Dobson prices floater deal; Abitibi up on asset-sale announcement

By Paul Deckelman and Paul A. Harris

New York, Sept. 7 - Dobson Communications Corp. kicked off the high-yield primary market's 2005 homestretch Wednesday with a quickly shopped floating-rate note deal, the proceeds of which will be used to take out some existing debt. The new-deal market also saw renewed calendar activity, with The Williams Cos. Inc. and Select Medical Holdings Corp. slating a pair of deals expected to price Thursday, details emerging on AmerisourceBergen Corp.'s previously announced bond issue, and roadshow information out on such offerings as Panolam Industries Inc., InSight Health and Euramax.

Dobson's $150 million floater come on top of price talk and one source said it was a blowout.

With the predicted parade of new junk offerings continuing to march, the forward calendar of deals in the market climbed to just under $3.5 billion.

That's a big jump considering that going into the Labor Day break there were no deals on the road, one market source commented.

In the secondary market, Abitibi-Consolidated Inc.'s bonds were several points better after the Canadian-based forest products company announced plans to sell its half-stake in a Korean-based newsprint company for $600 million, letting it cut its debt load by over C$1 billion.

Elsewhere, the bonds of General Motors and Ford Motor Co. were seen lower, after Standard & Poor's said it was "nervous" about its current ratings on the two automotive giants, who were dropped to junk bond status by S&P in May.

Overall, the high-yield market was "a little lower, down with Treasuries" on Wednesday, a buy-side source said.

"People are keeping an eye on the calendar and seeing it grow," the source commented.

"Maybe they're not quite as aggressive as they were two weeks ago."

Dobson a blowout

Wednesday's sole transaction came from Oklahoma City-based rural cellular telephone services provider Dobson Communications.

In a drive-by, the company priced a $150 million issue of seven-year senior floating-rate notes (Ca/CCC) at par to yield three-month Libor plus 425 basis points, right on top of price talk.

Lehman Brothers, Bear Stearns & Co. and Morgan Stanley ran the books for the debt refinancing deal.

The bond offering, as well as a concurrent convertible deal with terms fixed after the close Wednesday, were blowouts, according to a source in a hedge fund.

Trio of drive-bys before Friday close

By the time the market closes on Friday, three quick-to-market junk deals are expected to price, with more surprises likely on tap.

AmerisourceBergen Corp. plans to price its $900 million two-part offering (Ba2/BB+) on Thursday afternoon or Friday morning.

The Valley Forge, Pa., pharmaceutical services company is offering $500 million of 10-year senior notes and $400 million of seven-year senior notes - both of them bullets.

Lehman Brothers, Banc of America Securities and JPMorgan Securities are joint bookrunners for the debt refinancing deal.

A buy-side source said Wednesday that both AmerisourceBergen tranches can be expected to come around the 6% area.

"Treasuries backed up but they are seeing decent demand," the source commented.

"The seven-year is going to come a little tighter but the curve is pretty flat in there."

The source added that the deal is going pretty well and that AmerisourceBergen has two things going for it: its size and its four-B credit rating.

Also expected to price before the end of the week is a $350 million offering from Williams Co. Credit-Linked Certificate Trust of five-year fixed-rate credit-linked certificates (B1/B+).

Late Wednesday, according to a market source, the certificates were talked at 6¼% to 6 3/8%.

Pricing is expected on Thursday via Citigroup.

Finally, Select Medical Holdings Corp. plans to price a $250 million offering of 10-year senior floating-rate notes (Caa1/B-) late Thursday via JP Morgan, Merrill Lynch & Co. and Wachovia Securities.

Three for the road

Apart from the drive-by activity, the forward calendar continued to build.

Euramax International will begin a roadshow Thursday for its $315 million offering of eight-year senior subordinated notes (Caa1/B-) via Goldman Sachs & Co. and Credit Suisse First Boston.

The Norcross, Ga., manufacturer of aluminum and steel building products will use the proceeds to repay debt.

InSight Heath Services Corp. will begin a roadshow on Monday for its $250 million offering of six-year senior secured floating-rate notes (B) via Banc of America Securities.

The Lake Forest, Calif., provider of diagnostic imaging services will also use the proceeds to refinance debt.

And the roadshow began Wednesday for Panolam Industries Inc.'s $150 million offering of eight-year senior subordinated notes (Caa1/CCC+).

Credit Suisse First Boston and Jefferies & Co. are joint bookrunners for the acquisition financing from the Shelton, Conn., commercial and residential interiors furnisher.

Dobson up in trading

When the new Dobson floating rate notes due 2012 were freed for secondary dealings, a trader saw the notes firm to 100.375 bid, 100.875 offered, up a little from their par issue price earlier in the session.

Dobson's outstanding bonds - which had firmed smartly on Tuesday following the company announcement that it would sell new convertible and floating-rate junk debt and use proceeds from the transactions to redeem its 10 7/8% notes due 2010 - were seen pretty much holding onto those higher levels on Wednesday.

The 10 7/8s were seen around the 105.375 bid, 106.375 offered area, while its 8 7/8% notes due 2013 hung in at 101.75 bid. Dobson unit American Cellular Corp.'s 10% notes due 2010 were seen up perhaps a quarter point at 106.75.

AmerisourceBergen's existing 7¼% notes due 2012 were a quarter-point better at 116 bid, while its 8 1/8% notes due 2008 also gained 1/4, to 110.

Abitibi higher on sale

Back among existing issues not connected with new-deal transactions, Abitibi's bonds firmed solidly on the news that the company will sell its half-interest in PanAsia Paper Co. to its partner, Norske Skog, which will pay $600 million plus a cash purchase price adjustment of up to $30 million, depending on the achievement of certain financial performance objectives in 2006, and assume another $300 million of debt as part of the deal.

The prospect that Abitibi will be able to reduce debt by over C$1 billion gave its 6% notes due 2013 a two-point boost to 92 bid, 92.75 offered, and its 7.40% notes due 2018 a three-point rise to 92 bid, 93 offered, a trader said.

A market source at another desk saw the 6s up nearly two points at 91.25, while the company's 8 3/8% notes due 2015 were up by a pair at 102, and its 8½% notes due 2029 also a deuce better, at 93 bid.

A trader saw Aibitibi's 6.95% notes due 2008 up two points on the session to 102 bid, 103 offered, after "it was alluded to on the conference call [announcing the PanAsia transaction] that it might get taken out, along with other debt from that same near-term 2006-2007-2008 time frame."

However, he saw no quotes on any 2006 or 2007 bonds - reflecting, he said, market sentiment that they ought to be held on to because "they may be a potential takeout candidate." He also saw the 6% 2013s, which are not expected to be redeemed in the near-term, as being up about a point on the day.

Tembec also better

Abitibi rival Tembec Industries' bonds were seen by a source to be better; he quoted the company's 8 5/8% notes due 2009 at 82.25 bid, 83.25 offered, its 8½% notes due 2011 at 77.25 bid, 78.25 offered, and its 7¾% notes due 2012 at 73.875 bid, 74.875 offered.

A market source at another desk saw the 81/2s up nearly a point at just under 78 bid.

GM, Ford down

Elsewhere, General Motors' bonds, and Ford's, were easier, possibly on the news that Standard & Poor's may again downgrade the bonds of one or the other, or both.

A trader saw the GM benchmark 8 3/8% notes due 2031 down a point at 81 bid, 81.5 offered, while the carmaker's 7 1/8% notes due 2013 were down about a point at 89. He saw Ford's flagship 7.45% notes due 2031 half a point lower at 80.5.

During a London briefing, S&P analysts cited high energy prices, an increased chance of a U.S. recession following Hurricane Katrina, the companies' poor product mix and a decline in sales of sport utility vehicles among their concerns.

An additional danger that could send GM's bond ratings lower is the company's relationship with its former subsidiary, partsmaker Delphi Corp., which is currently in negotiations with GM and the United Auto Workers union aimed at cutting its labor costs to avoid bankruptcy.

The outcome of those talks is far from certain, and the S&P analysts said that should Delphi seek court protection, that could lead to a change in GM's ratings, since a bankruptcy filing by Delphi could leave GM responsible for some of the former company's costs under the terms of the agreement through which Troy, Mich.-based Delphi was spun off several years ago.

Delphi keeps falling

Delphi's bonds, meantime, have been skidding steadily lower over the past few sessions, and Wednesday was no exception, with Delphi's 6.55% notes due 2006 seen three points lower at 76 bid, 77 offered, while its 6½% notes due 2009 were off four points at 71 bid, 72 offered. Delphi's 61/2s due 2013 were down a trey at 69 bid, 70 offered, as were its 7 1/8% notes due 2029, which retreated to 65 bid, 66 offered from 68 bid, 69 offered previously.

AK Steel gains

A trader saw better levels for AK Steel Corp.'s notes, and credited the rise to perceptions that Hurricane Katrina's heavy damage to the Gulf Coast would be a net positive to the steel industry, which stands to likely sell a lot of steel for use in the rebuilding effort down there. He cited one report indicating that the renewed demand for steel in the wake of the rebuilding effort, could boost steel prices by as much as 20%.

AK's 7¾% notes due 2012 were up ¾ point at 94 bid, 95 offered. The Middletown, Ohio-based specialty steelmaker's 7 7/8% notes due 2009 were ¼ point better at 97.125 bid, 98.125 offered. He also saw Oregon Steel's 10% notes due 2009 ¼ point better at 108.5 bid, 109.5 offered.

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