Calpine prices stealth deal, Regal off roster; GM gyrates on Q1, Psychiatric Solutions gains

By Paul Deckelman and Paul A. Harris

New York, May 17 - Calpine Corp. priced a $400 million offering of 10-year secured bonds on Monday in a private placement transaction which was only announced to the market after the deal had already been done.

Traders saw not a trace of the San Jose, Calif.-based independent power producer's new deal in the aftermarket.

Also in the primary arena, Regal Cinemas Corp. postponed its planned $250 million add on offering of new 8 5/8% notes due 2019.

But while the Knoxville, Tenn.-based movie-theater operator was withdrawing from the junk market - at least temporarily - due to market conditions, other borrowers were will still stepping up. Syndicate sources heard that American Tire Distributors, Inc. and Capella Healthcare Inc. were each hitting the road to market prospective deals to investors this week - American Tire a $250 million seven-year transaction and Capella a $500 million seven-year tranche.

Price talk meantime emerged on Hillman Group Inc.'s $150 million eight-year offering, which could price either late Tuesday or on Wednesday morning

In the secondary market, General Motors Corp.'s bonds saw heavy trading on Monday after the Detroit-based automotive giant reported a first-quarter profit - its first black ink since mid-2007 - helped by its shedding of debt and other expenses during last year's bankruptcy as well as strong sales from some new models. Various traders saw the GM bonds up anywhere from ½ to 2 points.

Psychiatric Solutions Inc.'s bonds rose on the news that the Franklin, Tenn.-based provider of inpatient behavioral healthcare services is to be acquired for $2 billion by Universal Health Services Inc., which will also assume $1.1 billion of Psychiatric Solutions net debt.

Calpine prices $400 million

One deal priced during the Monday primary market session.

Calpine sold a $400 million issue of senior secured notes due Aug. 15, 2019 at par to yield 8%.

Goldman Sachs & Co. ran the books for the quick-to-market, Rule 144A for life deal.

The Houston-based power generation company will use the proceeds to repay a portion of its term loan.

Capella plans $500 million

Meanwhile, Capella Healthcare began a short roadshow on Monday for its $500 million offering of seven-year senior notes.

The roadshow wraps up on Thursday and the notes are expected to price after that.

Bank of America Merrill Lynch, Citigroup and Barclays Capital are joint bookrunners for the bank debt refinancing.

American Tire to bring LBO deal

American Tire Distributors also began a roadshow on Monday for a $250 million offering of seven-year second-lien notes.

The deal is set to price during the middle part of the present week.

Bank of America Merrill Lynch, Barclays Capital, RBC Capital Markets and UBS Investment Bank are joint bookrunners for the acquisition financing. The company is being acquired by TPG Capital.

The initial whisper on the deal has the bonds coming with a yield in the high 9% range, according to a source from a high-yield mutual fund.

Hillman sets price talk

American Tire takes its place on the new issue calendar as one of four acquisition deals expected to price this week.

Also bringing an LBO deal is Hillman Group.

On Monday Hillman's $150 million offering of eight-year senior notes (B3/CCC+) was talked to yield 10¾% to 11%.

The order books close noon ET, on Tuesday, except for West Coast accounts.

Pricing is set for Tuesday afternoon or Wednesday morning.

Barclays Capital Inc. and Morgan Stanley & Co. Inc. are the joint bookrunners.

Proceeds will be used to help fund the leveraged buyout of the company by Oak Hill Capital and to refinance existing debt.

Other whispers

Meanwhile, Games Merger Corp. (Dave & Buster's, Inc.) wraps up a roadshow on Wednesday for a $200 million offering of eight-year senior notes (B3/B-).

That deal has been discussed with a yield in the 11% context, said a source from a mutual fund.

J.P. Morgan Securities Inc. and Jefferies & Co. are the joint bookrunners.

Proceeds will be used to help fund the acquisition of Dave & Buster's by Oak Hill Capital Partners.

Finally, SSI Investments II Ltd. and SSI Co-issuer LLC, financing units of SkillSoft plc, expect to price a $310 million offering of eight-year senior unsecured notes (Caa1/B-) late this week.

The deal had been discussed with a yield in the 10% area, according to the buy-sider.

Morgan Stanley, Barclays and Deutsche Bank Securities are the joint bookrunners.

Proceeds, together with a new $365 million credit facility and an equity contribution, will be used to fund the acquisition of SkillSoft by an investor group comprised of Berkshire Partners LLC, Advent International Corp. and Bain Capital Partners LLC.

Regal postpones

Regal Cinemas postponed a $250 million add-on to its 8 5/8% senior unsecured notes due July 15, 2019 because of market conditions, the company stated in a Monday press release.

Credit Suisse, Barclays Capital Inc., Bank of America Merrill Lynch and Deutsche Bank Securities Inc. were the joint bookrunners.

The Knoxville, Tenn.-based motion picture exhibitor intended to use the proceeds, along with proceeds from a concurrent senior secured credit facility, to repay a portion of its senior secured term loan and to redeem its existing senior subordinated notes.

The company was very price sensitive, according to a source familiar with the deal, who added that the company drew a line in the sand at 103.50.

New Calpine bonds unseen

Several traders said that they could not find any sign of Calpine's new 8% senior secured notes due 2019 in the aftermarket.

"It looks like it may not even be trading yet," one of them opined, adding that it was "weird that I haven't seen one trade, there's been nothing on it."

One trader said he had seen the company's 8% notes due 2016 at 101½ bid, 102 offered, but had not seen the new paper.

WireCo bonds hold around Friday levels

A trader said that WireCo Worldgroup Inc.'s 9½% notes due 2017 were at 97½ bid, 98½ offered, which he said was "basically where they went out" on Friday, after the Kansas City, Mo.-based maker of wire-rope and cable products had priced its $275 million issue at 97.529 to yield 10%.

The new bonds had been seen in Friday's aftermarket around a 98-99 context.

Market indicators ease slightly

Among bonds not connected with the new-deal market, a trader saw the CDX Series 14 index off by 1/8 point on Monday to 96 3/8 bid, 96 ¾ offered, after having tumbled by 1 3/8 points on Friday.

The KDP High Yield Daily Index, meanwhile, eased by 3 basis points on Monday to 71.33, after having swooned by 47 bps on Friday. The index's yield rose by 1 bp to 8.38% on Monday, after having gapped out by 14 bps Friday.

Advancing issues remained behind decliners for a second consecutive session on Monday, by around a six-to-five ratio, improving a little from the worse than three-to-two ratio deficit seen on Friday.

Overall market activity, represented by dollar-volume levels, rose by about 5% on Monday from the previous session's levels, after having plunged by 35% on Friday.

A trader said that the market "started out weak, but kind of hung in there." However, he added that he was "pretty sure that it was a very quiet, quiet day."

Another added that there was "not a heck of a lot going on," other than the movement in GM and on Psychiatric Solutions, "and you can quote me on that."

He added that with Memorial Day still two weeks away, let alone the official beginning of the summer season a little more than a month from now, he was "hoping that [Monday's lassitude] is not the start of the summer" in Junkbondland.

GM moves around

A trader said that General Motors' bonds were up about 2 points, "solidly across the board," following the release of its first-quarter earnings data.

"They came out with good numbers," he said of the biggest U.S.-based auto manufacturer, quoting its benchmark 8 3/8% bonds due 2033 as having risen to 36 bid, up from prior levels.

A second trader said that GM "seemed to really be about the only activity out there."

He said that the big carmaker's bonds, like the benchmark paper, he opened "first thing this morning" trading around 35¼ bid, "then as the morning wore on" the bonds get as good as 37¼ bid, but "then it kind of worked its way back down" to around 361/2-36 5/8.

"They were up, but then they kind of moved back down," he said. He saw "most of the trading today" taking place between 36 and 37, with Trace showing some $148 million of the benchmark bonds having changed hands. Unlike the rest of the rest of Monday's junk bond market, which saw generally sleepy activity, on GM he saw "pages after pages" of trades on the Trace system.

"Who knows how they're counting it?" the trader said, adding that "each one of those [$1 million-plus] trades was not just $1 million - it was in multiples, so that the number could be a little bit smaller [than $148 million] - or it could be a lot larger. We don't know"

Another trader proclaimed that GM "did pretty well," pegging the bonds up 1½ points around 36 bid, 36½ offered.

However, yet another trader, while seeing "an awful lot of volume," only saw the bonds as unchanged to up perhaps ½ point, reiterating that the issue had seen "really good volume."

GM reported first-quarter net income of $865 million, or $1.66 per share - the first quarterly profit GM had shown since the second quarter of 2007, when it earned $891 million.

The latest quarterly results represented a sharp turnaround from the car company's loss of $6 billion, or $9.78 per share, a year earlier, during the period when GM was readying itself for its bankruptcy filing. First-quarter revenue was $31.5 billion, a 40% jump from a year ago.

GM's performance also improved on a sequential basis from the $3.4 billion of red ink recorded in the fourth quarter of 2009 on revenues of $32.3 billion. That quarter was the company's first full quarter of operations out of bankruptcy protection, since GM spent a portion of the 2009 third quarter under the Chapter 11 umbrella.

GM attributed its improved performance to its having shed tens of billions of dollars of debt and other burdensome obligations after going under the bankruptcy scalpel last year, as well as to robust sales on some of its new vehicles, such as the Chevrolet Equinox, a small sport-utility vehicle and the Buick LaCrosse luxury sedan.

Sales of those popular offerings produced a $1.2 billion profit versus the $3.4 billion loss seen a year earlier - one of a string of big losses which GM suffered at its core North American division in the several years before the bankruptcy.

While the numbers were impressive, GM's chief financial officer was not confidently popping any champagne corks, warning analysts and investors on the conference call following release of the results that he would "still be reasonably cautious about the rest of the year," explaining that GM may have a tough time sustaining that kind of profit level for the remainder of the year, since Q1 output in Detroit is usually higher than other quarters as carmakers ramp up for the spring selling season.

Ford along for the ride

A trader said that GM domestic arch-rival Ford Motor Co.'s bonds were also up by around ½ point, "which would have been higher, but the market was heavy for most of the day."

He said the credit "got dragged along a little bit too." Ford bonds, he continued, "have been performing well. GM's have gotten much more beat up in this little downturn," and so would be likely to snap back more strongly and head higher.

A trader saw Ford's 7.45% bonds due 2031 up ½ point at 90 bid, 92 offered.

But another trader said that the Dearborn, Mich.-based Number-Two U.S. carmaker's long bonds a point lower in an 88-89 context.

Elsewhere in the automotive realm, a trader saw Lear Corp.'s bonds off by around a point, quoting the Southfield, Mich.-based automotive systems maker's 7 7/8% notes due 2018 at 97 7/8 bid and it 8 1/8% notes due 2020 at 99½ bid. He saw no fresh news out about the company.

Investors go crazy for Psychiatric Solutions

A trader said that besides GM, the other major story in Monday's marketplace was the movement in Psychiatric Solutions' 7¾% notes due 2015, on the news that rival behavioral healthcare company Universal Health Services plans to buy Psychiatric Solutions for $2 billion and assume the company's $1.1 billion of net debt.

He saw the bonds at 103 3/8 bid, 103½ offered. That was up as much as 6 points and change from the bonds' previous levels, although he noted that that prior quote had just been for a smallish odd-lot trade.

He said the bonds had last traded in size about two weeks ago, around the 101 level, so "they were up a good 2½ points on this news, pretty much."

First Data fall continues

Elsewhere, a trader said that First Data Corp.'s 9 7/8% notes due 2015 were at 84¾ bid, while its 10.55% notes due 2015 were at 80½ and its 11¼% notes due 2016 were at 76¼ bid. He called those levels down ½ to ¾ point "across the board," on top of the losses notched on Friday following the release of numbers by the Greenwood Village, Colo.-based electronic transactions processor.

A market source at another shop estimated that the 9 7/8s were down around 1¾ points on the session at 85 bid, and saw its 10.55s likewise down nearly 2 points at 801/2.

On Friday, the company's bonds had plunged between 3 and 5 points after the company reported a first-quarter net loss of $240 million, widening out from a $231 million loss in the prior year.

Adjusted EBITDA for the quarter was $424 million, down from $472 million for the first quarter of 2009.

Revenues for the quarter, however, were up 16% at $2.4 billion, versus $2.1 billion in the comparable period last year.

Also, as of March 31, the company had about $293 million outstanding under its revolving credit facility, compared to having nothing drawn at Dec. 31, 2009, and during the quarter the company made $32.1 million of principal payments on its U.S. and euro term loans.

Ahern stabilizes after Friday plunge

A trader saw Ahern Rentals Inc.'s 9¼% second priority senior secured notes due 2013 hanging around the same levels in the upper 50s to which they had fallen on Friday following the release of disappointing quarterly numbers by the Las Vegas-based equipment-rental company.

"They didn't trade today, at least not in size," he said. "There was no real follow-through" from Friday's downturn. He said the bonds were down "11 or 12 points" from their pre-numbers levels.

A second trader added that he "did not see a thing" in Ahern.

However, another said that the bonds wended in a 58-60 context, which he called up 4 points from their Friday low, going out quoted at 59 versus about 57 at the opening Monday.

On Friday, those bonds had opened at 55, well down from 68½ on Thursday, then pushed back up into the mid-60s and stayed there for most of the day - only to take a late plunge back down into the 50s, with some $10 million of the paper having changed hands.

Ahern on Friday released its latest quarterly results, including a wider net loss of $20.214 million, versus its year-earlier red ink of $13.543 million, and a fall in EBITDA to $5.9 million, or a 9.8% margin, versus $21.2 million, or a 30.1% margin, for the same period in 2009.

Broader market a mixed bag

A trader saw Harrah's Operating Co. Inc.'s bonds "kind of active," quoting the Las Vegas-based gaming giant's 11¼% guaranteed senior secured notes due 2017 around 104.

Another market source saw the Harrah's bonds moving around between 104 and 105, down a little from Friday's levels in a 1051/2-106 context.

At another desk, a trader quoted Harrah's bonds, such as the 10¾% notes due 2016 ending around 81 bid, 82 offered, on "not a lot of trading, but some trades."

He saw the '17s right around 105 bid, calling those bonds up 1 point.

A trader saw Blockbuster Inc.'s 9% notes due 2012 "pretty much unchanged" on the day at 19¾ bid, adding that the Dallas-based movie-rental company's senior subordinated bonds were "inactive - there were just one or two trades."

A trader said that Clear Channel Communications Inc.'s 10¾% notes due 2016 were "slightly active," calling the San Antonio, Tex.-based media company's bonds down around a point at 77 bid.

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