Cenveo, Appleton, Glatfelter price as Regent Seven Seas drops out; HCA busy amid dividend news

By Paul Deckelman and Paul A. Harris

New York, Jan. 29 - The high yield market wrapped up the first month of 2010 with a moderately busy session in the new-deal arena Friday, as offerings from Cenveo Corp. and a pair of paper makers, Appleton Papers Inc. and PH Glatfelter Co., were heard by syndicate sources to have successfully priced.

They also reported that two other deals which had been expected to come to market on Friday, for magazine publisher Reader's Digest Association Inc. and for Italian gaming technology company SNAI SpA, had been pushed off until the upcoming week.

But the primary got an ominous end-of-week chill from the news that Fort Lauderdale, Fla.-based cruise line operator Regent Seven Seas Cruises has decided to abandon ship - at least for now - on its planned offering of $200 million second-lien senior secured notes due 2017, citing unfavorable market conditions as the reason for its postponement.

When the day's new bonds were freed for secondary dealings, traders saw the Cenveo and Appleton deals mired right around their respective issue prices. The Glatfelter bonds moved up in the aftermarket. Meanwhile, Thursday's offering from Libbey Glass, Inc., continued to sparkle in the secondary, trading several points above issue.

Among the secondary issues not connected with the new-deal market, HCA Inc.'s bonds saw busy activity, moving around at slightly higher levels even as the closely held Nashville, Tenn.-based hospital operator announced plans to pay a big dividend to its private stockholders, and released positive fourth-quarter and full-year 2009 earnings guidance.

Blockbuster Inc. - which got in trouble with its shareholders and bondholders when it released negative earnings projections about ten days ago - was again gyrating around, finally ending up lower on the day.

A second consecutive week ended with the statistical indexes of market performance reading unchanged to lower - the robust gains eagerly notched at the beginning of the month receding further in the rear-view mirror.

Slow end to big month

A record-setting month of January in the primary market came to a meek enough conclusion on Friday, with three deals pricing, another three being pushed into the week ahead, and one being postponed.

Nevertheless, U.S. market high-yield issuance totaled $16.55 billion in January, according to Prospect News data. That renders January 2010 as the biggest on record, going back to the beginning of this decade, which is as far back as Prospect News' data extends.

Cenveo upsizes

In Friday's market, Cenveo Corp. priced an upsized $400 million issue of 8 7/8% eight-year senior second-lien notes (B2/B) at 99.301 to yield 9%, on Friday.

The yield printed at the wide end of the 8 7/8% area price talk.

Bank of America Merrill Lynch, Morgan Stanley & Co. and RBS Securities Inc. were joint bookrunners for the issue, which was upsized from $375 million.

Proceeds will be used to repay bank debt.

Appleton completes restructured deal

Meanwhile, Appleton Papers Inc. priced a $305 million issue of restructured 10½% 5.5-year senior secured notes (B1/B+) at 98.035 to yield 11%.

Both the coupon and the yield printed on top of the price talk.

Broadpoint Gleacher Securities and Goldman Sachs & Co. were joint physical bookrunners.

Call protection was increased to three years from 2.5 years, and a special call feature at 103 was eliminated.

A change was made to the bond covenants mandating that no additional senior secured debt shall be added to repurchase capital stock of the parent entity, make other payments or pay expenses in connection with the termination of the employee stock ownership plan.

Proceeds, together with borrowings under Appleton's new revolving credit facility, will be used to repay amounts outstanding under Appleton's existing credit facilities.

Appleton a 'recovery story'

An asset manager in the Midwest played the Appleton deal, specifying that the above-described modifications to the structure and covenants rendered the deal a lot more appealing.

This investor found the deal's original special call provision, which would have allowed the company to take out 10% of the issue annually, at 103, particularly onerous.

"That's like a bank loan," the investor asserted, professing satisfaction that the special call ultimately fell by the wayside.

"Appleton is a recovery story," the investor said, adding that playing the deal requires a belief that economic recovery is at hand.

"I don't think that the changes they made to the deal created a lot of extra demand.

"But I do think that when people look back and consider that this paper, with the changes in structure, yields 11%, they may regret the fact that they didn't get in."

Glatfelter brings mirror notes

Also pricing Friday was PH Glatfelter Co.'s $100 million issue of notes mirroring its $200 million of 7 1/8% senior notes due May 1, 2016 (Ba2/BB+).

The mirror notes priced at 95.00, resulting in a yield of 8.16%.

The reoffer price came at the cheap end of the 95 to 96 price talk.

Credit Suisse had the books.

Proceeds, along with borrowings under the York, Pa.-based specialty paper company's revolving credit facility, and cash on hand, will be used to fund the acquisition of Concert Industries Corp. by subsidiary Glatfelter Canada Inc.

The original $200 million issue priced at par in April 2006.

Regent Seven Seas postpones

Meanwhile, Regent Seven Seas Cruises postponed its $200 million offering of seven-year second-lien senior secured notes on Friday due to market conditions.

The deal, which had undergone covenant modifications, had been talked at the 12% area on Thursday.

Barclays Capital Inc., HSBC Securities and Deutsche Bank Securities Inc. were joint bookrunners.

Proceeds were to have been used to refinance debt and for general corporate purposes.

SNAI delays, sets price talk

Italian gaming technology company SNAI SpA set price talk for its €350 million offering of seven-year senior secured notes (Ba3) at 10% to 10¼%.

Timing on the deal, which had been expected to price on Friday, has been delayed, the source added.

BNP Paribas, UBS Investment Bank and UniCredit Bank are joint bookrunners.

Proceeds will be used to refinance debt, to fund the acquisition of video lottery terminal rights and for general corporate purposes.

Also delaying pricing into the week ahead were Reader's Digest Association, Inc.,, with a $525 million offering of seven-year senior secured first-lien floating-rate notes (expected ratings B1/B+), and Hudson Products Holdings Inc., planning a $250 million offering of six-year senior secured second-lien notes.

Both deals had been set to price on Friday.

Also in the week ahead, Manitowoc Co. will continue to market its $400 million offering of eight-year senior unsecured notes (Caa1/BB-) until Tuesday, and price them on Tuesday or Wednesday. J.P. Morgan Securities Inc., Deutsche Bank Securities Inc. and Bank of America Merrill Lynch are joint bookrunners.

Crosstex Energy, LP continues its roadshow for a $700 million offering of eight-year senior notes, via Bank of America Merrill Lynch, BNP Paribas Securities Corp., RBC Capital Markets Corp. and Wells Fargo Securities, UBS Investment Bank and Goldman Sachs & Co. Marketing of the deal is scheduled to wrap up on Wednesday.

CNG Holdings, Inc. (Check 'n Go) wraps up its roadshow for a $200 million offering of senior secured notes (B3/B) on Thursday. Jefferies & Co. has the books.

Cyprus-based Songa Offshore SE's $200 million of seven-year senior notes, via Citigroup, are set to price late in the week.

McClatchy Co.'s $875 million offering of seven-year senior secured first-lien notes, via joint bookrunners J.P. Morgan Securities Inc., Bank of America Merrill Lynch and Credit Suisse Securities, is set to price on Thursday.

Media General Inc. is on the road until Thursday with a $350 million of seven-year senior secured notes, via Bank of America Merrill Lynch and SunTrust Robinson Humphrey Inc.

And Community Education Centers, Inc. wraps up the roadshow for its $210 million offering of six-year senior secured notes on Friday. The bookrunner is Jefferies.

New Cenveo deal is steady

When the new Cenveo 8 7/8% senior secured notes due 2018 were freed for secondary dealings, a trader saw the $400 million issue at 99 bid, 99¼ offered. That was down from the 99.301 level at which the deal had priced earlier in the session.

He had seen the bonds break right around their issue price, at 99 3/8 bid, but then eventually work their way downward.

"So these ain't going up - at least not today," he declared.

Another trader saw the Cenveo bonds going out at 99 bid, 99½ offered.

New Appletons fall from issue

A trader said that almost as soon as Appleton Papers' new 10½% senior secured notes due 2015 were freed for aftermarket trading, "they [investors] were hitting the bids, first at 98 and then at 973/4," taking the issue down from the 98.035 at which it priced.

At another shop, a trader quoted the bonds at 98 bid, 98½ offered.

A trader, queried about whether this lack of movement in those two credits - and others - was either just an indicator that the bonds had been fairly priced at appropriate levels or else a sign that there's no enthusiasm for new bonds in the current market - suggested that "it could be a combination of both."

He noted the fall off in the amount of money coming into Junkbondland this week, as exemplified by the high yield mutual fund flows data that makes the rounds of the junk shops on Thursday afternoon - the funds saw a $75 million outflow, the first in 23 weeks, since last summer, according to AMG Data Services - and said it could be a sign that "the pent-up demand could be gone."

Glatfelter is looking good

However, an exception to the rule Friday was Glatfelter's smallish offering of new notes mirroring its existing 7 1/8% notes. Those bonds had priced at 95 bid - but a trader saw them late in the day having gotten as good at 97 bid, 97½ offered.

At another desk, however, a trader said he had not seen any signs of the York, Pa.-based paper company's new issue.

Libbey gains endure

Traders saw Libbey Glass' $400 million offering of 10% senior secured notes due 2015, which priced on Thursday at 98.082 to yield 10½%, continuing to trade well above that level.

The Toledo, Ohio-based glass tableware maker's bonds had moved up to 1003/4, bid 101 offered when they were freed for secondary activity on Thursday. By Friday, they had firmed further, going out at 101¼ bid, 101¾ offered, one trader said.

Another quoted them as high as 101 bid, 102 offered, although he added that the last he had seen of the bonds was fairly early in the morning - with nothing else since then.

Market measures meander lower

Back among the established bonds with no new-deal connections, a trader saw the CDX Series 13 index down 3/8 point on Friday to end at 96¾ bid, 97 offered, after having been pretty much unchanged on Thursday. The index thus ends the week almost exactly where it was at the end of the previous week, on Friday, Jan. 22, this after having squandered progress earlier in the week which took the CDX 13 as high as 97½ bid, 97¾ offered.

The KDP High Yield Daily Index meanwhile edged up by 4 basis points on Friday to end at 71.02, after having fallen by 14 bps on Thursday. Its yield was steady at 8.23%. The index thus shows a deterioration from the 71.26 at which it ended the previous week, while yielding 8.11%.

Advancing issues nosed ahead of decliners on Friday, after having pulled dead even with them on Thursday to break a seven-session losing streak - but their advantage was literally just a handful of issues out of more than 1,400 tracked.

Overall market activity, as measured by dollar-volume levels, fell by about 14% from Thursday's pace.

A trader characterized Friday's session as 'kind of a quiet day," while another called it "pretty boring in our names."

Healthy trading in HCA

Among specific names, there was brisk activity in HCA Inc., whose 9¼% notes due 2016 traded around the 106 mark, with volume of nearly $20 million. The bonds had closed around 105½ on Thursday, and after opening about unchanged, got as good as 107 bid during the session - albeit on a very small odd-lot piece - before ending a little north of 106 bid.

The company's 6½% notes due 2016 also racked up active volume of well over $10 million, but was unchanged to perhaps up ½ point at around the 92½ bid level.

HCA's bonds were trading actively even as the company announced plans to distribute $1.75 billion to its stockholders on Feb. 5 via a special dividend, which HCA executives said would be paid for with funds available under the company's existing credit lines and cash on hand.

It also released bullish guidance, projecting 2009 fourth-quarter net income of about $216 million, up 28% from $276 million last year and also expecting a 4.7% increase in fourth-quarter revenues to $7.605 billion.

Blockbuster backs off

A trader said that Blockbuster's 9% senior subordinated notes due 2012 "really didn't have much activity, which was surprising because that's been the most active bond this week."

He saw those bonds - which were on a roller-coaster ride all week between highs around 27-28 at the beginning of the week and lows about 22 - mostly trading in smallish transactions.

"You had a bunch of odd pieces trading today, but not a lot of size." He said that the bonds were last seen around the 24 level - down from the more than $1 million which had traded at 26 "first thing this morning." After that big initial trade, he said there were several trades of between 500 and 750 [$1,000] bonds right around 24, "and that was pretty much it, except for the odd-lots."

Those Blockbuster bonds - which had originally been hammered down into the 20s from levels above 60 over a two-day stretch on Jan. 21-22 after the release of unfavorable guidance, and which were pushed still lower this past Monday, shoved down into the lower 20s - "turned three or four times during the week," another trader said, quoting them around a 25-26 context on "not much activity."

He also saw its 11¾% secured notes due 2014 staying in the mid-70s, "right where they've been hanging."

The 9s were in the 60s and the 113/4s near par until Blockbuster revealed on Jan. 20 that the important holiday sales period had been pretty much a bust, warning that it would post a sizable loss for 2009.

The problem-plagued Dallas-based movie rental giant has been trying to move away from its reliance on traditional brick-and-mortar physical stores and get into more profitable distribution modes already dominated by rivals Netflix Inc. and Coinmach Corp.

Kodak comes down a little

A trader said that Eastman Kodak Co.'s 7¼% notes due 2013 "have been kind of active," pegging the bonds a little lower, though on "a lot of activity," around a 90 to 90¼ context, versus a range of 90½ bid, 91 offered on Thursday, when the venerable Rochester, N.Y.-based camera and photographic film producer's bonds had firmed in response to better quarterly numbers.

He had seen the bonds only up by about ½ point on Thursday - although they were well up from levels earlier in the week around 87-88.

Another market source - who had seen the Kodak bonds climb over 3 points on Thursday - estimated them up another ½ point in Friday's early dealings at 91 bid, but then saw that advance fade and the bonds edge downward later on. Volume as of mid-afternoon was approaching $25 million, making the Kodak paper one of the most actively traded junk issues on the day.

The first trader said profit-taking after Thursday's gains was a definite possibility. "They just got a little ahead of themselves, and then they eased off."

Kodak, an American industrial icon which has seen its once-mighty traditional film-based photography business absolutely decimated over the past several years by the rise of digital photography beat Wall Street forecasts and posted its first quarterly profit in more than a year as it earned $443 million, or $1.40 a share, on the period - versus a year-ago net loss of $918 million or $3.42 a share.

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