XM Satellite, Oxford, Alliance One slate new deals; new Quicksilver holds gains, E*Trade also

By Paul Deckelman and Paul A. Harris

New York, June 22 - XM Satellite Radio Inc. announced Monday that it will sell $350 million of four-year senior secured notes. High yield syndicate sources heard that the deal for the wholly-owned unit of New York-based satellite radio broadcaster Sirius XM Radio Inc. will likely price around the middle to the end of the week.

Also heard slating deals were Atlanta-based apparel and footwear manufacturer Oxford Industries, Inc., as well as Alliance One International, Inc. The latter company - a Morrisville, N.C.-based tobacco producer - will do its junk deal in tandem with a convertible offering.

And Canadian grain company Viterra Inc. was heard to be trying gauge investor interest in a possible $300 million notes offering.

Traders continued to see only restrained activity in Solo Cup Co.'s existing paper, in the wake of Friday's news that Solo will sell $300 million of senior secured notes.

Among recently priced issues, Quicksilver Resources Inc. and Wendy's International Holdings LLC Inc's new bond issues, which priced on Thursday, remained around the levels at which those respective bond issues had

moved last week.

Among the established issues, E*Trade Financial Corp.'s bonds remained at, or even above, the levels seen at the close last week, with the New York-based on-line financial services company formally beginning the exchange offer aimed at taking out a large chunk of its outstanding notes.

But the market was pretty dull otherwise, traders said, with even news of debt take-out transactions involving Level 3 Communications Inc. and Hovnanian Enterprises Inc. seen producing not much trading in either name.

No issues were priced during the Monday primary market session.

"The negative tone in the market makes it difficult to bring a drive-by deal," one leveraged capital markets banker observed on Monday morning.

Nevertheless, even in light of recent market softness, the final full week in June in expected to be a busy one, sources say.

"The guidance we're giving to companies is to go before the Fourth," said a syndicate official, making reference to the three-day Fourth of July holiday in the United States, which gets underway on Friday, July 3.

And "before the Fourth" means this week, not next week, the official specified. The anticipated exodus of market participants around the coming holiday, in combination with the market risk posed by the three-day close, are factors that seem to favor a pre-Independence day timeframe, the banker said.

The source professed visibility on one and possibly two deals likely to be announced later this week.

Oxford Industries set for Tuesday

The above-mentioned timidity regarding quick-to-market deals is not universal.

Oxford Industries announced Monday that it will host a conference call at 12 p.m. ET on Tuesday for its $150 million offering of six-year senior secured notes (expected ratings B2/B).

The notes are scheduled to price on Tuesday afternoon.

Banc of America Securities and SunTrust Robinson Humphrey are joint bookrunners for the deal to fund the tender for the Atlanta-based apparel company's outstanding 8 7/8% notes due 2011.

Alliance One roadshowing $600 million

Meanwhile, against the backdrop of Monday's headline news that president Barack Obama signed into law the Family Smoking Prevention and Tobacco Control Act, giving the U.S. Food and Drug administration a broad mandate to regulate tobacco as it would any other drug, leaf tobacco merchant Alliance One International rolled out a $600 million offering of seven-year senior unsecured notes.

The deal, which is being led by Credit Suisse, is set to roadshow through the present week and price on Friday.

Deutsche Bank Securities, Goldman Sachs & Co. and ING are also bookrunners for the debt refinancing deal.

XM Satellite plans four-year secured deal

XM Satellite Radio, a unit of Sirius XM Radio, started a roadshow on Monday for a $350 million offering of four-year senior secured first-lien notes (Caa1/B).

The roadshow is expected to conclude on Wednesday or Thursday.

The notes are expected to price mid to late during the present week.

JP Morgan has the books.

Proceeds will be used to repay the New York-based satellite radio company's amended and restated credit agreement, with the balance to be used for general corporate purposes.

Viterra looking at $300 million

Viterra is seeking interest among institutional investors, primarily in Canada, for its newly announced $300 million offering of senior notes, according to Dean Popil, the company's director of investor relations.

Popil declined to furnish any further information on the Rule 144A/Regulation S offering, other than to say that more details will be available shortly.

The note would rank pari passu with the company's existing and future secured debt, other than its revolver.

Proceeds will be used for general corporate purposes.

Viterra is a Regina, Sask.-based agribusiness.

TD Securities was the bookrunner for Viterra's C$400 million bank deal, which came to market in May 2008.

One other name circulated through the Monday primary market.

Casella Waste Systems, Inc. is expected to show up with a deal in the near term.

On June 16 the company announced that it wants to raise $485 million in order to refinance its current $525 million senior secured credit facility which matures in April 2010.

The proceeds are expected to consist of an amended senior secured credit facility and a secured bond, which the company plans to have completed by July 31.

According to Prospect News data, Casella Waste Systems last visited the new issue market in January 2004, when it priced a $45 million add-on to its 9¾% senior subordinated notes due Feb. 1, 2013 at 113.5 for a 6.914% yield to worst.

Goldman Sachs ran the books for that deal. The co-managers were Fleet Securities, Banc of America Securities, ABN Amro, Comerica and Royal Bank of Scotland.

XM deal plans produce little action

A trader said that he "didn't see much" Sirius or XM paper trading in front of the new deal that XM Satellite Radio announced that it will bring to market this week. "I did see a little offered, a teeny bit cheaper, but nothing that I really saw actually traded."

A market source called XM's existing 13% notes due 2013 down a point at the 76 level.

Solo mostly silent

A trader saw only limited activity in Highland Park, Ill.-based disposable cup, plate and utensils maker Solo Cup, which announced plans for a $300 million secured four-year notes deal.

He said that "all last week, I expected something to happen, given that they were trying to come back to market," after the company said early in the week that it would explore different financing options to deal with upcoming maturing debt, and punctuated that on Thursday with the announcement of the secured bond deal. "Not much happened at all."

He said that Solo's bonds traded Monday "for the first time in two weeks," hanging basically in an 80-82 range." He said that $6 million or $7 million of the bonds traded, but before that, the only trades had been odd lots.

"I'm actually glad to see something traded today because it had really been surprising that nothing traded."

New Quicksilvers continue to glitter

Quicksilver Resources' 11¾% notes due 2016 hung on to the solid gains which the Fort Worth, Tex.-based energy exploration and production operator's new bonds had moved to following its pricing last week of its $600 million issue of bonds, upsized from $425 million.

Those bonds priced at the 97.717 level late Thursday, and were then heard to have jumped on the break to as high as the 101 bid area.

In Monday's dealings, a trader saw the bonds at 101 bid, 102 offered, while a second called them 101 bid, 101½ offered.

New Wendy's still a wallflower

However, the new Wendy's bonds that priced a little earlier on Thursday continued to struggle.

A trader saw those bonds at 97½ bid, 98 offered, little changed from the 97.533 level at which the bonds priced to yield 10½%.

At another desk, a trader saw the bonds having dropped to 96 bid, 97 offered.

New Penn Virginia, Virgin bonds better

Among other recently priced issues, a market source quoted Penn Virginia Corp.'s 10 3/8% notes due 2016 at 101 5/8 bid. That's well up from the 97.003 level at which the Radnor, Pa.-based independent energy exploration and production company had priced that $300 million of bonds - upsized from the original $250 million - on June 10, to yield 11%.

Also higher were New York-based Virgin Media Finance plc's $750 million of 9 ½% notes due 2016, which had priced back on May 29 at 95.754 to yield 10 3/8% as part of a two-part dollar-and euro-denominated deal worth around $1 billion equivalent. The source saw them Monday at 98.813.

Market indicators retreat

Back among the established issues, the CDX Series 12 High Yield index - which had lost about ½ point on Friday - remained in a rut on Monday, with a trader seeing it down 3/8 point at 81 bid, 81½ offered.

The KDP High Yield Daily Index, which had eased by 4 basis points on Friday, lost another 31 bps on Monday to end at 61.80, while its yield widened by 9 bps to 10.76.%

In the broader market, advancing issues - which managed to eke out a narrow victory over decliners on Friday to break a three-session losing streak - were back on the downside again on Monday, trailing by an almost two-to-one margin.

Overall market activity, measured by dollar-volume totals, fell about 7% versus Friday's levels.

A trader said that Monday's session "was really quiet and boring. It was a little blah."

Another trader said that "we're back in that half-"wait and see" mode and half-Monday mode."

He said that Monday's "subdued" session was at least in part attributable to the impact that the ongoing televised U.S. Open golf tournament was having in distracting people from the business at hand - and on top of that, he said, "you've got Wimbledon and [starting Tuesday] World Cup soccer. So there's always something to do" other than trade bonds.

He opined that he was "actually amazed that we got to $1 billion in high yield turnover - because it sure didn't feel like it. It was definitely pretty subdued. If you backed out all of the Sallie Mae stuff [SLM Corp.], there didn't seem to be a whole lot of conviction in anything."

He said "certainly in terms of volume trade," the Reston, Va.-based education finance company - whose bonds had traded busily and moved higher last week on news of a major loan-servicing contract win - were one of the few features.

But while Sallie Mae had firmed last week, it backpedaled on Monday, in tandem with most of the rest of Junkbondland; a market source saw its 8.45% notes due 2018 down more than 2 points to the 85 level.

He also saw "another $40 or $50 million Freeports traded [i.e. Freeport-McMoRan Copper & Gold Inc.], but they trade every day, all right in that same zone" - around par for the Phoenix-based metals mining company's 8 3/8% notes due 2017 and its 8¼% notes due 2015

"I still can't figure out why that trades as much as it does," he concluded.

Turning to another credit, he saw the Community Health Systems Inc. 8 7/8% notes due 2015 trading around 97-971/2, "kind of where they've been, or maybe a tiny bit softer" for the Franklin, Tenn.-based hospital operator, whose bonds are regarded by many in the market as a barometer of overall junk market trends, "but it's all right there."

E*Trade still excites

A trader said that E*Trade Financial Corp.'s 8% notes due 2011 and its 12½% springing lien notes due 2017 - which had shot up dramatically last week to levels well north of par, posting gains of some 30 points or more each on the company announcement it would take out all of the first and much of the second via an exchange offer - remained strong, as the company formally began that offer to give the holders of those bonds new convertible debt (see related story elsewhere in this issue). He saw the 8s at 108 bid and the 121/2s at 104.

He also saw the company's 7 7/8% notes due 2015, which are not included in the exchange offer, at 77½ bid, 79½ offered, although he added that he "really didn't see any activity in that one."

Another trader said that the E*Trade bonds "have held [their gains], that's for sure."

He saw the 8% notes actually get as good as 113, while the 121/2s had firmed to 106, "so that continues its march upward."

However, he said that the fact that the bonds had risen to the level they had, was "mind-boggling to me, considering that the 7 3/8% notes due 2013, when it really got ugly, [traded] in the '30s. Those notes - which are also not part of the exchange offer - went out around the 82 level.

The trader noted that "its stock is still just over a buck," finishing Monday at $1.19.

"There's something going on," he said. "Either someone knows something that nobody else knows - or someone thinks they know something and is going to get a big surprise."

Level 3, Hovnanian little moved

Traders said the sleepy session produced little movement even in the bonds of companies which legitimately had news out about them. One such credit was that Level 3 Communications. A trader saw its bonds little moved, despite the announcement of a convertible debt exchange which sent the Broomfield, Colo.-based telecommunications company's shares climbing.

He saw the company's 8¾% notes due 2017 around 75-76, "where they've been, on not much volume."

He said the 9¼% notes due 2014 were at 81¼ bid, 83¼ offered.

A trader meantime said that he "didn't see a whole lot of" activity in Hovnanian Enterprises' bonds, even on the news that the Red Bank, N.J.-based homebuilder plans to buy back all $28.87 million of its outstanding 6% senior subordinated notes due 2010, paying a price in the upper 90s, and will spend up to $60 million to buy back portions of eight other series of bonds via a pair of Dutch auction tender offers.

He said that the company's longer-dated issues, like the 6¼% notes due 2015 and 6¼% notes due 2016 - among the bonds being tendered for in the Dutch auction - was "right around 50; I think that's where they stayed."

He said that the 6s, which are being taken out at a price of 98.5 for holders tendering their bonds by the 5 p.m. ET July 2 early participation deadline and 95.5 after that, "didn't even trade today. With $28 million outstanding, you're not going to see may quotes. It just wouldn't be active."

Another trader said that he "didn't see a single picture in Hovnanian today."

There was, he said, "a little bit of bidding on Friday, but not much trading." He said that Hovnanian was one of the names, "surprisingly, where there should be activity - but there hasn't been."

On the other hand, another market source saw its 6 3/8% notes due 2014 up as much as 4 points to the 56 level.

Ford long bonds stay in the 50s

Among the automotive names, a trader said that "Ford [Motor Co.] seems to be holding up," quoting the Dearborn, Mich.-based carmaker's 7.45% bonds due 2031 as remaining around the same 57-58 context "where they were" on Friday, although there was "not a lot of volume," so he held out the prospect that "it could be quoted a little lower, but that's about where I saw it." He saw the shorter paper, such as Ford Motor Credit Co.'s 7 3/8% notes slated to come due on Oct. 28, at 983/4, 99 bid, "probably unchanged to a little better."

However, at another desk, a trader said that the Ford long bonds - which spent all of last week on the slide, coming down into the upper 50s from prior levels as good as 70 bid - lost another 2 points to close at 55 bid, 57 offered.

The whole Ford structure had moved up smartly in April, May and early June after the Number-Two domestic carmaker successfully completed a major debt-exchange transaction that enabled it to slash its obligations, and as Ford's main domestic arch-rival, General Motors Corp., descended into the throes of bankruptcy reorganization, while Ford avoided that fate. However, after peaking at around 70 in early June, the 7.45s has descended over about a week's worth of trading into the 50s, sometimes falling several points a day, on what's been described as a mixture of profit-taking, the Ford advance simply running out of gas, and Ford being dragged down by the overall junk market heaviness of the past week, which was seen continuing into Monday.

A trader meantime saw GM's 8 3/8% bonds due 2033 unchanged at 12½ bid, 13½ offered.

Another trader saw those GM benchmark bonds "still hanging around" 12½ bid, 13 offered, off a touch from levels about ¼ point higher at which they had started the day. He said that GM's other bonds "were a little lower than that. The 8 3/8s seem to be quoted [at] the best [levels]."

Another market source saw the Ford Credit 7% notes due 2013 down more than a point to just under 79 bid, but saw GM's equivalent, GMAC LLC, down further, its 6 7/8% notes due 2012 quoted down as much as 5 points on the session to around the 77 mark.

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