Upsized Virgin Media leads primary, Brocade prices, market awaits Sorenson, Jarden deals

By Paul Deckelman and Paul A. Harris

New York, Jan. 13 - European borrowers stepped up to the plate on Wednesday, putting their stamp on another busy junk bond primary session. The big deal among them was U.K.-based entertainment and communications company Virgin Media Secured Finance plc's £1.5 billion equivalent two-part deal, which came at triple its originally announced size and was restructured to drop a planned euro-denominated bond tranche, leaving only offerings of dollar- and sterling-denominated paper.

When the new Virgin Media bonds were freed for secondary dealings, the dollar notes were seen to have moved up modestly from their pricing level.

Also pricing were deals - all of them denominated in euros - for Continental issuers UPCB Finance Ltd., a unit of Dutch pan-European cable and broadband service provider UPC Holding BV and FMC Finance VI SA, the borrowing arm of German dialysis services giant Fresenius Medical Care AG. Irish bottle-maker Ardagh Glass Holdings also came to market.

The Virgin and Fresenius deals had first been announced on Monday; the UPC and Ardagh offerings popped onto the screens early Wednesday and priced some hours later.

Back among North American issuers, Brocade Communications Systems Inc. successfully priced a two-part $600 million offering of eight- and 10-year secured notes late in the day. The Silicon Valley firm's split-rated issue came too late in the day for any aftermarket action.

Also pricing were smaller offerings from a pair of energy operators - Denver-based Antero Resources Corp., which did a drive-by add-on to an existing bond issue, and Canada's Gibson Energy ULC/GEP Midstream Finance Corp.

Apart from actual pricings, talk emerged on Rye, N.Y.-based consumer products maker Jarden Corp.'s $400 million equivalent offering of dollar- and euro-denominated notes, which is expected to price on Thursday morning.

Also seen as Thursday's business is Sorenson Communications, Inc.'s $735 million issue of five-year senior secured notes. Price talk emerged on the bond deal for the Salt Lake City, Utah-based provider of communications technology for the hearing impaired.

And Teekay Corp. was heard by syndicate sources to have begun a short roadshow for its $300 million offering of 10-year non-callable notes. The Hamilton, Bermuda-based ocean tanker operator is expected to price that deal on Friday or Monday.

Traders said that new deals dominated the day's proceedings, pushing secondary activity off to the side of the stage. That market was seen unchanged to perhaps off slightly, according to market indexes.

Gibson prices at tight end

In Wednesday's primary market Gibson Energy ULC and GEP Midstream Finance Corp. priced a $200 million issue of 10% eight-year senior unsecured notes (B3/B-) at 97.337 to yield 10½%.

The yield printed at the tight end of the 10½% to 10¾% price talk.

Timing on the deal was moved up; the notes were originally scheduled to price on Friday.

UBS Investment Bank was the left bookrunner for the acquisitions and general corporate purposes deal. Morgan Stanley was the joint bookrunner.

Antero upsizes

Elsewhere Antero Resources Finance Corp. priced an upsized $150 million add-on to its 9 3/8% senior notes due Dec. 1, 2017 (Caa1/B) at 104.0 to yield 8.489%.

The reoffer price came on top of price talk.

J.P. Morgan, Barclays Capital and Wells Fargo Securities ran the books for the add-on, which kicked off at a $100 million size, and was increased to $125 million before ultimately upsizing to $150 million.

Proceeds will be used to repay bank debt.

Virgin Media triples size

Headlining a busy day in Europe, Virgin Media Secured Finance plc priced an upsized two-part issue of eight-year senior secured notes (Ba2/BB/BB+) on Wednesday.

The U.K.-based entertainment and communications company priced $1 billion of 6½% notes at 98.488 to yield 6¾%.

The yield printed on top of price talk that had been revised from 6¾% to 7%. The reoffer price came in line with the 1.5 points of discount talk.

In addition, Virgin Media priced £875 million of 7% notes at 98.503 to yield 7¼%.

The yield for the sterling tranche printed on top of yield talk. The reoffer price came in line with the 1.5 points of discount talk.

The total size was increased from £500 million equivalent.

J.P. Morgan, Goldman, Sachs & Co., BNP Paribas, Calyon Securities, Credit Suisse, Deutsche Bank, GE Capital Markets, HSBC, Lloyds TSB Corporate Markets, RBS, UBS Investment Bank, Barclays Capital, Bank of America Merrill Lynch and Citigroup were joint bookrunners;

Proceeds will be used to repay bank debt.

Allocation was spotty, commented an investment banker, shortly after the terms circulated

Fresenius yields 5 ¾%

Elsewhere in Europe, FMC Finance VI SA, a financing unit of Fresenius Medical Care AG & Co. KgaA, priced a €250 million issue of 5½% 6.5-year senior notes (Ba2/BB+) at 98.6636 to yield 5¾%.

The yield printed at the tight end of the 5¾% to 6% price talk.

Deutsche Bank Securities was the left bookrunner. Barclays Capital, Bank of America Merrill Lynch and Morgan Stanley were joint bookrunners.

Proceeds will be used to repay short-term debt and for general corporate purposes.

UPCB prices €500 million

Dutch cable company UPCB Finance Ltd. priced a €500 million issue of 7 5/8% 10-year senior secured notes (Ba3/B+) at 99.138 to yield 7 ¾%.

Credit Suisse, Barclays Capital, BNP Paribas, Calyon Securities, HSBC and RBS were joint bookrunners.

Proceeds will be used to refinance bank debt.

Ardagh brings €180 million

Elsewhere, Ireland's Ardagh Glass Finance plc priced a €180 million issue of 8¾% 10-year senior guaranteed notes (B3/B-) at 99.994, via Citigroup.

Proceeds will be used to refinance the company's 8 7/8% notes due 2013.

Brocade sells split-rated deal

From the crossover space, Brocade Communications Systems, Inc. sold $600 million of split-rated senior secured notes (Ba2/BBB-) late on Wednesday in two tranches.

The sale was done off the high-yield syndicate desks.

The $300 million of 6 5/8% eight-year notes priced at 99.239 to yield 6¾% with a spread of Treasuries plus 329 basis points. They sold at the tight end of price talk, which was for a yield of 6¾% to 7%.

A $300 million tranche of 6 7/8% 10-year notes priced at 99.114 to yield 7% with a spread of 322 bps over Treasuries. They priced at the tight end of guidance at a yield of 7 to 7¼%.

J.P. Morgan Securities and Goldman Sachs & Co. were on the books.

Proceeds will be used to retire $173 million in outstanding subordinated convertible notes originally issued by wholly-owned subsidiary McDATA Corp.

Sorenson sets talk

Sorenson Communications, Inc. talked its restructured $735 million offering of five-year senior secured notes at 11% on Wednesday, according to an informed source.

The deal is set to price on Thursday morning.

Call protection was extended to two years from one year. The notes become callable after two years at par plus 50% of the coupon.

Goldman Sachs & Co. is the left lead bookrunner. Morgan Stanley & Co. is the joint bookrunner.

Jarden talks $400 million equivalent

Jarden Corp. set tranche sizes and price talk for its $400 million equivalent two-part offering of 10-year senior subordinated notes.

A $225 million tranche is talked to yield in the 7¾% area. A €150 million tranche is talked to yield in the 7 7/8% area. Both are expected to price at discounts of 1 to 2 points.

Order books for U.S. accounts closed Wednesday. Books close for European accounts at 11 a.m. U.K. time on Thursday.

The deal is expected to price Thursday morning, New York time.

In the United States, the notes are coming in an offering that has been registered with the Securities and Exchange Commission. In Europe the notes are being sold in a private offering.

Deutsche Bank Securities Inc. and Barclays Capital Inc. are joint physical bookrunners.

Proceeds will be used for general corporate purposes, including debt repayment, capital expenditures and potential acquisition financing.

Teekay starts roadshow

Teekay Corp. began a roadshow on Wednesday for a $300 million offering of 10-year non-callable senior notes (B1/BB).

The roadshow wraps up on Friday. The deal is expected to price either on Friday or on Monday.

JP Morgan, Citigroup and Deutsche Bank are joint bookrunners for the notes which have been registered with the Securities & Exchange Commission.

Proceeds will be used to fund a tender offer for the Hamilton, Bermuda-based ocean-going tanker company's 8 7/8% notes due 2011.

New Virgin Media up modestly

When the new Virgin Media 6½% dollar-denominated notes due 2018 were freed for secondary dealings, a trader saw the $1 billion issue open in a 98 5/8-99 context, "and they pretty much stayed in that range most of the day."

The bonds had earlier priced at 98.488 to yield 6¾%.

Another trader quoted the bonds at 98¾ bid, 99 offered.

The Antero Resources, Gibson Energy and Brocade Communications deals came to market too late in the day for any kind of trading.

Icahn deal still struggles

Turning to Tuesday's deals, Icahn Enterprises LP/Icahn Enterprises Finance Corp.'s $2 billion two-part offering "was still a little underwater," said a trader, who quoted both tranches of that deal at 98½ bid, 99 offered - up a little from the levels around 98-98½ at which the bonds were seen on Tuesday after their pricing, but still well below issue.

Billionaire investor Carl C. Icahn's New York-based holding company's $850 million of 7¾% notes due 2016 priced at 99.411 on Tuesday, to yield 7 7/8%, while its $1.5 billion of 8% notes due 2018 priced at 99.275 to yield 8 1/8%.

Another trader, who had seen the bonds trading below issue on Tuesday, said he had seen no sign of them in the market on Wednesday, although he had heard that the bonds were trading below issue and investors who bought the deal were "not too thrilled about it."

Stone Energy stays strong

Stone Energy Corp.'s 8 5/8% notes due 2017 "had a ton of volume today," a trader said, estimating turnover on the upsized $275 million deal at greater than $30 million, with "most of that paper" trading in a 1001/2-101 context.

At another desk, a trader saw the bonds at 100¼ bid, 100¾ offered.

On Tuesday, the Lafayette, La.-based oil and gas exploration and production operator priced its offering - upsized from the originally announced $250 million size - at 98.713, to yield 8 7/8%. The bonds had firmed solidly to between par and 101 near the close on Tuesday.

Marquette holds Tuesday gains

A trader said that Marquette Transportation Co. LLC/Marquette Transportation Finance Corp.'s new 10 7/8% senior secured notes due 2017 - were trading "first thing this morning" as high as 101 bid, 101½ offered, but then settled in later in the day around 100 7/8 bid, 101 1/8 offered.

A second trader pegged them at 101 bid, 101¼ offered.

That was around the same area where the Paducah, Ky.-based river freight company's $250 million deal had finished on Tuesday - still well up from the 98.810 level at which it had priced earlier Tuesday to yield 11 1/8%.

Monday's deals remain firmer

A trader said that deals which priced on Monday and which then moved up in aftermarket dealings continued to hold their own on Wednesday.

He saw CMS Energy Corp.'s 6¼% notes due 2020 at 101½ bid, 102, versus the 99.436 level at which the Jackson, Mich.-based utility operator and merchant power generator had priced its $300 million issue to yield 6.326%.

Scotts Miracle-Gro Co.'s 7¼% notes due 2018 were at 101½ bid, 102 offered, compared with the 99.254 level at which the Marysville, Ohio-based lawn and garden products company's $200 million issue had priced to yield 7 3/8%.

He saw B&G Foods, Inc.'s 7 5/8% notes due 2018 hovering at 102 bid, 102½ offered; the Parsippany, N.J.-based packaged foods company had priced its $350 million issue at 99.271 to yield 7¾%.

And United Air Lines Inc.'s $700 million two-part issue was also seen having gained altitude from the levels at which the Chicago-based Number-Two U.S. carrier's parent had priced its bonds on Monday. UAL's $500 million of 9 7/8% first-lien senior secured notes due 2013 traded at 101½ bid, 102 offered on Wednesday, up from the 99.259 level at which they had priced to yield 10 1/8%. Its $200 million of 12% senior secured second-lien notes due 2013 "were straddling 96," a trader said, versus the 95.318 level at which those bonds had priced to yield 13 5/8%.

Market indicators little changed

Back among statistical measures of market performance not related to the new-deal market, a trader saw the CDX Series 13 index off marginally on Wednesday at 100 9/16 bid, 100 13/16 offered, after having lost ½ point on Tuesday.

The KDP High Yield Daily Index meanwhile eased by 4 basis points on Wednesday to 72.21, after having gained 1 bp on Tuesday. Its yield was little changed for a second straight session, at 7.78%.

A trader characterized Wednesday's session by saying "everything was new deals."

Another called things "a little blah on my side of the world."

"There was nothing jumping out of the blue" on the secondary side, yet another trader lamented, "at least not on our desk here. I'm not seeing any big mover in any direction."

Hexion bonds hold up

Here and there were exceptions to the generally sleepy market demeanor. A market source quoted Hexion U.S. Finance Corp.'s 9¾% second priority senior secured notes trading around 101 on fairly decent volume of over $11 million - about where the bonds finished on Tuesday, when they gained about a point on the news that ultimate parent Hexion Specialty Chemicals Inc. plans to issue about $700 million of new bonds. The Columbus, Ohio- based chemical manufacturer is also seeking approval of its lenders to extend the maturity on its term loans to 2015 from the current 2013.

CIT bonds seen lower

A trader saw CIT Group Inc.'s bonds down a point pretty much across the board, with its 7% notes due 2013 at 93 bid, its 7% 2014 notes at 91½ bid, its 7% notes due 2015 at 90 bid, and its 7% notes due 2016 and 2017 at 88 bid.

There was "a decent amount of trading" in the recently reorganized New York-based commercial lender's paper, he said. "They're pretty regular."

Also on the financial front, a trader saw AIG unit American General Finance Corp.'s 4% notes due 2011 still at 93-941/2, which seemed unchanged.

"They trade all the time," he said, "but I don't see any big move in it."

Donnelley, Dex hold gains

A trader saw R.H. Donnelley Corp.'s paper mostly unchanged Wednesday, after having firmed on Tuesday on the news that the bankruptcy court overseeing the Cary, N.C. -based telephone directory publisher's bonds had approved its plan of reorganization, clearing the way for Donnelley and its affiliates to emerge from Chapter 11, probably by the end of this month, and to start distributing the restructured company's equity to its bondholders, who will receive virtually all of it.

He saw the company's holdco paper, such as its 8 7/8% notes due 2017 or 2018, and its 6 7/8% notes due 2013, steady at 12½ bid, 13 offered.

He meantime saw its Dex Media 9% notes due 2013 and 8% 2013 notes quoted around 36-38, but said that he didn't see any real trades in that paper.

The company's premium paper, such as its 11¾ % notes, were right around 116, "which looks like where they've been lately."

Automotive upside stalls out

A trader saw Visteon Corp.'s bonds "moving around a little bit," with the Van Buren Township, Mich.-based automotive components company's 7% notes due 2014 getting up to 50 bid, and then retreating back to a 48-49 context. He said there was "not a lot of volume," and called the bonds perhaps a point lower on the day.

Also in the autosphere, a trader said that General Motors Corp.'s bonds "got a little weaker," with the automaker's benchmark 8 3/8% notes due 2033 easing to a 27½ bid, 28½ close, which he called down maybe ½ point lower, "not a big deal - but they've stopped going up."

A trader saw Lyondell Chemical Co.'s 10¼% notes due 2010 trading down at 741/4. He saw "some trades, four or five trades," with the Houston-based chemical maker's bonds a little lower than Tuesday. However, he said that the issue wasn't very active, and was trading down from levels it held a couple of days ago.

He also saw the company's 9.80% notes due 2020 unchanged around 74 bid, likewise on "not much activity."

Overall, he said - noting a number of issues which had recently been firming now coming a little off their recent peak levels - "it looks like things are taking a little breather today."

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