale of Docker's could produce a hefty gain for the company's coffers, which could go to debt reduction; the downside is that by selling the line, Levi loses the cash flow that goes with the popular product, and in effect puts all of its eggs in one basket - its traditional denim clothing.

Levi's 11 5/8% notes due 2008 were seen having moved up to 92.75 bid from 91 previously, while its 7% notes due 2006 were two points better at 88 bid, and its 12¼% notes due 2012 rose to 91.25 from 90 on Monday.

On the earnings front, NRG Energy's bonds were heard little changed, despite strong first quarter numbers which the Minneapolis-based power generator posted as it continues its comeback from last year's bankruptcy restructuring (see related story elsewhere in this issue).

NRG's 8.42% notes due 2015 were seen having lost a quarter point to par, and the company's other debt was there as well.

Charter Communications Holdings Inc.'s 8 5/8% notes due 2009, which had eased on Monday as the St. Louis-based cable operator reported a quarterly loss but better subscriber numbers, rebounded Tuesday, closing up two points at 79.5 bid.

Overall, a market observer said that "stuff dropped," in response to earnings and to continued interest rate concerns, but with stocks having rebounded smartly from Monday's swoon, "a few things came back. But outside of Salton, there was nothing crazy."

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