Crown Castle, First Wind drive by; Lonestar prices; new Bombardier, Exterran bonds trade up

By Paul Deckelman and Paul A. Harris

New York, April 1 - The high-yield primary sphere kicked off the month of April and the second calendar quarter of the year with a trio of new deals totaling some $1.15 billion.

Houston-based communications antenna tower owner Crown Castle International Corp. did an upsized, quick-to-market $850 million offering of eight-year notes, the day's biggest deal. However, that transaction took place too late in the day for any kind of aftermarket activity.

Also driving by was Boston-based wind-power generation company First Wind Holdings, LLC, who priced via a financing subsidiary a $75 million add-on to its existing 2018 senior secured bonds. Those bonds were also not seen trading around afterward.

Lonestar Resources America Inc., a Fort Worth-based independent oil and natural gas production and development company, priced an upsized, regularly scheduled forward calendar offering of $220 million of five-year notes, with traders seeing those bonds having moved up from their issue price.

The traders also saw both halves of Monday's big two-part drive-by megadeal from Canadian aircraft and railroad equipment manufacturer Bombardier Inc. as having firmed smartly when the five-year and 8.5-year notes were freed for secondary dealings.

They also saw energy operator Exterran Partners LP's new issue of 8.5-year notes having moved up from their solidly discounted Monday pricing level.

Away from the new deals, traders saw gains in Forest Oil Corp.'s bonds in very active trading after the company announced that it had amended its credit facility.

Claire's Stores Inc.'s bonds were seen on the downside after the specialty retailer reported poor fiscal fourth-quarter numbers.

Statistical market performance measures turned higher on Tuesday after having been mixed on Monday.

Big upsize for Crown Castle

News volumes in the European and U.S. primary markets were intense on Tuesday.

The dollar market saw $1.15 billion of total proceeds raised, as three issuers completed single tranche deals.

Two of the three deals were upsized.

Two of the three came as drive-bys.

Two came on top of price talk, and the third came toward the tight end of talk.

Crown Castle International priced an upsized $850 million issue of 4 7/8% non-callable eight-year senior notes (B1/BB-) at 99½ to yield 4.951%.

The quick-to-market deal was upsized from $500 million.

The yield printed toward the tight end of yield talk set in the 5% area.

Barclays was the left lead bookrunner. Credit Agricole, BofA Merrill Lynch, TD, RBC, RBS, SunTrust, Morgan Stanley, J.P. Morgan, Mitsubishi and Citigroup were the joint bookrunners.

The Houston-based owner and operator of wireless communications towers plans to use the proceeds, including those resulting from the $350 million upsize amount, to purchase or redeem all of its outstanding 7 1/8% notes due 2019 and for general corporate purposes, which may include the repayment or repurchase of certain other outstanding debt.

Lonestar Resources upsizes

Lonestar Resources America priced an upsized $220 million issue of five-year senior notes (Caa2/CCC+) at par to yield 8¾% on Tuesday, according to an informed source.

The deal, which priced at the conclusion of an investor roadshow, was upsized from $200 million.

The yield printed on top of yield talk.

Jefferies and Wells Fargo were the joint bookrunners for the debt refinancing deal.

First Wind taps 10¼% notes

First Wind Capital, LLC priced a $75 million add-on to its 10¼% senior secured notes due June 1, 2018 (B3/B) at 105 to yield 8.406%.

The reoffer price came on top of price talk.

Goldman Sachs was the sole bookrunner.

Proceeds, along with cash on hand, will be used to pay the consent fee for the current consent solicitation, to fund parts of its Oakfield project in Maine, to purchase the MA Solar projects in Massachusetts from its ultimate parent company, First Wind Holdings, LLC, to make a distribution to First Wind Holdings, and for general corporate purposes.

The Boston-based wind energy company priced the original $200 million issue at par in May 2011, and thus realized 184 basis points of interest savings with the tap versus the original print.

Signode starts Wednesday

In addition to the deals that priced, the dollar-denominated calendar saw a buildup as the first session of April unfolded.

Signode Industrial Group (B2/B) plans to start a roadshow on Wednesday for its $750 million offering of eight-year senior notes.

Goldman Sachs, JPMorgan, Barclays, BofA Merrill Lynch, Citigroup and Credit Suisse are the joint bookrunners.

Proceeds, along with a $1.35 billion term loan, a $400 million euro-denominated term loan and $885 million of sponsor equity, will be used to fund the acquisition of Signode from Illinois Tool Works, Inc., by the Carlyle Group.

Cogent brings $200 million

Cogent Communications Group, Inc. plans to sell $200 million of seven-year senior notes.

The private offer is being led by JPMorgan.

The notes come with three years of call protection.

The Washington, D.C.-based internet backbone network services provider plans to use the proceeds for general corporate purposes.

International Personal prices

News volume in the euro-denominated market was also brisk on Tuesday.

International Personal Finance plc priced a €300 million issue of eight-year senior notes (//BB+) at par to yield 5¾%.

The yield came at the tight end of revised yield talk in the 5 7/8% area. Earlier guidance came in the 6% area.

Joint bookrunner HSBC will bill and deliver. Citigroup is also a joint bookrunner.

The Leeds, England-based home credit company plans to use the proceeds to fund the tender offer for its 11½% guaranteed notes due 2015.

Quick Restaurants roadshow

There were additions to the euro-denominated market as well.

France-based Quick Restaurants, issuing via its Financiere Quick SA unit, began a roadshow on Monday in Paris for a €585 million two-part offering of floating-rate notes.

The deal includes a €430 million tranche of five-year senior secured notes, which come with one year of call protection, and a €155 million tranche of 5.5-year senior unsecured notes, which come with 1.5 years of call protection.

Joint global coordinator Goldman Sachs International will bill and deliver. JPMorgan is a joint bookrunner.

Proceeds, together with cash on the balance sheet, will be used to repay existing senior debt, second-lien debt, mezzanine debt, a shareholder loan and convertible bonds.

Monier two-part deal

BMBG Bond Finance SCA, a subsidiary of Braas Monier Building Group SA, plans to sell €415 million of senior secured notes due 2020 in tranches of fixed-rate notes and floating-rate notes.

Tranche sizes remain to be determined.

Deutsche Bank and Goldman Sachs are managing the sale.

The Oberursel, Germany-based building materials company plans to use the proceeds, along with a new €150 term loan and €100 million revolver, to refinance debt.

Virgin Media upsizes

The sterling-denominated market also generated news on Tuesday.

Virgin Media Secured Finance plc priced an upsized £175 million add-on to its 6¼% senior secured notes due March 28, 2029 (expected ratings Ba3/BB-) at 101¾ to yield 6.066%.

The deal was upsized from £150 million

The reoffer price came at the rich end of the 101½ to 101¾ price talk.

Goldman Sachs International was the sole bookrunner.

Stonegate starts Wednesday

Stonegate Pubs Co. plans to start a roadshow on Wednesday in London for a £380 million offering of five-year senior secured notes.

The roadshow continues in London on Thursday, and pricing is expected on Friday.

The deal is coming in tranches of fixed-rate and floating-rate notes. Tranche sizes remain to be determined.

Barclays and Morgan Stanley are the joint bookrunners for the Regulation S offer.

The Luton, England-based pub operator plans to use the proceeds to repay £175 million of bank debt, repay a £154 million shareholder loan and fund a £28 million dividend.

Lonestar bonds firm in trading

In the secondary market, a trader said that Lonestar Resources America, Inc.'s new 8¾% notes due 2019 had moved up smartly from the energy operator's par issue price.

He saw the bonds at 101½ to 102, although he commented that "I'm not sure how strong the bid was - but it seemed like once an offering came in, the offering went away."

A second trader pegged the bonds at 102½ bid.

At another desk, a trader saw them going home at 102 bid, 102½ offered.

The new Crown Castle and First Wind bonds were not seen trading around initially on Tuesday.

Monday's deals do better

Going back one day, a trader said the new Bombardier and Exterran deals "were trading at a premium - but not heavy volume that I saw."

A trader saw the new 6% notes due 2022 were trading around 101¾ to 102, while another located the bonds at 101 5/8 bid, 101 7/8 offered.

The Montreal-based aircraft and railroad equipment manufacturer had sold $1.2 billion of those bonds on Monday, pricing them at par as part of its $1.8 billion quick-to-market two-part financing.

Its $600 million of 4¾% notes due 2019, which had also priced at par, were 101½ to 1013/4, two of the traders said.

As for Exterran's new 6% notes due 2022, a trader said that "the only thing I saw" in the new issue - earlier in the day - was 98¾ bid, 991/2. It was "a little higher, about ½ point or so," coming off the 98.371 level at which the Houston-based provider of natural gas contract operations had priced its quickly shopped $350 million issue to yield 6¼%. The bonds priced after the deal was upsized from an originally announced $300 million.

Another trader saw the new bonds get as good as par during intraday trading, with about $8 million of the new notes having changed hands.

Market remains quiet

Away from the new deals, a trader said "nothing is jumping out of the screen here."

Another trader characterized the day as "slow," adding that "there were a lot of one-off situations, with no one name really garnering a lot of activity."

He noted that the day marked the beginning of the new month - as well as the start of the calendar-year second quarter - adding that "people were a little bit slow to get started."

At his shop, "most of the trades we did were one-off - one guy selling some stuff, and that was pretty much it."

He said "I'm surprised - it just didn't seem like anybody really wanted to play today."

TXU trades around

Energy Future Holding finds itself in a similar situation, and the Texas utility operator and merchant power generator likewise announced a delay in its 10-K filing as well as its decision not to make a scheduled debt interest payment, instead invoking the standard 30-day grace period.

However, a trader said that "really, the only active bonds were the 10% notes due 2020." He saw the bonds down 3/8 point with over $17 million traded, as they went home at 105 5/8 bid.

A second trader said that TXU's 10s were trading between 105½ and 105 5/8. He said that "maybe $20 million traded, maybe more." He said the bonds seemed little changed to him. "They were flat. They had been 105½ on the 28th," he asserted.

Another trader said that TXU's 11¼% notes were trading around 72 bid, which he called "up a little bit," with the notes having traded around 70 previously.

An industry analyst told Prospect News on Tuesday that by not making the debt payment - which starts the clock on the 30-day grace period - and by delaying the Securities and Exchange Commission filing, "I think they've bought some time here. This really gives them some more time" with which to negotiate with its creditors on a pre-packaged Chapter 11restructuring. Had it filed with the SEC as scheduled, its filing would surely have included the auditors' "going concern" warning, which in turn would likely have triggered an immediate default declaration on at least some of its debt.

Armed with that extra time, he suggested that the company could now remove the last roadblocks to a smooth pre-packaged filing.

"What we were hearing was that they were talking about coming to terms with Fidelity [Investments], which is a large holder of some of the bonds. It was kind of the last holdout. It was rumored that they were almost in agreement. I think that was kind of the issue that was holding everything up."

Assuming any remaining objections can be resolved during the grace period, clearing the way for a Chapter 11 filing, the analyst declared that "what needs to happen is the company needs just a lot less debt on the balance sheet. That's really the issue here."

He said that "this company generated about $1.4 billion in EBITDA [last year]. That's down over 25% from what was being generated back in '07 [the year the company was acquired in a giant-sized leveraged buyout]. In '07, it was $2.4 billion, and then it got as high as $4 billion. We've seen a large erosion of EBITDA in this company," mostly triggered by low natural gas prices, which held down revenues at its unregulated merchant power operation.

That, in turn, sharply boosted the company's leverage ratio of debt as a multiple of EBITDA, which he said came out to 28 times.

In contrast, "most of your peer group out there is maybe 5 times, 6 times debt to EBITDA. [TXU] is an unsustainable capital structure."

He noted that because of the mostly debt-funded LBO, "they went from $12.6 billion of debt [pre-LBO] to $40.8 billion."

"On a pro-forma basis, debt-to-EBITDA was about 9.6 times out of the box when the deal was done," which he agreed was a little high - but not totally ridiculous.

He pointed out that among TXU's competitors, "First Energy is at 5 times debt to EBITDA. NRG has been as high as 10 times also, a year ago, when cash flow started to dry up for them, but currently, NRG is at about 7-ish times. Calpine has actually done very well since [their reorganization], they're at 7 times.

"So if I'm a restructuring guy, you can see that 6-to-7 for a junk credit is a somewhat sustainable cap structure - but 28 times EBITDA is not."

Forest firms on credit facility

Also in the energy sphere, a trader said that Forest Oil announced a new credit facility, giving a boost to the Denver-based energy exploration and production company's 7¼% notes due 2019. "It looks like that one traded up a little bit, between ½ and 1 point," he said.

More than $15 million of those bonds changed hands, a market participant said, pegging them around 88½ bid.

Those bonds had been trading at or near par as recently as mid-February - but they plunged, first to 90 bid on Feb. 26 after Forest reported bad fourth-quarter numbers and indicated it would reduce its operations in the lucrative Eagle Ford Shale geologic formation in southern Texas.

The bonds ultimately fell as low as just under 82 bid in early March before making a partial recovery later in the month to around current levels.

Forest disclosed in a regulatory filing on Tuesday that it had entered into a new credit facility amendment.

The amendment decreases total commitments under the credit facility to $500 million from $1.5 billion, which may be increased by up to $300 million total, and reduces the borrowing base to $300 million until the next regularly scheduled borrowing base redetermination date on Nov. 1, 2014.

The lenders also agreed to amend the facility to provide for an increase in the permitted maximum total leverage ratio of debt as a multiple of EBITDA, setting a 5.75 times ratio at the end of the calendar quarters ending March 31, June 30 and Sept. 30, 2014. That will drop to 5.5 times at the end of the calendar quarter ending this coming Dec. 31 and will continue to ratchet downward next year to 4.5 times at the end of any calendar quarter ending after Sept. 30, 2015.

Claire's Stores gets clobbered

A trader said that Claire's Stores reported earnings "and they were kind of ugly - they replaced the CEO, that sort of thing."

He didn't see any immediate trading in the company's bonds in the wake of that late-session report.

However, another trader, who called the number "weak," said the retailer's 9% notes "are probably down a couple of points - probably in the neighborhood of about 3 points" to end at 101 bid.

He said its 8 7/8% notes "are probably going to shake out on either side of 90," which he called down 3 to 5 points on the day.

A market source at another desk saw the latter bonds finishing at 87½ bid, down 5½ points from their late Monday levels, on volume of over $4 million. The bonds had actually risen to an intraday high of 943/4, up 1¾ points on the day, but slid badly in the late afternoon after the news was announced.

The Hoffman Estates, Ill.-based specialty retailer said that for the 2013 fiscal fourth quarter ended Feb. 1, net sales fell by $57.9 million, or 11.7%, to $435.5 million.

Claire's said the slide was partially attributable to having 14 weeks in the year-ago quarter versus just 13 in the latest period - but it acknowledged that even adjusting for that discrepancy, sales still would have fallen by some 7.3% year over year.

Consolidated same-store sales - the retailing industry's key performance metric - fell by 10.7% from a year ago.

Adjusted EBITDA slid to $93.3 million in the quarter from $129.6 million a year earlier.

Claire's also announced that James D. Fielding, the Company's chief executive officer, had resigned. The board of directors appointed Beatrice Lafon, up till now the president of Claire's European operation, as the company's new CEO, effective Wednesday.

Market indicators move up

Statistical junk performance indicators moved higher on Tuesday after having been mixed on Monday.

The Markit Series 22 CDX North American High Yield index was seen by a market source to have gained 3/16 point to end at 107 7/16 bid, 107 11/16 offered. It was the index's third consecutive gain, including ¼ point rises each on Friday and Monday.

The KDP High Yield Daily gained 3 bps points to end at 74.92 after it had lost 2 bps Monday.

Its yield was unchanged at 5.23% after having come in by 1 bp on Monday.

And the widely followed Merrill Lynch High Yield Master II index moved up by 0.076%, its third straight advance. On Monday, it had risen by 0.101%.

Tuesday's improvement lifted its year-to-date return to 3.075% - a third straight new peak level for the year so far, up from Monday's 2.997%, the former peak level for 2014.

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