Pioneer, GNC, OI Europe deals price; Movie Gallery gains on move into online rentals

By Paul Deckelman and Paul A. Harris

New York, March 7 - Pioneer Natural Resources Co. successfully brought a quickly shopped offering of 10-year notes to market Wednesday, high yield syndicate sources said. The deal met with enough investor interest that it was upsized by 25% to $500 million. When the new bonds were freed for aftermarket dealings, they were heard to have tightened smartly from their spreads at issue.

Two forward calendar deals also came to fruition - for General Nutrition Centers Inc. and for OI European Group BV, the European arm of U.S. packaging maker Owens-Illinois Inc. Also pricing was a $1 billion unsecured term loan deal for SandRidge Energy Inc.

Elsewhere on the primary scene, Plains Exploration & Production Co. announced plans for a $300 million offering of 10-year notes.

But Fiat North America suspended its benchmark-sized euro-denominated bond offering.

In the secondary market, Movie Gallery Inc.'s bonds were up on the news that the Dothan, Ala.-based Number-Two video rental chain store operator will get into the on-line movie rental business with its purchase of MovieBeam Inc.

Fremont General Corp.'s bonds - which got hammered earlier in the week on investor angst over the meltdown of the sub-prime lending business sector - perked up substantially Wednesday on the possibility that the Santa Monica, Calif.-based financial services company could sell its sub-prime home mortgage business, possibly to one of the half-dozen buyers it says has expressed interest.

A high yield syndicate source said that the market had a firmer tone on Wednesday.

Pioneer drives through

In the primary market, three issuers each completed one tranche of bonds apiece, raising slightly more than $795 million and exactly €300 million.

Oil and gas exploration and production companies came with quick-to-market business during the mid-week session.

Pioneer Natural Resources Co. priced an upsized $500 million issue of 6.65% 10-year senior notes (Ba1/BB+/BB+) at a 220 basis points spread to Treasuries.

The a.m.-to-p.m. drive-by deal, which was upsized from $400 million and priced off the high-grade desk, had been talked at a 220 basis points spread to Treasuries. Hence it came on top of the price talk.

Deutsche Bank Securities was the bookrunner for the debt refinancing from the Dallas-based E&P.

Meanwhile Houston-based Plains Exploration & Production Co. announced plans to price a $300 million offering of 10-year senior notes (BB-) on Thursday - also a quick-to-market debt refinancing.

No price talk was in the market when Prospect News went to press on Wednesday night.

JP Morgan and Lehman Brothers are joint bookrunners.

GNC on top of talk

Elsewhere in the dollar-denominated primary market, General Nutrition Centers, Inc. priced a $300 million issue of six-month Libor plus 450 basis points seven-year senior floating-rate toggle notes (Caa1/CCC) at 99.00 on Wednesday.

The issue priced on top of price talk.

The notes come with a 75 basis points step-up toggle feature should the issuer elect to make an in-kind, as opposed to cash, coupon payment.

The tranche is part of an overall $425 million notes offering that includes a $125 million tranche of eight-year senior subordinated notes (Caa2/CCC) which have already been placed, according to an informed source.

JP Morgan, Goldman Sachs & Co. and Lehman Brothers were joint bookrunners for the LBO deal from the Pittsburgh-based retailer of nutritional products, supplements and sports nutrition, diet and energy products.

Owens-Illinois prices €300 million

Meanwhile in Europe, OI European Group BV, an indirect wholly owned subsidiary of Owens-Illinois, Inc., priced a €300 million issue of 10-year senior notes (B3/B/B) at par to yield 6 7/8%.

The yield was printed in the middle of the 6¾% to 7% price talk.

BNP Paribas, Citigroup and JP Morgan were joint bookrunners.

Proceeds will be used to repay debt under the company's existing secured credit facility. In May 2007, a subsidiary borrower of Owens-Illinois, Inc., intends to borrow under the secured credit agreement in order to repay all outstanding $300 million of Owens-Illinois, Inc.'s 8.10% senior notes due May 15, 2007.

Fiat suspends bonds

Fiat North America, a unit of Turin, Italy-based auto manufacturer, Fiat SpA, has suspended its proposed benchmark-sized offering of euro-denominated bonds (Ba2/BB/BB) due to market conditions.

BNP Paribas, Calyon Securities and UBS were joint bookrunners.

The notes, proceeds from which were to be used to fund general corporate purposes, were to be issued via the company's euro medium-term notes program.

New Pioneer notes push upward

When the new Pioneer Natural Resources 6.65% notes due 2017 were freed for secondary dealings, a trader saw the new bonds - which were quoted on a spread-versus Treasuries basis - tighten to a bid level 210 bps over the comparable governments and an offered level 205 bps over, from the 220 bps spread at which those bonds had priced earlier in the session.

The trader also noted the pricing of the SandRidge Energy loan, but said that he had seen no aftermarket dealings in it.

The GNC floating-rate toggle notes due 2015 and the OI European 6 7/8% notes due 2017 priced too late in the session for any meaningful aftermarket activity.

Movie Gallery moves up

Back among the secondary issues, trader saw Movie Gallery's 11% notes due 2012 push upward on the news that the company will - finally - move beyond just being a traditional brick-and-mortar operation with its purchase of MovieBeam.

The bonds, which had finished Tuesday at 88, opened a point better at 89, and then traded in an 89-80 context for most of the day, though at one point quotes as high as 92.25 were heard. They went home, however, quoted around 90 bid, 92 offered - still up 2 points on the session.

Movie Gallery - which owns the Hollywood Video rental chain, in addition to its own eponymous rental stores in mostly smaller markets - is the second-biggest U.S. video rental company behind Dallas-based Blockbuster Inc.

However, it has badly lagged its bigger rival, as well as such upstarts as the internet-based Netflix Inc., both of which moved to capture shares of the lucrative market of movie renters who don't want to go out to the video stores.

After many quarters in which its leadership said that it was happy just being in the traditional business and had no plans to get into any kind of at-home delivery service, Movie Gallery finally acknowledged the reality of the changing industry - and went after MovieBeam, a privately held company backed by The Walt Disney Co., Cisco Systems, Intel Corp., Mayfield Fund and Norwest Venture Partners, which uses over-the-air transmitting technology to give instant access to movies to customers at home who have special set-top boxes.

Fremont General in snappy rebound

Also on the upside, a trader saw Fremont General's 7 7/8% notes due 2009 up 5 points on the session to 92 bid, 94 offered on the possibility that it may get out of the problem-plagued sub-prime mortgage lending business.

Fremont General's exposure to that troubled sector of the financial services business had caused its bonds to plunge by a similar amount earlier in the week.

It had disclosed late Friday that it was exiting sub-prime mortgages and further said that it had agreed to a cease-and-desist order with federal regulators related to allegations of improper lending practices.

Fremont General told employees Wednesday that its sub-prime home mortgage business has received interest from five or six parties, which it declined to identify.

The company will continue to originate commercial real-estate loans.

Investors friendly toward Friendly's

Another upsider Wednesday was Friendly Ice Cream Corp., which said that it had hired Goldman, Sachs & Co. to explore a possible sale of the company.

That sent the stock up solidly - and pushed its 8 3/8% notes due 2012 up 3 points, a trader said, to 98.5 bid, 99.5 offered.

At another desk, the surge was seen as a 2 point gain - but to 99 bid.

The Wilbraham, Mass.-based ice cream manufacturer and restaurant chain operator has been under pressure from its largest shareholder - 14.9% owner Sardar Biglari, to improve its performance and to give Biglari a say in voice in running the underperforming company.

Numbers help Primus, Young

A trader said that Primus Telecom Group Inc. and Young Broadcasting Inc. were both up several points on good quarterly numbers.

Primus' 8% notes due 2014 were seen better by 3 points on the day at 57 bid, 58 offered, while Young's 8¾% notes due 2014 were 2 points higher at 94 bid, 95 offered, and its 10% notes were a point ahead at 99 bid, par offered.

New York-based television station group owner Young swung to a fourth-quarter profit, citing the effect of cost-cutting and stronger sales.

The company posted a net profit of $726,000 (three cents per share) - a solid improvement over its year-earlier loss of $14.7 million (71 cents per share).

Meanwhile McLean, Va.-based telecommer Primus said that income from operations was $10 million in the fourth quarter, including a $2 million loss on the sale or disposal of assets - consistent with the prior quarter and improved from a $6 million loss from operations in the fourth quarter 2005.

Remy debacle continues

Remy International Inc.'s bonds continued to fall, as more bankruptcy rumors swirled around the Anderson, Ind.-based automotive electrical systems maker. Its Delco Remy 8 5/8% notes due 2007 were down a point at 77 bid, 79 offered, its 9 3/8% notes due 2012 also a point lower at 18 bid, 20 offered, and its 11% notes due 2009 at 20 bid, 24 offered.

Another trader saw the 8 5/8s two points lower at 76 bid, 77 offered, and its 11s four points down at 19 bid, 21 offered.

The company was rumored to be hunting around for debtor-in-possession financing - seen as a precursor to a likely bankruptcy filing.

Also in the distressed precincts, Fedders Corp.'s bonds, after having risen about 4 or 5 points on Tuesday from their previous lows on the news that the troubled Liberty Corner, N.J.-based air conditioner manufacturer had lined up $90 million of financing from a Goldman Sachs unit, gave back most of those gains on Wednesday, falling back to 54 bid, 56 offered from Tuesday's close at 58.5 bid, 60 offered. The company's bonds are trading flat, or without the accrued interest, on the market's estimation that the company had not made the scheduled March 1 coupon interest payment, instead invoking the 30-day grace period. The company has not made a public announcement about the coupon payment.

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