Atkor, upsized Swift, Briggs & Stratton price; Syniverse, ResCare next; Regions up on M&A talk

By Paul Deckelman and Paul A. Harris

New York, Dec. 15 - High yield primaryside players continued to clear out the new-deal cupboard on Wednesday, pricing another $1.2 billion of paper, as issuers sought to get in on the last rush of transactions before Junkbondland begins its traditional year-end winding down.

Overland Park, Kan.-based trucking company Swift Transportation had the day's biggest deal, an upsized $500 million eight-year secured offering that hit the market too late for secondary dealings.

Earlier, industrial manufacturer Atkore International, Inc. brought a $410 million secured deal to market; the new bonds were heard to have then firmed solidly in the aftermarket.

Gasoline engine manufacturer Briggs & Stratton Corp. upsized its 10-year offering to $225 million, with the new bonds trading modestly better when they moved to the secondary side. First Capital Holdings, Inc. came with a $100 million offering of five-year notes.

Price talk emerged on Syniverse Holdings, Inc.'s and ResCare Inc.'s respective eight-year deals, which could come to market on Thursday. But Hunter Defense Technologies Inc. was heard to have postponed its $250 million of seven-year secured notes.

In the secondary realm, Regions Financial Corp.'s paper popped on market buzz that PNC Financial Services Group may be looking to acquire the Birmingham, Ala.-based banking concern.

Dynegy Holdings, Inc.'s bonds moved lower on news that the Houston-based power generator - whose shareholders last month blocked Blackstone Group's efforts to acquire the company - has now agreed to a new buyout proposal, from billionaire investor Carl Icahn.

Swift upsizes slightly

The dollar-denominated high-yield primary saw $1.23 billion price in four tranches from four different issuers on Wednesday.

Swift Services Holdings, Inc. priced an upsized $500 million issue of senior second priority secured notes (Caa1/B-) at par to yield 10%, at the wide end of the 9¾% to 10% price talk. The amount was increased from $490 million.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., Wells Fargo Securities, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and UBS Investment Bank were the joint bookrunners for the debt refinancing deal.

The Phoenix-based transportation services company plans to use the proceeds to refinance its existing bank debt, as well as its senior secured floating-rate notes and senior secured fixed-rate notes.

Atkore prices $410 million

Meanwhile, Atkore International priced a $410 million issue of seven-year senior secured notes (B3/B+) at par to yield 9 7/8%, in the middle of the 9¾% to 10% price talk.

Deutsche Bank Securities Inc., UBS Securities and Credit Suisse Securities were the joint bookrunners.

Proceeds will be used to fund the acquisition of a 51% stake in Atkore, Tyco International's electrical and metals products unit, by Clayton, Dubilier & Rice, LLC.

Briggs at the tight end

Briggs & Stratton priced an upsized $225 million issue of non-callable 10-year senior notes (Ba2/BB-) at par to yield 6 7/8%, at the tight end of the 7% area price talk.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were the joint bookrunners for the debt refinancing.

The deal went well, according to market sources from the buy-side and the sell-side, who made reference to the "roll factor."

Briggs & Stratton used the proceeds from the new deal to redeem its 8 7/8% notes due 2011. And a significant portion of the participants were holders that were being taken out of the 8 7/8% paper - hence were "rolling" into the new notes.

First Capital oversubscribed

First Capital priced a $100 million issue of 12% five-year senior notes (B3/B-) at 98.182 to yield 12½%.

The deal priced on top of price talk which specified a 12% coupon at a discount to yield 12½%.

Gleacher & Co., making its debut as sole bookrunner, quarterbacked the deal.

Proceeds will be used to repay debt and for general corporate purposes.

The deal was well oversubscribed, an informed source said.

Quebecor upsizes

In the Canadian bond market, Quebecor Media Inc. priced an upsized C$325 million issue of 10-year senior notes at par to yield 7.376%

The yield printed at the wide end of the 7¼% to 7 3/8% yield talk. The amount was upped from C$250 million.

Scotia Capital Inc., TD Securities Inc. and National Bank Financial Inc. were joint bookrunners.

Proceeds will be used by subsidiary Sun Media Corp. to redeem and retire all outstanding Sun Media notes in February and to finance the settlement and termination of related hedging contracts.

Talking the deals

Syniverse Holdings talked its $475 million offering of eight-year senior notes (Caa1/B-/) with a 9¼% area yield.

Pricing is set for Thursday morning.

Credit Suisse, Barclays Capital and Goldman Sachs & Co. are the joint bookrunners.

Also ResCare talked its $200 million offering of eight-year senior notes (B3/B-) with a 10½% to 10¾% yield.

That deal was slated as late-Wednesday or early Thursday business. No terms were available Wednesday night as Prospect News went to press.

J.P. Morgan Securities LLC and Bank of America Merrill Lynch are the joint bookrunners.

Hunter Defense postpones

Finally, Hunter Defense Technologies postponed its $250 million offering of seven-year senior secured notes, according to market sources, who added that the deal had been struggling.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch and RBS Securities Inc. were the joint bookrunners.

The company was in the market via HDT Worldwide, LLC and HDT Finance.

The proceeds were to have been used to repay existing debt and to fund a dividend payment.

Atkore at higher levels

Atkore International's seven-year senior secured notes "did very well," a trader said, quoting the new notes going home at 102 bid, 102½ offered, well up from their par issue price.

A second trader also saw those bonds at that same higher level.

Briggs & Stratton chugs higher

A trader saw Briggs & Stratton's new 10-year bonds get as good as 101¼ bid, 101½ offered, up solidly from the par level at which the Milwaukee-based maker of gasoline engines for power equipment had priced its deal earlier.

A second trader saw a more restrained upside move in initial trading, pegging the notes at 100¾ bid, 101¼ offered.

First Capital firmer

A trader said that First Capital Holdings' issue of five-year notes was "up a point, and looking," versus the 98.182 level at which the bonds had priced. "There's really not any supply left" in the Boca Raton, Fla.-based commercial finance company's $100 million issue. "That one got put away pretty good."

He said there was "definitely a better bid - but on just no paper. There's no paper around."

US Air hits turbulence

Despite their investment-grade rating, a junk trader saw some crossover high yield activity in US Airways Inc.'s new pass-through certificates, declaring that the Tempe, Ariz.-based air carrier's 6¼% class A paper due 2023 "look like they're struggling a little bit."

He quoted the certificates as "wrapped around the par level," where the $262.86 million of certificates had come to market earlier.

Another trader quoted them a bit better than that, at 100¼ bid, 100¾ offered.

New CNO moves up

Among Tuesday's deals, CNO Financial Group Inc.'s new 9% senior secured notes due 2018 moved up to 101 3/8 bid, 102 1/8 offered, well up from the par level at which the Carmel, Ind.-based insurance holding company had priced its $275 million offering - downsized from the originally announced $300 million. Those bonds came to market too late in the session Tuesday for any kind of aftermarket activity.

Another trader quoted the new notes at 101½ bid, 102 offered.

Kansas City Southern down

A trader saw Kansas City Southern de Mexico SA de CV's 6 5/8% notes due 2020 "wrapped around par," quoting the bonds at 99 7/8 bid, 100¼ offered.

The Mexican unit of the Kansas City, Mo.-based railroad operator had priced its $185 million issue at par on Tuesday, and the new bonds had then moved as high as 100 3/8 bid, 100½ offered in Tuesday's aftermarket.

Aurora hangs around issue

Aurora Diagnostics Holdings, LLC/Aurora Diagnostics Financing Inc.'s new 10¾% notes due 2018 were trading around 99¾ bid, 100¾ offered, a trader said. That compares with the par level at which the Palm Beach Gardens, Fla.-based healthcare company had priced its $200 million issue - downsized from the originally announced $230 million - too late in the day Tuesday to really trade around.

Several other traders meantime saw no aftermarket visibility on the deal, although one did note that "it struggled - they had to widen talk and change covenants to get it done."

But he added that it was "not a bad deal," if it was, in fact snapped up by some investors and quickly put away.

Scotts stays soft

A trader saw the 6 5/8% notes due 2020 priced Monday by Scotts Miracle-Gro Co. "still struggling a little bit," quoting the bonds going out at 99¼ bid, 99½ offered.

The Marysville, Ohio-based provider of lawn and garden care products priced its quickly appearing $200 million deal on Monday at par, and the bonds were quoted having gotten as good as 100¾ bid, 101¼ offered when they moved to the aftermarket later Monday.

However, on Tuesday, they came down from those initial levels, to finish quoted by one trader at par bid, 100½ offered, while a second saw the bonds retreat even further, to 99 bid, 99½ offered, and stay there on Wednesday.

Indicators soften up

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index up down ¼ point on Wednesday to end at 102 1/8 bid, 102 3/8 offered, after having risen by 5/16 point on Tuesday.

The KDP High Yield Daily index meantime lost 8 basis points on Wednesday to end at 73.95, after having gained 12 bps on Tuesday. Its yield rose by 1 bp to 7.45%, after having come in by 3 bps on Tuesday.

The Merrill Lynch High Yield Master II index lost 0.081% on Wednesday, on top of Tuesday's 0.029% decline. That left its year-to-date return at 14.143% on Wednesday, off from 14.235% on Tuesday. The index also remains down considerably from the 2010 peak level of 15.602% recorded on Nov. 9.

Declining issues made it three straight sessions over advancers on Wednesday, although just as had been the case on Monday and Tuesday, the margin of difference was just a few dozen issues out of the almost 1,500 that traded on Wednesday.

Overall activity, represented by dollar-volume levels, dropped by 15% on Wednesday, versus Tuesday's 33% gain from the previous session's levels.

"Nothing went on," a trader said. "It was deader than dead today."

He continued that he had spent much of the day "doing a lot of homework, cleaning up, housekeeping" - a not atypical story at this time of the year.

He said that a lot of people are just "doing paperwork. Nobody's really making money at this time of the year, unfortunately."

However, that view was by no means universal. A second trader said that he saw "decent volume" on Wednesday. "There was definitely still trading going on. I thought today was a little busier than it had been over the last couple of days.

"It was a tiny bit weaker overall - but pretty decent volume out there."

The first trader meantime opined that "if there's a deal that needs to get done, it needs to be squeezed in during the next day or two." After that, he said, it's all "holiday parties, and then everybody's leaving [early] to go Christmas shopping.

"That's the game plan, unfortunately."

However, he held out the hope that "it's going to be an exciting 2011. It's going to be awesome."

Regions gains on buyout buzz

Among specific secondary names Wednesday, a trader said that Regions Financial's several series of bonds were solidly higher on Wednesday, pushed up on market speculation that Pittsburgh-based PNC Financial Services Group is interested in buying the Alabama-based regional banking company.

The South Florida Business Journal reported that PNC, the sixth-biggest U.S. banking company by deposits, was looking to expand beyond its mostly Northeastern U.S. base and widen its footprint in the South, and was doing "due diligence" on Regions in preparation for a possible acquisition. There was neither any official confirmation nor denial from either company on Wednesday.

He saw Regions' 7½% notes due 2018 at 102 bid, 103 offered, up from Tuesday's 99¼ bid level.

Another market source saw Regions' 5.70% notes due 2015 up 1¾ points on the day at 981/2, while the 6 5/8% bonds due 2047 of its Regions Financing Trust II entity jumped more than 4 points on the day to end just over 87.

Dynegy dips on Icahn bid

On the downside, Dynegy announced it had entered into an agreement with Icahn Enterprises LP to be acquired for $5.50 per share, a 10% increase over Blackstone Group's failed $5-per-share bid.

But in reaction to the news, the bonds traded down. One trader opined that "bondholders are figuring they are not going to benefit much from Icahn taking over."

The trader called the 7¾% notes due 2019 down "about a point" at 66 bid, 67 offered, while the 8 3/8% notes due 2016 fell 1½ points to 74 5/8.

Another trader said the bonds fell 1½ to 2 points on the day, seeing about $25 million of the 7¾% notes changed hands. He placed that issue at 66 1/8 and the 8 3/8% notes at 741/2, with about "$10-odd million" trading.

"The likelihood of [an Icahn takeover] not adding leverage is almost zero," he said.

Yet another source saw the 7¾% notes losing 2 points to end at 66¼ bid.

Icahn is expected to pay a total of $665 million for the Houston-based power producer if the sale is approved. Under the terms of the agreement, Icahn is launching a tender offer for outstanding stock, which ends Dec. 22. Dynegy will then have until Jan 24 to find a superior offer.

The agreement provides that if a better bid is found and Icahn doesn't want to top it, Icahn will support it.

"All stockholders should benefit from the auction process which has now begun at a price which is 10% higher than the last bid," said Carl C. Icahn in a statement posted on Dynegy's website.

Still, bond market players are not all that jazzed about the proposal.

"We don't see how this improves bondholder status or recovery since Icahn presumably will be free to dividend out cash, do a recap or sell assets when and if he gets control - all equity-friendly results," wrote Gimme Credit LLC analyst Kim Noland in an afternoon report.

Noland noted that it seemed unlikely Dynegy would find a better bid, as it failed to do so after Blackstone made its offer just a few months ago. However, she isn't ruling out Seneca Capital, which - along with Icahn - had protested the Blackstone takeover, claiming that the valuation was too low.

"Maybe Icahn is trying to force someone else's hand, but right now given the previous shareholder vote in favor of a Blackstone deal, and Icahn affiliates ownership, IEP may already have enough votes to achieve a majority," she said in the report.

Stephanie N. Rotondo contributed to this report

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