Forest City prices deal, Time-Warner Telecom hitting road; Playtex off again

By Paul Deckelman and Paul A. Harris

New York, Feb. 3 - Forest City Enterprises Inc. was heard by high yield syndicate sources to have brought a quickly shopped $100 million bond offering to market on Tuesday - but the big news in the primary sphere was the preparations for Time-Warner Telecom Inc. to hit the road Wednesday to market its upcoming $800 million offering.

In secondary activity, Time-Warner Telecom's existing 9¾% notes due 2008 - which are to be called for redemption more of less concurrently with the bond deal, although they will be paid of out of cash on hand - were heard to have firmed. The same however, could not be said of the existing bonds of another issuer scheduled to come in with a new deal, Playtex Products Inc.; they continued to struggle in the wake of bearish guidance put out by the consumer products company.

One junk bond deal priced during Tuesday's primary market session, as the forward calendar continued to build with four new names added to the new deal pipeline.

One sell-side official, reflecting on the choppy market conditions that prevailed through the latter half of the Jan. 26 week - in the wake of the Federal Reserve's comments that were taken by Wall Street as a subtle warning that interest rates may rise sooner than later - said that the second session of the Feb. 2 week saw a "more even tone."

"Long-term bull market in junk"

"You know how fast people become emotional in this market," the source said. "They swing from one end of the spectrum to the other. At the end of last week people sounded very negative.

"But it's very short term. We're still in a long-term bull market in junk. It was just a couple of days of correction.

"Things seemed a little better today. Some stuff was lower. Some stuff was the same. Some stuff was half a point higher. But it was a better tone than last week."

Bull market deals

As evidence the source pointed to three deals that appeared during Monday's session: Woodcraft Industries' $130 million, North Atlantic Trading Co. Inc.'s $260 million proceeds, and JSG Holding plc's €250 million equivalent.

All three, said the sell-sider, might be thought of as "bull market deals," in part because some of the use of proceeds from each involves dividend payments to stock holders. Dividend deals, the source specified, find much tougher sledding when the tone turns bearish in junk land.

"This market doesn't exactly feel great," the sell-side official concluded. "But it remains open."

Forest City prices retail issue

One deal priced during Tuesday's session.

Cleveland, Ohio-based real estate development and management company Forest City Enterprises, Inc. sold $100 million of 30-year senior notes (Ba3/BB-) at par to yield 7 3/8%.

The Morgan Stanley Dean Witter led transaction came at the tight end of the 7 3/8%-7½% price talk.

News of four new deals

News of four new offerings was heard during Tuesday's session.

Time Warner Telecom, Inc. will start a roadshow Wednesday for $800 million of new bonds to be sold in two tranches, the sizes of which remain to be determined.

Pricing is expected to take place late in the week of Feb. 2 or early in the week of Feb. 9.

The Littleton, Colo.-based provider of managed network solutions is offering seven-year non-call-two second priority senior secured floating-rate notes (B).

The company is also offering 10-year non-call-five senior notes (CCC+).

Lehman Brothers and Morgan Stanley Dean Witter will run the books.

Meanwhile, the roadshow started Tuesday and will run until Feb. 12 for Solo Cup Co.'s offering of $325 million of 10-year senior subordinated notes (B3/B-).

Banc of America Securities and Citigroup are joint bookrunners on the acquisition financing from the Highland Park, Ill. manufacturer and distributor of disposable food service and beverage-related products.

Also AmeriPath, Inc. expects to price a $75 million add-on to its 10½% senior subordinated notes due April 1, 2013 late Wednesday or early Thursday, via a four-way bookrunning syndicate comprised of Credit Suisse First Boston, Deutsche Bank Securities, Citigroup and Wachovia Securities.

The Riviera Beach, Fla.-based provider of cancer diagnostics, genomics, and related information services priced the original $275 million on March 13, 2003.

And United Biscuits Finance Plc announced in a Tuesday press release that it intends to offer a £75 million equivalent add-on to its 10¾% senior subordinated notes due 2011.

No syndicate names or timing were disclosed on the deal from the U.K.-based snack food company.

Talk heard on four deals

Price talk of 8% area emerged Tuesday on Playtex Products, Inc.'s upcoming $450 million of seven-year senior secured notes (B), expected to price on Wednesday, via Credit Suisse First Boston.

Price talk is 9 3/8%-9 ½% on Schefenacker AG's €175 million of 10-year senior subordinated (B2/B-), expected to price early Wednesday morning in London via Citigroup.

Price talk of 105 area emerged Tuesday on the Dunlop Standard Aerospace Holdings plc's $125 million add-on to its 11 7/8% senior notes due May 15, 2009 (B3/CCC+), expected to price Wednesday afternoon via Credit Suisse First Boston.

And the price talk is 9¼%-9½% on Bluegreen Corp.'s $150 million of 10-year senior notes (B3/CCC+), expected to price early Thursday, with Citigroup running the books.

Qwest speculation

In the secondary sphere, a trader cited market rumors that Banc of America - the primary book runner on last Friday's $1.775 billion three-part Qwest Communications International Inc. offering - "was going to make a clean-up bid for this Qwest deal," which so far has traded well below the issue price for each of the three tranches.

He called such speculation "foolhardy" at this point but allowed that "some of overage is being absorbed" and the paper finally being sopped up by a reluctant market.

Even so, he quoted Qwest's new 7¼% notes due 2011 at 97.25 bid, 97.75 offered, down five-eights of a point on the session and its 7½% notes due 2014 at 96.25 bid, 96.75 offered, down three-quarters of a point. The floating-rate tranche due 2009 was at 98.25 bid. 98.75 offered, down a quarter point.

While "they did get a little lower on the session," he said, the bonds had been lower still before being lifted by the B of A scuttlebutt, which at this point remains just that - unsubstantiated rumor. For instance, he said, the seven-year bonds had gone as low as 96.75 bid, 97 offered before firming off that low to their closing levels.

Also on the new-deal-related front, Time Warner Telecom's 9¾% notes were being quoted up two points on the day at 104 bid.

The company said it planned to redeem them concurrently with the closing of the new bond deal, although it would be using cash on hand for that, with the new-deal proceeds slated for paying off senior secured credit facility debt, capital expenditures and other general corporate purposes.

The bonds "weakened with the [company's] numbers," a trader said, and the stock got killed, but now they're right back up. He saw the bonds three points better, at 104 bid, 106 offered. While the quarterly results released Monday showed a substantially narrower quarterly loss from year-ago levels, the company missed Wall Street revenue projections, causing its shares to decline.

Playtex retreats again

Playtex is also doing a new bond deal - but that hasn't helped the existing 9 3/8% bonds of the Westport, Conn.-based maker of such well-known consumer brands as Playtex Tampons, Woolite rug cleaner and Binaca breath sprays; those bonds, seen down a total of six points over the previous two session, following bearish guidance released Friday; on Tuesday, the bonds continued to retreat,

A trader said that with price talk of about 8% out on the upcoming issue, the existing bonds fell another roughly two points, down to 95.25 bid, 96 offered. However, he said. "I think we're starting to see some interest at that lower level," with investors viewing the fall from above par down to around 95 as a buying opportunity.

On Friday, Playtex had said that it would take $4 million in charges for restructuring in 2004, including costs for an unspecified number of job cuts.

Playtex further said that with fourth-quarter sales off 8% from the previous year's levels, it would have a 2003 profit of 37 cents per share, excluding charges - less than analysts' estimates of 39 cents per share.

And in 2004, the company projects net income of between 30 and 33 cents per share, which would include 16 cents of charges for refinancing an existing credit facility and issuing $450 million in senior secured notes, as well as the restructuring charge; Wall Street had been estimating earnings of around 51 cents per share for the company.

Apart from new-deal related developments, a trader said that "the market feels a little squishy," quoting for instance, Level 3 Communications Inc.'s 11% notes due 2008 as having eased to 99.5 bid. 100.5 offered from prior levels at 101 bid, 102 offered.

Traders also noted a generally quiet tone, with many high yield players at the J.P. Morgan Chase junk bond conference in New Orleans. One quipped that "anybody who isn't there is probably still straggling back from the Super Bowl" this past weekend in Houston.

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