Kodiak, Midcontinent, Carolina deals price, RKI back with add-on; RadioShack off on numbers

By Paul Deckelman and Paul A. Harris

New York, July 23 - The high-yield primary realm saw a quartet of new issues come to market on Tuesday, including an add-on to a deal that had originally priced just a week ago, from RKI Exploration & Production, LLC.

Besides the energy company's quickly shopped $50 million tack-on transaction, there was also a trio of stand-alone offerings. The largest - also an energy-sector add-on - was Kodiak Oil & Gas Corp.'s upsized $400 million of 8.5-year notes, which were seen having firmed slightly when they began trading around.

There was also a $250 million offering from cable, internet and phone services provider Midcontinent Communications, and an upsized $130 million of five-year secured notes from Carolina Beverage Group, LLC.

Among recently priced deals, Chemtura Corp.'s eight-year note offering was the subject of heavy trading, slightly to the upside, for a second consecutive session.

And Monday's deal from health plan company MultiPlan, Inc. was also seen having firmed solidly for a second straight day of aftermarket dealings.

Apart from those deals that actually priced, syndicate sources saw Atlas Resource Partners LP hitting the road with an eight-year note offering.

Away from the primary sphere, traders saw RadioShack Corp.'s bonds fall sharply after the underperforming electronics retailer reported a wider net loss in the second quarter. The decline came despite the company's vow to fully repay a convertible note issue that is scheduled to mature next week.

Statistical junk market performance indicators were mixed for a second straight session.

Kodiak upsizes

Four issuers brought single-tranche dollar-denominated deals on Tuesday, raising a combined total of $830 million.

Executions bore the earmarks of a primary market running on all cylinders. Two of the four deals were upsized, two came as drive-bys, two came at the tight end of price talk, one came on top of downwardly revised talk. And one came on top of original talk.

Kodiak Oil & Gas priced an upsized $400 million issue of 8.5-year senior notes (B3/B) at par to yield 5½%.

The quick-to-market deal was increased from $300 million.

The yield printed at the tight end of the 5½% to 5¾% yield talk.

Credit Suisse, KeyBanc, RBC, Wells Fargo, BMO and Scotia were the joint bookrunners for the debt refinancing.

Midcontinent atop reduced talk

Midcontinent Communications and Midcontinent Finance Corp. priced a $250 million issue of eight-year senior notes (B3/B-) at par to yield 6¼%.

The yield printed on top of revised yield talk; earlier talk was in the 6½% area.

SunTrust, RBC, Wells Fargo and BofA Merrill Lynch were the joint bookrunners for the debt refinancing.

Carolina Beverage at tight end

Carolina Beverage Group, LLC and Carolina Beverage Group Finance, Inc. priced an upsized $130 million issue of five-year senior secured notes (Caa1//) at par to yield 10 5/8%.

The yield printed at the tight end of the 10 5/8% to 10 7/8% yield talk. The size was increased from $120 million.

Imperial Capital ran the books.

Proceeds will be used to refinance debt and fund a dividend to equity holders.

RKI returns, taps 8½% notes

Just over a week after it priced $350 million of 8½% senior notes due Aug. 1, 2021 (B3/B-) at par, RKI Exploration & Production, LLC and RKI Finance Corp. returned to the market on Tuesday with a $50 million add-on to those notes.

The deal priced at 100.5 to yield 8.39%, on top of talk.

Citigroup, J.P. Morgan and UBS, the original deal's bookrunners, were the joint bookrunners for Tuesday's quick-to-market debt refinancing.

Atlas starts roadshow

The forward calendar took aboard new business on Tuesday.

Atlas Resource Partners started a roadshow on Tuesday for a $250 million offering of eight-year senior notes.

The deal, which is being led by Deutsche Bank Securities Inc., is expected to price late this week.

The Philadelphia-based exploration & production master limited partnership plans to use the proceeds to fund a portion of its previously announced acquisition of natural gas assets from EP Energy Co., LP.

Italy's Salini upsizes

The European primary market remained active on Tuesday.

Italy's Salini Costruttori SpA priced an upsized €400 million issue of 6 1/8% five-year senior notes (/BB-/BB) at 99.477 to yield 6¼%.

The deal was upsized from €350 million.

The yield printed at the tight end of the 6¼% to 6 3/8% yield talk. Initial talk had come in the 6½% area.

Salini's deal played to an order book that contained north of €1 billion in orders, according to a market source.

UniCredit, Banca IMI and Natixis managed the sale.

The Milan-based construction company plans to use the proceeds to refinance debt.

Picard roadshowing floater

Elsewhere France's Picard Group SA is running an investor roadshow for a €480 million offering of six-year floating-rate notes (Ba3/BB-).

The roadshow is set to wrap up on Friday.

Credit Suisse is the lead bookrunner. BNP Paribas, Goldman Sachs and Morgan Stanley are the joint bookrunners.

The Fontainebleau, France-based frozen food company plans to use the proceeds to repay debt.

Kodiak climbs after pricing

In the secondary market, a trader said that Kodiak Oil & Gas' 5½% notes "priced, and it traded a little north of 101, before coming down from that peak level to close just a little below 101.

That was up from the par level at which the Denver-based independent oil and natural gas exploration and production company's new issue had priced.

A second trader quoted the bonds trading in a 100¼ to 100¾ bid context.

Other deals unseen

Given the lateness of the hour at which they priced, traders did not see any kind of aftermarket activity in either Sioux Falls, S.D.-based cable, broadband and phone service provider Midcontinent Communications' 6¼% notes, nor in Mooresville, N.C.-based specialty drinks manufacturer Carolina Beverage Group's 10 5/8% notes.

And even though it priced earlier in the session, nobody reported any aftermarket dealings in Oklahoma City based energy operator RKI Exploration & Production's add-on to its 8 ½% notes.

MultiPlan move continues

Looking at Monday's new issues, a trader said that MultiPlan's 8 3/8% senior PIK toggle notes due 2018 continued to climb solidly. He saw the New York-based healthcare cost management company's quick-to-market issue at 102 5/8 bid, 103 5/8 offered, which he called up 1 3/8 points from its closing levels on Monday after that $750 million issue had priced at par and had then moved up in the aftermarket.

"They did well," a second trader agreed, pegging the bonds at 102½ bid, 103½ offered.

Gardner Denver gains

The second trader meantime said that Gardner Denver Inc.'s new 6 7/8% notes due 2021 traded in a 100½ to 101 bid context before finishing between 100 3/8 and 100 7/8.

That $575 million offering from the Wayne, Pa.-based manufacturer of industrial compressors, blowers, done via Renaissance Acquisition Corp. priced on Monday at par, after having been downsized from an originally planned $675 million with the shifting of $100 million of planned proceeds to its planned term loan.

Chemtura keeps climbing

For a second consecutive session, Chemtura's 5¾% notes due 2021 traded heavily on Tuesday, leaving them near, if not right at the top of the Junkbondland most-actives list, once the five-B and six-B crossover issues are factored out.

A market source said that over $26 million of those notes changed hands, on top of the roughly $35 million that had traded on Monday.

He said that the bonds were up about ¼ point on the day, ending at 100¾ bid.

A second trader saw the bonds trading between 100¼ and 101 bid.

Chemtura, a Middlebury, Conn.-based specialty chemicals manufacturer, had priced its quickly shopped $450 million issue at par on Thursday afternoon, after having upsized it from the originally announced $400 million size. The bonds had come to market too late in the session Thursday for any trading, market participants said, but had been seen modestly higher when they were freed for the aftermarket on Friday, and they continued to climb on both Monday and again on Tuesday.

RadioShack roiled by earnings

Away from the new-deal arena, a trader said that Radio Shack's 6¾% notes due 2019 "traded off a few points" after the underachieving Fort Worth, Texas-based electronics retailer reported wider operating and net losses for the second quarter ended June 30 versus its year-ago performance.

He saw the bonds going out trading between 72 and 72½ bid, calling them down by 4 points.

A second trader said they closed at 72½ bid, calling that a loss of 3 7/8 points on the session.

Radio Shack's bonds fell even as company executives said on the conference call following the earnings release that it had ample liquidity of $818 million, and would definitely repay the $214 million of 2½% convertible notes that are scheduled to mature on Aug. 1.

The company also announced that it had retained turnaround specialist AlixPartners, LLC and investment bank Peter J. Solomon Co. as advisers, with an Alix executive becoming interim chief financial officer (see related story elsewhere in this issue).

While total net sales and operating revenues were $845 million, versus $849 million last year, the company's operating loss increased to $41 million from $14 million a year ago, and its net loss widened out to $53 million, or 53 cents per diluted share, from $21 million in the year-ago quarter.

Indicators mixed on day

On the whole, a trader said that Monday's session had been "fairly busy - but today was kind of a dud."

Statistical junk market performance indicators were mixed for a second consecutive session on Tuesday, after having been higher across the board over the final three sessions of last week.

The Markit Series 20 CDX North American High Yield index fell by 5/8 point on Tuesday, its second straight decline, to end at 105 11/16 bid, 105 13/16 offered. On Monday, it had eased by 1/32 point, breaking a three-session winning streak.

And the KDP High Yield Daily Index saw its first loss on Tuesday after 10 straight session on the upside dating back to July 9, falling by 4 basis points to close at 74.55. On Monday, it had gained 11 bps.

Its yield likewise saw the end of a 10-session string of improvements, including Monday's 5 bps narrowing. On Tuesday, it was unchanged at 5.74%.

However, the widely followed Merrill Lynch High Yield Master II Index bucked the trend and stayed on the upside for an 11th consecutive session. It rose by 0.053%, which followed Monday's 0.146% advance.

The latest gain raised the index's year-to-date return to 4.264% from Monday's finish at 4.209%.

The return was still down from its peak level for the year so far of 5.835%, recorded on May 9, though up solidly from its 2013 low point of 0.384%, set on June 25.

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