UCI, Dollarama, Neenah deals price; Goodyear better on talks news

By Paul Deckelman, Paul A. Harris and Ronda Fears

New York, Dec. 15- Neenah Foundry Co. was heard to have priced a quickly shopped $225 million drive-by offering of 10-year notes Friday afternoon. That deal, plus pricings earlier in the session from UCI Holdco and Dollarama, brought to a close a hugely busy last full trading week of the year - the biggest week of 2006 in terms of dollar amount of issuance. The upcoming week will see an abbreviated session Friday, ahead of a full market closure the following Monday in observance of the Christmas Day legal holiday.

The issuers, anxious to get their deals done before the year-end doldrums set in, came to market this past week with more than $11 billion of deals.

In the secondary market, activity was sparse - what one trader called "a typical December Friday."

Goodyear Tire & Rubber Co.'s bonds were seen better, helped by the news that the strikebound Akron, Ohio-based tiremaking giant and its recalcitrant main labor union were heading back to the bargaining table, raising hopes that the strike against the company that has been going on since early October might be settled.

In the distressed sector, bonds of airlines, notably Delta Air Lines Inc. and Northwest Airlines Corp., which have been bouncing around up and down all week like a commuter jet flying into a storm front, rising and falling with oil prices and with the waxing and the waning of merger and acquisition speculation, were mostly lower.

UCI atop revised talk

Friday's primary market session saw three issuers each price a single tranche of notes to raise a combined total of just under $650 million of proceeds, capping the biggest week of 2006 in terms of dollar amount of issuance.

Two of Friday's three tranches came with PIK or PIK-like structures. Both of them were dividend deals which were priced at discounts.

Friday's biggest deal in terms of proceeds, but just by a nose, was done by UCI Holdco, Inc. the ultimate parent of Evansville, Ind., vehicle replacement parts supplier United Components Inc.

The company priced a $235 million issue of three-month Libor plus 700 basis points seven-year senior floating-rate PIK notes (Caa2/CCC+) at 96.50 on top of price talk that had been revised from Libor plus 700 basis points at 99.00.

Lehman Brothers and Goldman Sachs & Co. were joint bookrunners for the dividend deal, which generated slightly less than $226.8 million of proceeds.

Dollarama's deferred interest notes

In much the same category was the deal done on Friday by Dollarama Group Holdings LP and Dollarama Group Holdings Corp.

The company priced a $200 million issue of six-month Libor plus 575 basis points 5.5-year senior floating-rate deferred interest notes (B3/B-) at 99.00, on top of price talk.

The Montreal dollar store chain's dividend deal was lead by Citigroup, JP Morgan and RBC Capital Markets, with Citigroup on the left.

Neenah returns

Six weeks after pulling a $225 million offering of 10-year senior secured notes, Neenah Foundry Co. returned with a seemingly identical offering, and this time the Wisconsin company got the deal done.

In a drive-by, Neenah priced a $225 million issue of 10-year senior secured notes (B2/B) at par to yield 9½% on Friday.

The notes priced at the wide end of the 9¼% to 9½% price talk.

Credit Suisse ran the books.

In connection with the secured notes issue, Neenah intends to sell up to $75 million of senior subordinated notes in a private placement, according to information disclosed by the company in a Friday press release.

Proceeds from both the secured notes and the subordinated notes will be used to repay its existing credit facility as well as to repurchase all of its outstanding 11% senior secured notes due 2010 and redeem its 13% senior subordinated notes due 2013. The new senior subordinated notes will be issued upon redemption of the 13% notes.

Biggest week of the year

With mega-deals priced by Ford Motor Credit Co., GMAC, Georgia-Pacific Corp., Aleris International Inc., Tropicana Entertainment, Level 3, and MGM Mirage, the week of Dec. 11 was the biggest of 2006 - a record that will almost certainly stand to the end of the year, a fortnight away.

Prospect News tallies slightly less than $11.8 billion of proceeds generated in 27 dollar-denominated, junk-rated Rule 144A or SEC registered tranches that were marketed to U.S. investors.

Next biggest, in terms of dollar amount of issuance, was the week of Nov. 13, which saw slightly less than $10 billion in 15 tranches, including Freescale Semiconductor's $5.95 billion, the deal which market sources described as the biggest single amount of issuance ever placed at one time by a U.S. issuer.

To measure recent issuance with regard to a couple of benchmark dates, since Labor Day (Sept. 4) the new issue market has seen slightly less than $71 billion price in 144 dollar-denominated tranches. Since Thanksgiving (Nov. 23) the primary has churned out over $18.25 billion in 40 tranches.

That phenomenal volume places 2006 squarely in the record books.

Year-to-date issuance, tallying Friday's approximately $650 million, comes up just short of $155.7 billion of dollar-denominated issuance.

Hence with one week of business remaining - a week that figures to be a thin one in terms of dollar issuance - the 2006 issuance total stands a full $13.3 billion over the previous record of $142.4 billion set in 2004.

Dashing through the junk

With that one week remaining before the market calls it a year, the forward calendar shows only $350 million of dollar-denominated business left to be cleared.

Metals USA Holdings Corp. is in the market with a $150 million offering of five-year senior unsecured floating-rate PIK notes (Caa1/CCC+), via Goldman Sachs & Co. and Credit Suisse.

Also Titan International, Inc. is marketing a $200 million offering of five-year senior notes, also via Goldman Sachs.

Both deals are expected to price during the Dec. 18 week.

TIM Hellas €1.4 billion

The pre-Christmas week is expected to see a sizable amount of euro issuance.

TIM Hellas Communications is scheduled to price a restructured €1.4 billion equivalent offering of high-yield notes early in the week.

The Greek telecommunications firm plans to price €1.10 billion of eight-year senior subordinated floating-rate notes. A euro-denominated tranche is talked at Euribor plus 600 to 625 basis points. An added dollar-denominated tranche is talked at Libor plus 575 to 600 basis points.

Hellas also plans to price a €200 million tranche of PIK notes due July 2015, which it has talked at Euribor plus 800 to 825 basis points.

Also the company plans to price a €100 million add-on to to its three-month Euribor plus 350 basis points senior secured floating-rate notes due Oct. 15, 2012, which it has talked at Euribor plus 350 basis points. There are €1.125 billion of the notes presently outstanding.

A proposed senior notes tranche has been abandoned.

Deutsche Bank Securities, JP Morgan, Lehman Brothers and Morgan Stanley are joint bookrunners for the debt refinancing and dividend funding deal.

Finally, Global Crossing (UK) Finance plc is expected to price £52 million add-on to its 11¾% senior secured notes due 2014, via ABN Amro.

No talk had been heard on the tap as Prospect News went to press Friday night.

The original £105 million issue priced at 98.575 to yield 12% on Dec. 23, 2004 in a transaction that also saw the company price $200 million 10¾% notes due 2014.

UCI edges up on the break

When the new UCI floating-rate notes due 2013 were freed for secondary dealings, a trader saw them at 97 bid, 98 offered "right out of the gate," up from the bonds' 96.50 issue price.

Another trader saw the bonds finishing up the session at that slightly higher level, and likewise saw the new Tropicana 9 5/8% senior subordinated notes due 2014 trading at their Thursday issue price, at par bid, 100.5 offered.

Harrah's up slightly on bid report

Back among the established issues, the second trader saw another gaming name, Harrah's Entertainment Inc., "looking up a little," with the Las Vegas-based casino giant's 6½% notes due 2016 perhaps ½ point better at 89 bid, 90 offered, even as the company was reported to now be considering two formal takeover bids.

The Wall Street Journal reported Friday that Penn National Gaming Inc. - which had been rumored to be cooking up a bid for the far-larger Harrah's with the help of Lehman Brothers and Wachovia Bank - has indeed now officially bid $87 per share in cash and stock, or about $16 billion total, for Harrah's. That's the same amount that private equity players Texas Pacific Group and Apollo Management are bidding, although their offer is all cash. Their offer, which was made in early October, was sweetened to the $87 mark from its original $83.50, the Journal reported. Harrah's had set a Tuesday deadline for all offers for the company.

The paper said that Harrah's was also considering the option of a leveraged recapitalization - which would be good news for shareholders, but bad news for bondholders, should it happen, since the company would be borrowing money to give the stockholders a large dividend or to repurchase shares to boost shareholder value. The major ratings agencies are wary of such a course, and have put Harrah's ratings under scrutiny for a possible downgrade. Moody's Investors Service rates Harrah's bonds a barely investment-grade Baa3, but both Standard & Poor's and Fitch peg them at a junk-rated BB+.

Wyomissing, Pa.-based Penn National is small compared with Harrah's - the world's largest gaming operator - with a market capitalization of only slightly more than $3 billion, and revenues about one-quarter those of its target. Any takeover would be largely debt financed, a consideration the ratings agencies are also looking at. Penn Gaming mostly operates racetracks - a few with racino slot-machine operations on premises - as well as some riverboat casino gaming properties, including in Mississippi, the nation's third-largest gaming jurisdiction, but it currently has no presence in either Las Vegas or Atlantic City, N.J. the domestic gaming industry's, and Harrah's, top two profit centers. Penn National's 6¾% notes due 2015 were seen unchanged Friday at 98.5.

Goodyear gains as talks revived

Elsewhere, a trader saw Goodyear's bonds up about ½ point on the session, given a little bounce by the news that the tiremaker and the United Steel Workers union were heading back to the bargaining table on Monday. Goodyear's 7.857% notes due 2011 finished at 99.5 bid, 100.5 offered. A market source at another desk saw the company's bonds up ¾ point at par.

The union's 15,000 members struck Goodyear plants in the United States and Canada on Oct. 5 when their old contract with the world's third-largest tiremaker expired. The two sides have been unable to reach agreement since then, battling over the company's health care proposals for retirees, which the union says would shortchange them, and its plans to close a Tyler, Texas, tire factory - a step Goodyear says it must take to cut costs, reduce capacity and remain competitive with lower-cost overseas-based rivals.

The talks had been in limbo since Nov. 17. Goodyear has managed to limp along since the strike began, using a combination of management employees and non-union temporary workers to man the assembly lines, and using some of the output from its international factories to make up for lost North American production.

Airlines move lower

In distressed debt, bankrupt carriers Delta and Northwest provided virtually all the volume seen Friday, with both heading southward on profit taking. But even those high-profile distressed names saw a lot of odd-lot trading Friday, according to traders.

Atlanta-based Number-Three domestic carrier Delta's bonds were generally described as off about ½ point to a point, with its widely quoted 8.30% notes due 2029 ending the weekend in the 66.5 bid, 67.5 offered area.

Meanwhile, Eagan, Minn.-based Number-Four carrier Northwest's paper was seen declining by as much as 2 points on the session, after having seen a more dramatic rise over the past month.

Bonds in both those names, however, have more than doubled since mid-November, when US Airways Group Inc. aired an $8 billion-plus bid for Delta - $4 billion in cash and the remainder in US Airways stock, which also has gained ground since then. Delta has so far resisted its Tempe, Ariz.-based rival's advances, insisting that it plans to emerge from restructuring as a standalone company. Some holders of Delta's bonds and other debt, however, feel the company is being too quick to brush the proposal off, and have organized a rump creditors' committee - as opposed to the court-sanctioned official creditors' panel - to agitate for serious consideration of the US Air proposal.

Solo Cup up

A trader saw Solo Cup Co.'s bonds up about ½ point, helped by the news that the Highland Park, Ill.-based maker of disposable cups and plates had increased the size of its board of directors - and had given a greater voice to one of its major shareholders.

The trader called Solo's 8½% notes due 2014 up ½ point at 86 bid, 87 offered.

Solo said that the newly elected board members are Peter W. Calamari, Jack M. Feder, Jeffrey W. Long and Kevin A. Mundt, all of whom are employees of Vestar Capital Partners, a private equity firm that owns a minority interest in the Company. Combined with two Vestar representatives who were already the board, Vestar now has six of the 11 seats, giving it a powerful, if not commanding voice in determining Solo's future.

Solo has been underperforming financially - last month, it reported a net loss of $339.3 million for the third quarter, far wider than the $13.5 million, as restated, that it had lost in the year-earlier period. The latest period loss included non-cash charges of $341.3 million.

Solo said at that time that it was evaluating possibilities including alternative financing options and the sale of non-strategic assets.

The company is also in negotiations, which must be completed by Jan. 2, to close on new amendments to its existing loan facilities or to replace its first- or second-lien facility with new borrowings, although Solo executives have expressed confidence that they will get the financing done, one way or another, by that deadline.

GM, Ford better

Back among the non-distressed names, General Motors Corp.'s 8 3/8% notes due 2033 were seen up ½ point at 89 bids, 90 offered, while arch-rival Ford Motor Co.'s 7.45% notes due 2031 were also up ½ at 76.25 bid, 76.75 offered.

Outside of the automotive realm, Canadian-based pharmacy operator Jean Coutu's 8½% notes due 2014 "rebounded" ½ point, a trader said, to end at 98.5 bid, 99 offered.

And a trader said that spreads on potential future fallen angel Sabre Holdings Inc.'s nominally investment-grade bonds widened out sharply in the wake of the announcement at mid-week that Texas Pacific Group and Silver Lake Partners will pay $4.5 billion to acquire Sabre, the operator of the Travelocity.com online travel service. The acquisition, which includes assumption of $550 million of debt, is expected to be funded mostly with new debt.

Sabre's Baa3/BBB rated 6.35% notes due 2016 were seen having widened out a whopping 200 basis points over two sessions to bid levels of 330 to 340 basis points over the comparable 10-year Treasury note. Ratings agencies have placed those notes, and Sabre's 7.35% notes due 2011, on watch for a possible downgrade, the trader observed.

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