Upsized Pinnacle deal prices; Solectron firms again, peers off; Trump gains on possible buyer interest

By Paul Deckelman and Paul A. Harris

New York, June 5 - Pinnacle Entertainment Inc. successfully priced an upsized offering of eight-year notes on Tuesday. However the issue came at a discount and when the new bonds were freed for secondary dealings they only advanced marginally.

Elsewhere in the primary arena, pre-deal market price talk emerged on Reliant Energy Inc.'s upcoming mega-deal, a $1.25 billion-three-part offering. Talk was heard on Actuant Corp.'s pending offering of 10-year senior notes.

In the euro-denominated sector of the market, Fiat North America Inc. priced €1 billion of new 10-year bonds, talk was heard on Cognis Group's offering of eight-year PIK loan paper and Clondalkin Group was seen getting ready to hit the road Thursday to market its €400 million equivalent deal.

In the secondary sphere, Solectron Corp.'s bonds - which rose smartly on Monday on the news that the Milpitas, Calif.-based contract electronics manufacturer will be acquired by larger rival Flextronics International Ltd. - firmed a little more Tuesday.

Flextronics' own bonds, which on Monday had retreated on the prospects that the Singapore-based company will have to lever up to the tune of more than $2 billion to swing the deal, were seen pretty much unchanged on the day,

However, other high-tech electronics and semiconductor companies such as Celestica Inc., Sanmina-SCI Corp. and Advanced Micro Devices Inc., whose bonds had firmed Monday on sector strength in the wake of the Flextronics-Solectron deal, were seen giving those gains back.

Outside of the Silicon Valley sector, Trump Entertainment Resorts Inc. bonds were seen better on the buzz that the Atlantic City, N.J.-based casino operator has attracted the interest of at least two potential buyers so far.

One high yield syndicate official marked the broad market flat early Tuesday afternoon.

Shortly after the close, however, another said that junk had been weak on Tuesday against a backdrop of continued softness in the Treasury market, with the yield on 10-year government paper poised at the 5% yield threshold.

The official who spoke at the close also noted that there had been a sell-off in stocks.

Pinnacle upsizes

In spite of a sell-off in the broad market, Pinnacle Entertainment priced an upsized $385 million issue of 7½% eight-year senior subordinated notes (B3/B-) at 98.525 to yield 7¾%, the yield coming on top of price talk.

Lehman Brothers quarterbacked the deal, which was increased in size from $350 million.

Pinnacle will use the proceeds to repay its outstanding term loans, for general corporate purposes and to fund its expansion, construction and development projects.

A source close to the deal told Prospect News that it had gone well.

The Las Vegas-based gaming company ended up with a covenant package that was "decently aggressive" with respect to its existing indentures, the source noted, adding that the order book was approximately two-times oversubscribed with good anchor orders from some quality high yield names.

The source also commented that the transaction came against the above-mentioned weakness in the broad junk market, but nevertheless Pinnacle came on top of the 7¾% pro forma printed on the red that was circulated when the deal was launched.

The source added that the extra proceeds from the upsizing will primarily be used to take out some of the company's existing 8¼% notes due 2012.

Pinnacle bonds edge upward

When the new Pinnacle Entertainment 7½% senior subordinated notes due 2015 were freed for secondary dealings, a trader saw the bonds initially break at 98.375 bid, 98.625 offered, down slightly from their 98.525 issue price.

However, after that, they crept slightly higher, to 98.625 bid, 98.75 offered.

Another trader saw them right around issue price at 98.5 bid, 98.625 offered.

Fiat prices €1 billion

Elsewhere Fiat North America priced a €1 billion issue of 5 5/8% 10-year global medium-term notes (Ba2/BB+/BB) at a 98 basis points spread to mid-swaps, on top of price talk that had been lowered from mid-swaps plus 100 basis points earlier in the day.

The notes were sold at 99.232, resulting in a 5.73% yield to maturity.

BNP Paribas, UBS and Calyon Securities managed the sale.

Reliant Energy talks $1.25 billion

Meanwhile Houston-based Reliant Energy set price talk for its $1.25 billion two-part offering of senior unsecured notes (B3/B-/B+) on Tuesday.

The company talked a tranche of seven-year notes at the 7 5/8% area, and a tranche of 10-year notes at the 7 7/8% area.

Tranche sizes remain to be determined.

The Goldman, Sachs & Co.-led debt refinancing deal is expected to price on Wednesday.

Actuant set price talk for its $250 million offering of 10-year senior notes (Ba2/BB-) at the 6 7/8% area.

The Banc of America Securities-helmed debt refinancing deal is also expected to price Wednesday.

Clondalkin launches €400 million

Packaging and printing products firm Clondalkin Acquisition BV will begin a roadshow on Thursday in New York for its €400 million equivalent offering of six-year senior secured floating-rate notes (Ba3/B+), which are expected to be issued in dollar-denominated and euro-denominated tranches.

Deutsche Bank Securities and Lehman Brothers are joint bookrunners for the debt refinancing and acquisition funding deal.

Solectron bonds continue ascent

Back among the established issues, Solectron - whose bonds had firmed some 6 points on Monday on news of the company's coming acquisition by Flextronics - were seen heading upward once again, though nowhere near as sharply.

Those 8% notes due 2016 were quoted at a trader as having risen to about 109 bid, up around a point. However, activity was light, the trader said, as the bonds "barely traded." The biggest trade was "not a particularly large piece."

While Solectron was going up, Flextronics bonds - which had retreated on Monday - were pretty much steady, with its 6¼% notes due 2014 seen at 95 bid, 95.75 offered, "not a big difference there" from Monday's levels around ¼ to ½ point higher than that.

The big movement, however, was in the bonds of other companies in that same sector, which had rallied on Monday, pushing upwards by anywhere from ½ point to 1½ points.

But now that what the trader called the initial "Solectron euphoria" had worn off, those bonds were "all backing off."

For instance, Celestica's 7 7/8% notes due 2011which had gotten as good as around the par level on Monday, were back down to 99 bid, 99.5 offered on Tuesday.

Likewise, Sanmina-SCI's 6¾% notes due 2013 rose about 1 to 1¼ points on Monday, ending at 96 bid, but by Tuesday's close, had shrank back down to 94.75 bid, 95.125 offered, while the San Jose, Calif.-based high-tech manufacturer's 8 1/8% notes due 2016, also up 1½ points on Monday, came right back down on Tuesday to finish at 97.75 bid, 98.5 offered.

And Sunnyvale, Calif.-based AMD, "which got better after dipping a few weeks ago," the trader said, but had "been drifting," until its bonds rose on Monday along with the rest of the tech names, was seen ending down ½ to 5/8 point at 97 bid, 97.5 offered.

Also in that same sector, Amkor Technology Inc.'s 7¾% notes due 2015 were down ¼ point around the 98 level, while Freescale Semiconductor's 8 7/8% notes due 2014 were at par, down ½ point.

However, one name which seemed to buck the trend was MagnaChip Semiconductor Ltd. A trader saw the bonds "up a bit," with the South Korean computer-chip maker's 8% subordinated notes due 2011 at 77 bid, 79 offered and its 6 7/8% senior notes due 2011 at 88 bid, 90 offered, both a point higher on the day.

Trump higher on buyer interest

Elsewhere, Trump Entertainment Resorts' 8½% notes due 2015 were seen up ½ point at 103 bid, 103.5 offered, with a trader citing market talk that two possible buyers have expressed interest in the company, which put itself up for sale in March.

No names have yet surfaced - but according to one source, the latest rumors have either a private equity firm or perhaps even another Atlantic City casino executive, presumably with deep-pocketed partners, were considering putting in a bid for the company, which has struggled for years against larger, better-funded competitors, and which reorganized through the bankruptcy courts earlier in the decade.

That bondholder optimism came even as an analyst for Bear Stears was cautioning investors that the odds against such a buyout are, in his opinion, pretty long.

Carlo Santarelli downgraded the company's shares Tuesday to underperform from peer perform previously and said that the long-hoped-for buyout probably won't happen.

He pointed out that any potential buyer will have to spend considerable money to update the company's three properties, the Taj Mahal and Trump Plaza on the Boardwalk, and the Trump Castle in the city's Marina district.

He also noted that Atlantic City casinos in general are now less valuable properties because recent moves by nearby Pennsylvania to allow racetracks to have slot machine gambling will pull many potential customers away from the seaside New Jersey gaming center.

The downgrade caused Trump's Nasdaq-traded shares to move lower Tuesday.

Homebuilders shrug off Fed boss

Federal Reserve chairman Ben Bernanke's warning in an address that the current downtrend in the real estate market will likely continue for some time was seen to have had little impact on homebuilder bonds.

A trader saw Beazer Homes' 6 7/8% notes due 2015 actually up ½ point at 93.375 bid, 94.375 offered, while another trader saw K. Hovnanian Enterprises' 6 3/8% notes due 2014 "maybe down 1/4" at 92.5 bid, 93.5 offered.

The second trader said that MI Homes' 6 7/8% notes due 2012 were unchanged at 94 bid, 95 offered.

Also in that sector, the announcement that Technical Olympic USA Inc. will assume full ownership of its troubled Transeastern joint venture hit the tape well after things had wrapped up for the day, and had little or no impact on the Hollywood, Fla. -based homebuilder's bonds.

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