Solo, Belden price deals; hear talk on XM, Univision; Rite Aid up on Q1, Huntsman rises more

By Paul Deckelman and Paul A. Harris

New York, June 24 - Solo Cup Co. successfully priced an offering of senior secured notes on Wednesday, market participants said. The Highland Park, Ill.-based disposable utensils company's new bonds were heard to have firmed smartly when they moved over into the secondary realm late in the session.

Also pricing - although too way too late for any kind of aftermarket action - was wire and cable maker Belden Inc.'s quickly shopped $200 million offering of 10-year senior subordinated notes.

Elsewhere in the primary arena, price talk emerged on XM Satellite Radio Inc.'s $350 million offering of four-year secured notes, which are expected to price on Thursday. Out of that same media sector, new-dealers also heard talk on Univision Communications, Inc.'s planned offering of secured notes.

Prospective new deals were added to the forward calendar by Casella Waste Systems, Inc. and Commercial Barge Line Co.

Back among the existing credits, Rite Aid Corp.'s bonds were seen significantly better after the Camp Hill, Pa.-based drugstore chain operator reported a smaller-than-expected loss for the fiscal first quarter.

Another gainer was Huntsman Corp.'s bonds, riding the momentum generated on Tuesday when the chemical manufacturer announced a big settlement in its lawsuit against two banks which had backed out of commitments to fund the proposed buyout of Huntsman by Hexion Specialty Chemicals Inc., causing that deal to be scuttled.

And MGM Mirage's bonds were seen up about 2 points across the board, given a boost after the Las Vegas-based gaming giant removed from its latest regulatory filing the ominous-sounding "going concern" warning that its auditors had slapped on the company in March, when its fortunes looked the bleakest.

The junk market maintained a positive tone on Wednesday, according to a syndicate official.

It was a busy day in the primary market, with two issuers combining to price a face amount of $500 million in a pair of single-tranche deals.

Also there were deal announcements and price talk buzzing throughout the day, as the issuers and dealers gird for some serious deal volume during the last two days of this week, and the early part of the pre-Independence Day week.

Solo Cup plays to a solid book

Solo Cup did Wednesday's biggest deal - a $300 million issue of 10½% 4.5-year senior secured notes (B2/B+) which priced at 97.928 to yield 11 1/8%.

The yield was printed at the tight end of the 11¼% area price talk.

Goldman Sachs was the left bookrunner. Banc of America Securities and Wachovia Securities were joint bookrunners.

The Highland Park, Ill.-based single-use foodservice products company is also in the bank loan market with a $200 million asset-based revolving credit facility.

Proceeds will be used to repay its existing first-lien credit facility.

The deal went well despite the more volatile capital markets conditions which have prevailed during the past week and a half, an informed source said.

A lot of accounts did work on the deal, the source added.

Solo Cup's offering played to a solid book containing normal high-yield accounts as well as some smaller accounts.

Belden prices $200 million

Elsewhere Wednesday Belden priced a $200 million issue of 9¼% 10-year senior subordinated notes (Ba2/B+/) at 96.866 to yield 9¾%.

The yield was printed at the wide end of the 9½% to 9¾% price talk.

Wachovia Securities, Banc of America Securities and Citigroup were joint bookrunners.

Proceeds will be used to repay existing debt under the company's senior secured credit facility.

Belden is a St. Louis-based signal transmission solutions provider to businesses.

Univision sets talk

The Thursday session will get underway with at least two offerings expected to price.

Univision Communications set price talk for its $500 million offering of five-year senior secured notes (B2/B-) at 14% to 14¼%.

The notes are expected to be discounted to around 90.

Deutsche Bank Securities, Banc of America Securities, Wachovia Securities, Mizuho Securities and Credit Suisse are joint bookrunners deal to fund the tender for the Los Angeles-based Spanish-language media company's 7.85% notes.

XM talks four-year deal

Meanwhile XM Satellite Radio set price talk for its $350 million offering of four-year senior secured first-lien notes (Caa1/B/) at 12¾% to 13%, on Wednesday.

The notes are expected to be priced with an original issue discount of 4 to 5 points.

Pricing is set for Thursday.

J.P. Morgan has the books for the debt refinancing and general corporate purposes deal.

The building calendar

The active forward calendar underwent a build-up on Wednesday, and is expected to do so once again on Thursday, sources say.

Eight to 10 deals, all of them targeted to price before the July 3 close, ahead of the three-day holiday weekend, are expected to roll out during the remainder of the week, a sell-side source said early Wednesday morning.

Three of those expected deals surfaced during the mid-week session.

Banc of America Securities has the wheel for all three deals - all of which are expected to price next week.

Casella to bring secured notes

Casella Waste Systems plans to price a $205 million offering of five-year senior second-lien notes next week.

Banc of America Securities, JP Morgan and Calyon Securities are joint bookrunners for the debt refinancing from the Rutland, Vt.-based waste management and recycling services firm.

Bill Barrett brings $200 million

Elsewhere Bill Barrett Corp. began a roadshow on Wednesday for a $200 million offering of seven-year senior notes (expected ratings B1/B+).

The roadshow ends on June 30, with the notes expected to price after that.

Banc of America Securities, Deutsche Bank Securities and JP Morgan are joint bookrunners for the bank debt refinancing from the Denver-based oil and gas exploration, development and production company.

Commercial Barge to sell $200 million

Finally, Commercial Barge Line announced plans to price a $200 million offering of eight-year senior secured notes next week.

Banc of America Securities, UBS Investment Bank, SunTrust Robinson Humphrey and Wachovia Securities are joint bookrunners.

The subsidiary of American Commercial Lines Inc., a Jeffersonville, Ind.-based transportation services company, will use the proceeds, together with borrowings under a new credit facility, to repay the existing credit facility and for general corporate purposes.

New Solo securities soar

When the new Solo Cup 10½% senior secured notes due 2013 were freed for secondary dealings, a trader saw those bonds as having jumped all the way up to 100½ bid, 100¾ offered from the 97.928 level at which they priced.

Meanwhile, a market source saw some busy trading in Solo's existing 8½% notes due 2014, pegging those bonds at 81¼ bid, with over $14 million traded as of late afternoon. Another source -- who also saw active round-lot dealings in the credit - saw them going home just under the 83 mark, up 3 points on the day.

Market indicators move up

Back among the established issues with no new-issue connections, the CDX Series 12 High Yield index - which had inched upward on Tuesday - surged higher on Wednesday, gaining about 1 5/8 points on the day, a market participant said, to end at 81¾ bid, 82 offered.

The KDP High Yield Daily Index, which had lost 17 basis points on Tuesday, gained 24 bps on Wednesday to end at 61.87, while its yield tightened by 7 bps to 10.75%.

In the broader market, advancing issues - which trailed decliners for a second consecutive session on Tuesday by a six-to-five margin, turned that equation around on Wednesday, leading the laggards by nearly the same six-to-five ratio.

Overall market activity, measured by dollar-volume totals, fell by 17% versus Tuesday's levels.

A trader described the session as "a sort of weird day." With many market players sidelined ahead of the mid-afternoon policy announcement from the Federal Reserve - and then staying there afterward, trying to parse the language of the Fed's communiqué, he said that one large shop that normally actively e-mails news tidbits around to its investors and other interested parties, was reduced to "sending out time updates. It was, like, boring."

The announcement, issued at the end of the two-day regular meeting of the Fed's policy-setting body, the Federal Open Market Committee, indicated that the central bank will leave its key bank lending rate at a record low of between zero and 0.25% and keep it there for "an extended period." The Fed meanwhile did not commit to expanding its purchases of government bonds and mortgage securities, which it has been doing in recent months to try to drive down rates on consumer debt. It also does not consider inflation an immediate threat, and believes the recession is easing.

Rite Aid rallies on results

A trader saw Rite Aid's bonds move up after the third-largest U.S. drugstore-chain operator reported a smaller than expected fiscal first-quarter loss.

He saw its 10 3/8% notes due 2016 - the day's most active Rite Aid bond, on volume estimated to exceed $15 million - trading in the 89-90 area, up from 88 at the day's open. "So it moved up a point, 1½ points, on good activity," he said.

He also saw Rite Aid's 8 5/8% due 2015 "up a little less" than the 10 3/8s, perhaps ½ to 1 point, at a "65ish" type of trade, versus the recent 64-65 range.

Another trader said that Rite Aid "did really well." He saw the 9½% notes due 2017 "trading up at 641/2," up from 61¾ at the close Tuesday. "That was a huge name today."

A market source saw the 10 3/8s get as good as 91 bid, well up from Tuesday's 87-handle levels, although the bonds came down from that peak to finish at a round-lot close just under 90. However, smaller trades late in the day left those bonds with only a smallish-overall gain, at 88.

The source also saw the 91/2s ending around 64, up 3 points on the session.

Rite reported that for the fiscal first quarter ending May 30 it had a net loss of $98.4 million, or 11 cents per share - considerably less than the year-ago red ink of $156.6 million, or a 20 cents per share loss.

Excluding one-time items, Rite Aid reported an adjusted net loss of 6 cents per share - about half of what Wall Street had been expecting.

Besides the smaller net loss, Rite Aid warmed the hearts of bondholders by announcing that it had refinanced a major portion of its September 2010 debt maturities and had improved its cash flow and liquidity during the quarter. It cut its bloated debt level by more than $320 million to $5.69 billion at the quarter's end.

Results stir Steelcase

Better-than-expected first-quarter results were also the catalyst behind the active trading in Steelcase Inc.'s 6½% notes due 2011, although an early advance did not last. "A lot of bonds traded," a trader said, with the final tally standing at more than $30 million.

Activity in the split-rated (Baa3/BBB/BB+) credit was thought to have come from both junk players and investment-grade accounts.

The Grand Rapid, Mich.-based office furniture company's bonds were trading a little over par in the early going - but he saw them go out "much lower," at around 981/2.

The bonds softened despite fairly decent numbers for the fiscal quarter ended May 29. The company - whose business has been decimated by the ongoing recession - still managed to have breakeven net income, although that was down from a profit of $22.1 million, or 16 cents a share, a year earlier.

While sales were slashed by one-third to $545.6 million, that was still better than analysts' expectations of $543.4 million. Excluding non-recurring items, the roughly two cents per share the company earning in the quarter handily topped analysts' estimates, which produced a consensus projection of a 13 cents per share loss.

Steelcase said that for the current second quarter, it expects to again report net income of about breakeven, although it also sees revenue jumping to $600 million. That compares with Wall Street projections of a 4 or 5 cents per share loss on revenue of $610 million.

Huntsman higher again

Another notable name was Huntsman - whose bonds had risen on Tuesday on the announcement that Deutsche Bank and Credit Suisse will pay Huntsman a total of $1.73 billion to settle the Salt Lake City, Utah-based chemical manufacturer's lawsuit against the banks, claiming improper interference in its planned $6.5 billion buyout by Hexion Specialty Chemicals.

The banks had agreed in 2007 to front Columbus, Ohio-based Hexion the money to acquire Huntsman - but by mid-2008, fearful that letting the deal go through would produce an insolvent company that would be unable to pay back that massive dollop of debt, the banks withdrew their funding. While Hexion and Huntsman attempted to go it alone with alternative sources of financing, the deal ultimately withered on the vine and died last December - sending Huntsman into the state courts in Texas to sue for some $4.5 billion in compensatory damages, and as much as $8 billion in punitive damages had the case gone to trial and had Huntsman won.

In Wednesday's dealings, Huntsman's 7 7/8% notes due 2014 - its most actively traded issue, with at least $20 million having changed hands - continued to move up. On Tuesday, those bonds had jumped from their prior levels around 71 to as high as 79 bid late in the day, although traders noted that looking strictly on a round-lot basis of trades of $1 million or more, the bonds had actually gained just 5 points on the day, going home around 76.

On Wednesday, a trader said, the bonds got as high as 801/2, although they "faded [from their highs] as the day went on" to end on a round-lot level of 79 - still up nearly 3 points on the day on that basis.

"There were a bunch of trades with an 80 handle," he said - 80¼ , 80½ -- but then during the afternoon, it was back below the magic 80 support level.

Huntsman's 7 3/8% notes due 2015, after having jumped to 75 on Tuesday from prior levels at 68, pushed a few points higher Wednesday, going home at 78 bid.

MGM up as 'going concern' dropped

A trader saw MGM Mirage's bonds better by about 2 points across the board after the gaming concern, in a regulatory filing, included language that effectively reverses the dreaded "going concern" warning that it had received from its auditors earlier in the year.

Now with "no longer any substantial doubt" about where the company can continue as a going concern, he saw its 6¾% notes due 2012 "trading up a bit," getting as high as 68 bid from 66 on Tuesday.

He also saw its 6¾% notes due in 2013 moving up to 66 bid from 64¾ on Tuesday, while its 6 5/8% notes due 2015 gained to 64½ bid, up from 62½ on Tuesday.

MGM, in a regulatory filing, said that thanks to a series of financial transactions, including last month's $1.1 billion stock offering, the sale of $650 million senior secured notes due 2014 and $850 million notes due 2017, and changes to its senior credit agreement, its liquidity has improved to the point where there is "no longer" any doubt about whether the company can continue as a going concern, as auditors had warned back in March.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.