Nortek, Nuance bring add-ons; Vantage megadeal on tap; Sprint jumps on sale to Softbank

By Paul Deckelman and Paul A. Harris

New York, Oct. 15 - The high-yield primary arena had a relatively quiet day Monday, at least in terms of issues pricing.

Just two transactions totaling $585 million came to market versus the billion-dollar-plus totals that were recorded over each of the previous 11 sessions dating back to the last week in September.

Both of Monday's deals were quickly shopped add-ons to existing bonds - a $235 million issue of 2021 bonds from Nortek, Inc., and a $350 million tranche of 2020 bonds from Nuance Communications, Inc.

Neither deal was seen trading in the aftermarket.

But while only two dollar-denominated, fully junk-rated deals from domestic or developed country issuers were seen pricing, the primary remained a busy place with the forward calendar swelling up from a slew of new-deal announcements most notably from Vantage Drilling Co., whose $1.15 billion seven-year secured notes deal is expected to price Tuesday.

There also were announcements of upcoming deals from Spectrum Brands Holdings Inc., EPL Oil & Gas, Inc., and Tervita Corp. Syndicate sources also heard of deals being quietly shopped around with little fanfare by Sidewinder Drilling, Inc. and Boise Cascade, LLC.

Price talk also emerged on U.S. dollar-denominated issues being marketed by Canadian borrowers Mood Media Corp. and Petaquilla Minerals Ltd.

Away from the new deals, secondary market activity was characterized by traders as restrained, with the exception of Sprint Nextel Corp.'s bonds and those of its Sprint Capital Corp. subsidiary; both rose solidly in very busy dealings on the news that Softbank Corp. will, indeed, take a majority stake in the No. 3 U.S. wireless operator. Those bonds already began rising last week on news that talks between the two companies were underway.

The overall market was considered firm, with most statistical indicators of market performance pointing higher, and one major gauge establishing a new peak level for the year.

Nuance taps 5 3/8% notes

Two issuers raised $608 million on Monday. Both brought a single, quick-to-market add-on tranche.

Nuance Communications priced a $350 million add-on to its 5 3/8% senior notes due Aug. 15, 2020 (Ba3/BB-) at 101.75 to yield 5.023%.

The reoffer price came at the rich end of price talk set in the 101.50 area.

Morgan Stanley and Barclays were the joint bookrunners.

The proceeds will be used for acquisitions and general corporate purposes, including repayment of $144 million of term loans, working capital and capital expenditures.

Nortek prices through talk

Nortek priced a $235 million add-on to its 8½% senior notes due April 15, 2021 (Caa1/B) at 107.125.

The reoffer price came 37.5 basis points richer than the midpoint of price talk set in the 106.75 area, and it renders a 7.357% yield-to-maturity and a 7.033% yield-to-worst.

UBS was the left lead bookrunner for the bank debt-refinancing. Bank of America, Deutsche Bank and Wells Fargo were the joint bookrunners.

Vantage plans $1.15 billion

Aside from the deal pricings, the Monday primary market saw a vigorous news flow, as the forward calendar filled out.

Offshore Group Investment Ltd., the indirect parent of Vantage Drilling, plans to price a $1.15 billion issue of seven-year senior secured first-lien notes on Tuesday.

Citigroup is the left bookrunner. Jefferies, RBC and Deutsche Bank are the joint bookrunners.

The proceeds will be used to tender for the company's existing $2 billion of 11½% senior secured notes due 2015 and to fund growth capital expenditures.

Mood Media talks $350 million

Mood Media talked its $350 million offering of eight-year senior notes (B3/B-) to yield 8¾% to 9%.

The books close at 2 p.m. ET on Tuesday, and the deal is set to price thereafter.

Credit Suisse and Jefferies are the joint bookrunners.

Boise Cascade brings deal

Boise Cascade and Boise Cascade Finance Corp. plan to price a $250 million offering of eight-year senior notes (/B+/) during the middle part of the present week.

Bank of America, Goldman Sachs, Barclays and Wells Fargo are the joint bookrunners.

The Boise, Idaho-based vertically integrated wood products manufacturer and building supplies company plans to use the proceeds to redeem its 7 1/8% senior subordinated notes due 2014, and for general corporate purposes.

Tervita starts Tuesday

Tervita plans to start a brief roadshow Tuesday for its $290 million offering of seven-year senior notes (expected ratings Caa2/CCC+).

The roadshow wraps up Thursday.

Deutsche Bank is the left bookrunner. Goldman Sachs, RBC and TD are the joint bookrunners.

The Calgary, Alta.-based environmental and energy services company plans to use the proceeds to repay debt under its dollar- and Canadian dollar-denominated revolvers, as well as to pay fees and expenses related to an amendment to its senior secured credit facilities, and for general corporate purposes.

EPL to tap 8¼% notes

EPL Oil & Gas, Inc. began a roadshow Monday for a $250 million tack-on to its 8¼% senior notes due 2018 (current ratings Caa1/B-).

The deal is set to price later in the present week.

Credit Suisse, BMO and Jefferies are the joint bookrunners.

Upon release from escrow, the proceeds will be used to finance the acquisition of 100% of the issued and outstanding member interests of Hilcorp Energy GOM, LLC, which owns certain shallow-water Gulf of Mexico shelf oil and natural gas interests.

The original $210 million issue priced at par in February 2011 via Energy Partners Ltd.

Sidewinder seven-year deal

Sidewinder Drilling plans to price a $225 million offering of seven-year senior notes in the early to middle part of the Oct. 22 week.

Jefferies is the sole bookrunner.

The proceeds will be used to fund the acquisition of Union Drilling, Inc., a Fort Worth, Texas-based land drilling services and equipment contractor.

Sidewinder is a Houston-based land drilling company controlled by Avista Capital Partners.

Petaquilla price talk

Petaquilla Minerals talked its $210 million of offering of five-year senior secured notes (Caa1//) with a 12% yield, as well as attached warrants for shares of the company's common stock.

The deal, which was originally announced in mid-summer, is set to price during the middle part of the week ahead.

Global Hunter is the bookrunner.

The proceeds will be used to refinance debt and to finance capital expenditures related to the Lomero-Poyatos mine in Spain.

In late summer, the deal was sidelined by a hostile takeover bid from Inmet Mining Corp., which announced Sept. 5 that it was attempting to acquire Petaquilla for C$112 million in a cash and stock bid.

In the press release announcing the bid, Inmet specified that in addition to customary closing conditions, its bid was subject to Petaquilla withdrawing the notes offering.

No Nortek or Nuance

Nortek's and Nuance Communications' issues priced fairly late in the day. Owing to that timing and the fact that they were quickly shopped and relatively small add-ons to existing bonds, a trader said, "I don't expect to see much in [Nortek]."

A second trader also did not see any trace of the new bonds or the underlying existing issues in the aftermarket.

Recent deals stay strong

One of the traders also said the deals that came to market last week held their own, but there was no huge trading in them Monday. For instance, he noted that Viking Cruises Ltd.'s new 8½% notes due 2022 "didn't trade much - but they're still 1021/2-103."

He hastened to add that it was about, or perhaps a little above, where the Woodland Hills, Calif.-based river cruise ship operator's $250 million issue finished in initial aftermarket dealings after pricing earlier Friday at par.

"That's not any difference today. Things held their gains today. It was a relatively quiet session, but the recent deals were definitely going out unchanged to a little better," the trader said.

"I don't really see any of those new issues from last week that have given up anything," he added.

A trader at another shop quoted Gulfport Energy Corp.'s 7¾% notes due 2020 at 98¾ bid, 99¼ offered. That was where he saw the Oklahoma City-based oil and natural gas exploration and production company's $250 million issue going home Friday, after it priced 98.534 to yield 8%.

The trader saw several other recent deals firmer on the day, for instance, NBTY Inc.'s 7¾% senior unsecured contingent cash-pay notes due 2017, which he quoted at 101 bid, 101½ offered. The Ronkonkoma, N.Y.-based vitamin and nutritional supplements manufacturer's $550 million deal, upsized from an originally planned $500 million, priced Friday at 98 to yield 8.242% on a cash basis and 8.776% on a payment-in-kind basis. Those bonds - brought to market via parent Alphabet Holding Co., Inc. - firmed smartly when they began trading around later Friday, rising to around 100 3/8 bid, 100¾ offered at the close.

He saw Cequel Communications Holdings LLC's 6 3/8% notes due 2020 at 101 3/8 bid, 101 7/8 offered, up by 3/8 point on the day. The St. Louis-based cable, phone and internet service provider priced $500 million of the notes at par Thursday though its Cequel Communications Escrow LLC and Cequel Communications Escrow Capital Corp. units. They firmed as high as 102 bid right out of the gate when freed for trading late Thursday, fell back a little from that peak and went home Friday around 101 bid, 101½ offered.

Going back a little further, the trader said TransDigm, Inc.'s 5½% senior subordinated notes due 2020 gained ¾ point Monday to end at 100¾ bid, 101¾ offered.

The Cleveland-based manufacturer of aircraft components priced its $550 million issue at par Wednesday after upsizing it from an original $500 million. While the bonds at first held not too far above their issue price when freed for secondary dealings Thursday, they pushed above 101 bid by the time things wrapped up Friday.

Here and there, a recent new deal did ease off a bit. Jaguar Holding Co. I (PPDI)'s 9 3/8%/10 1/8% senior PIK toggle notes were being quoted Monday at 101¾ bid, 102½ offered.

The Wilmington, N.C.-based pharmaceutical and biotechnology company's $525 million deal priced at 98.064 on Wednesday after upsizing from $500 million. That yielded 9 7/8% on a cash basis, 10.4% on a PIK basis.

After initially trading Wednesday around a 1001/2-to-101 context, the bonds moved up Thursday and Friday, going out ahead of the weekend at 100 7/8 bid, 101¾ offered.

Sprint runs up

A trader said that the new-deal arena took a back seat Monday.

"The real action today was in Sprint. Close to $200 million of their bonds changed hands," the trader said.

That followed an announcement that Japanese wireless company Softbank Corp. will take control of Overland Park, Kan-based Sprint, currently the third-biggest U.S. wireless provider behind industry top dogs Verizon Wireless and AT&T Mobility LLC, but for now ahead of T-Mobile (USA) Inc. The latter company, controlled by German phone giant Deutsche Telekom, AG, recently announced plans to buy smaller rival MetroPCS Corp., a provider of pre-paid, pay-as-you go wireless service.

Under the terms of the deal announced Monday, Softbank will pay $20.1 billion to take a 70% stake in Sprint. Sprint has been looking for a source of funding so that it can complete is LTE next-generation network and be in a stronger market position vis a vis its rival carriers.

Sprint Nextel's bonds, and those of its Sprint Capital Corp. financing unit, firmed solidly last week after the company first announced that it was in talks with Softbank in hopes of getting the latter company to make a sizable investment in Sprint. And the bonds continued to rise with the official announcement Monday.

The trader said it was all "buy, buy, buy," on Monday, which belied the old market adage "Buy on the rumor, Sell on the news."

He said that Sprint Capital's 6 7/8% notes due 2028 were easily the busiest in Junkbondland, with more than $50 million changing hands by the close. The paper was up 4¼ points, last trading around the 106 bid level.

Almost as busy were Sprint Capital's 8¾% notes due 2032, whose volume approached $50 million. They moved up by 3¾ points to 118 bid.

More than $42 million of Sprint Nextel's 6% notes due 2016 traded; the trader saw them up 2 points at 107 bid. Sprint Capital's 6.90% notes due 2019 gained 3¼ points, ending at 1121/2. More than $16 million of those bonds traded.

Clearwire up on Sprint news

A trader said the bonds of Sprint's 48%-owned affiliate, Bellevue, Wash.-based Clearwire Corp. also were doing better on the back of the Sprint news.

He saw its 12% notes due 2015 at 105¾ bid, 106 offered, while the 12% notes due 2017 were at 113 bid, 114 offered.

He estimated that the bonds were up by about 1 point or so.

Clearwire has been building its own network and seeking and getting some funding from Sprint. Analysts said Monday that with deep-pocketed Softbank taking control of Sprint, it could bode well for Clearwire's funding efforts. Some suggested that the Japanese company might buy the remaining 52% that Sprint doesn't already own.

Market indicators improve

A trader said that apart from the Sprint moves, "There wasn't a heck of a lot of stuff going on."

Overall, statistical indicators of junk-market performance were seen firmer, after being mixed Friday.

The Markit Group CDX North American Series 19 High Yield Index was up by 3/8 point on Monday to end at 100 1/16 bid, 100 3/16 offered. It lost 5/32 point on Friday.

The KDP High Yield Daily Index meantime rose by 8 basis points Monday to finish at 74.36, after easing by 2 bps Friday. However, its yield rose by 2 bps, to 6.08%, after being unchanged for two days.

But the widely followed Merrill Lynch U.S. High Yield Master II Index notched its third consecutive advance Monday as it rose by 0.191%, on top of Friday's 0.030% advance.

That lifted its year-to-date return to 12.932% from Friday's 12.717% and in the process, set a new record high for the year so far. It eclipsed the old 2012 peak level of 12.814% set on Sept. 19.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.