Reynolds mega-deal, Levi, five others price, DWS, Cooper next; Ineos, American Petroleum slate

By Paul Deckelman and Paul A. Harris

New York, April 28 - High yield primary market activity continued at a brisk pace on Wednesday, as seven deals totaling more than $3 billion equivalent priced - and with the primary by no means done for the week.

The big deal of the day came from packaging products maker Reynolds Group Issuer LLC, which priced $1 billion of eight-year notes at par. Clothier Levi Strauss & Co. came to market with an upsized two-tranche offering of $525 million and €300 million notes, each of which also priced at par. Patriot Coal Corp. did a $250 million offering of eight-year notes, while Southern States Cooperative, Inc., which supplies agricultural products and services, priced a slightly upsized $130 million of five-year notes.

Also upsizing was Chicago-based sausage and hot dog casing maker Viskase Cos. Inc., which tacked a quickly-shopped $40 million add-on million offering of eight-year senior secured notes onto its original $175 million of those bonds, which priced last December.

Another drive-by deal emerged from American Seafoods Group LLC, which sold $400 million of new paper in a two-part deal, one a straight senior subordinated bond issue, the other a tranche of notes plus warrants.

The day's lone overseas issuer, Spanish gaming concern Cirsa Funding Luxembourg, SA, priced €400 million of eight-year bonds.

Market participants meantime heard price talk on DSW Holdings Inc.'s $475 million issue of seven-year senior secured notes, and on Cooper-Standard Automotive Inc.'s $450 million of eight-year notes, both of which are expected to price on Thursday.

High yield syndicate sources said that U.K. chemical concern Ineos Finance plc was getting ready to hit the road on Thursday to market a €700 million equivalent offering of five-year euro- and dollar-denominated senior secured notes, while American Petroleum Tankers LLC will sell $275 million of five-year secured notes, with both of those deals expected to price next week.

When the day's new deals hit the market, Levi Straus and Patriot Coal were modestly higher, while Reynolds Group's bonds edged slightly upward.

Away from the new deals, paper and packaging names were mostly lower after sector player Catalyst Paper Corp., released earnings.

Reynolds Group $1 billion

A busy Wednesday in the primary market saw issuers price $2.345 billion and €700 million in nine tranches of junk-rated notes.

Reynolds Group, issuing via three subsidiaries, priced $1 billion of eight-year senior notes (Caa1/B-) at par to yield 8½%, on top of price talk.

Credit Suisse ran the books.

Proceeds will be used to help fund the acquisitions of the Evergreen Packaging group of companies and the Whakatane Mill from Carter Holt Harvey Ltd.

The deal went well, according to a buy-side source who added that the par-pricing notes traded to par ½ bid, 101 offered, during the afternoon.

Levi Strauss upsizes

Levi Strauss & Co. priced two upsized tranches of senior notes (B2/B+).

The San Francisco-based apparel company priced an upsized $525 million tranche of 10-year notes at par to yield 7 5/8%. The yield printed at the tight end of the 7¾% area price talk. The tranche was upsized from $460 million.

In addition, Levi Strauss priced an upsized €300 million tranche of eight-year notes at par to yield 7¾%. Price talk for the eight-year notes was also the 7¾% area; hence the yield printed on top of the price talk. The tranche was upsized from €275 million.

Bank of America Merrill Lynch and J.P. Morgan Securities Inc. were the joint bookrunners.

Proceeds will be used to refinance the company's 8 5/8% euro senior notes due 2013 and its 9¾% senior notes due 2015 and for general corporate purposes.

The Levi's dollar-denominated tranche also went well, a buy-side source said, spotting the 7 5/8% notes due 2020, which priced at par, trading at par ¼ bid, par ¾ offered, late Wednesday afternoon.

American Seafood brings $400 million

American Seafood Group LLC, issuing via various entities, priced $400 million of securities.

American Seafoods Group LLC and American Seafoods Finance, Inc. priced a $275 million issue of 10¾% six-year senior subordinated notes (expected ratings B3/B) at 98.913 to yield 11%.

In addition, ASG Consolidated LLC and ASG Finance, Inc. priced a $125 million issue of units comprised of 15% seven-year senior PIK notes and penny warrants representing a 15% indirect ownership of ASG Consolidated.

The notes were priced at par.

Bank of America Merrill Lynch and Wells Fargo Securities, LLC were joint bookrunners for the quick-to-market deal.

Proceeds, along with a new credit facility, will be used to refinance all existing debt, repay a seller note and redeem certain preferred limited partnership interest of the parent companies.

Patriot Coal at the tight end

Patriot Coal Corp. priced a $250 million issue of 8¼% eight-year senior notes (B3/B+) at 99.279 to yield 8 3/8%, at the tight end of the 8½% area price talk.

Citigroup Global Markets Inc., Bank of America Merrill Lynch and Barclays Capital Inc. were the joint bookrunners.

Proceeds will be used for general corporate purposes.

Southern States prices $130 million

Southern States Cooperative, Inc. priced a $130 million issue of 11¼% five-year senior notes (B3/B+) at 97.222 to yield 12%.

The yield printed at the tight end of the 12% to 12¼% yield talk. The reoffer price came in line with discount talk of approximately 3 points.

Jefferies & Co. ran the books.

Proceeds will be used to refinance the cooperative's outstanding senior notes due 2011 and to make a contribution to its pension plan.

Viskase upsizes add-on

Viskase Cos., Inc. priced an upsized $40 million add-on to its 9 7/8% senior secured notes due Jan. 15, 2018 (B2/B-) at 101.0 to yield 9.683%.

The reoffer price came on top of price talk.

Jefferies ran the books for the quick-to-market add-on, which was upsized from $30 million.

Proceeds will be used for general corporate purposes, including working capital, further plant expansions and possible acquisitions.

Cirsa sells €400 million

Spain's Cirsa Funding Luxembourg SA priced a €400 million issue of 8¾% eight-year senior notes (B3/B+) at 97.8926 to yield 9 1/8%, at the tight end of the 9¼% area price talk.

Deutsche Bank ran the books.

The Madrid-based gaming firm is also putting in place a €30 million revolving credit facility.

Proceeds will be used to repay the issuer's existing €270 million of unsecured bonds due 2014, to repay other debt and for general corporate purposes.

Talking the deals

The stage was set for Thursday, as DSW Holdings, Inc., a holding company for DS Waters of America, Inc., talked its $475 million offering of seven-year senior secured notes (B3/CCC+) to yield 9¾% to 10%.

The books close at 11:30 a.m. ET on Thursday, with the notes expected to price after that.

Morgan Stanley & Co. Inc., J.P. Morgan Securities Inc. and Barclays Capital Inc. are the joint bookrunners for the debt refinancing deal.

Also, Cooper-Standard Automotive Inc. talked its $450 million offering of eight-year senior notes to yield in the 8½% area.

That deal is also set to price on Thursday.

Deutsche Bank Securities Inc. is the left bookrunner. Bank of America Merrill Lynch, Barclays Capital Inc. and UBS Investment Bank are the joint bookrunners.

Proceeds will be used to repay the company's debtor-in-possession loan and other debt.

The Novi, Mich., manufacturer and marketer of systems and components for the automotive industry filed for bankruptcy on Aug. 3, 2009 in the U.S. Bankruptcy Court for the District of Delaware.

American Petroleum to bring notes

The forward calendar continued to take aboard new prospective issues, on Wednesday.

American Petroleum Tankers Parent LLC disclosed plans to price a $275 million offering of five-year first-priority senior secured notes late in the week ahead.

Credit Suisse and UBS Investment Bank are joint bookrunners.

Proceeds will be used to refinance the company's existing secured debt and to fund final new build payments.

Ineos lines up secured deal

Also Ineos Finance plc will begin a roadshow in the United States on Thursday for a €700 million-equivalent offering of five-year senior secured notes (expected ratings B2/B-).

A European roadshow will follow on Monday and Tuesday.

The notes are expected to price after that.

Barclays Capital and JP Morgan are joint physical bookrunners for the debt refinancing deal.

Day's new deals up modestly

When Reynolds Group's 8½% notes due 2018 were freed for secondary dealings, the new bonds didn't go very far, with several traders quoting the new bonds around 100¼ bid, 100¾ offered, versus the par level at which the company's mega-deal had priced earlier.

Another trader said that the Reynolds bonds initially traded at 100½ bid on the break, then at 100 3/8, and "then kind of quieted down from there" on their way to going home at 100 1/8 bid, 100½ offered.

Reynolds, yet a third trader asserted, "didn't go anywhere - it didn't really move at all."

A trader saw Levi Straus' new dollar-denominated 7 5/8% notes due 2020 do a little better, quoting the iconic San Francisco-based blue jeans company's new $525 million issue - upsized from the originally planned $460 million - at 100¾ bid, 101¼ offered, versus a par issue price. At another desk, the bonds were seen having firmed to 101 bid, 101 1/8 offered.

Still another trader called the bonds up a point, on "good activity."

Traders did not see Levi's upsized €300 million of 7¾% euro notes due 2018, which also priced at par.

A trader also saw Patriot Coal's 8¼% notes due 2018 having moved up a little to par bid, 100½ offered, up from the bonds' 99.279 issue price. A second trader saw the St. Louis-based coal operator's new bonds gain more than a point in the aftermarket to 100½ bid.

The American Seafoods two-part offering priced too late in the session for any kind of an aftermarket. In the meantime, nobody saw any trading in the $130 million issue of Southern States Cooperative's 11¼% notes due 2015, which had priced at a deeply discounted 97.222 to yield 12%.

"You're never gonna see those little Jefferies [& Co.] things trading," he said of the latter company's smallish issue.

And no trading was seen in the day's smallest deal - the $40 million add-on transaction from Viskase, which priced around the 101 level at which the original $175 million of 9 7/8% senior secured notes were trading before the deal.

Tuesday deals trade mostly higher

A trader said that AK Steel Corp.'s new 7 5/8% notes due 2020 were "kind of active," pegging the West Chester, Ohio-based steelmaker's issue "pretty much right around 102ish," although he saw the bonds going out on Wednesday in a 101½ -102 range.

The company priced $400 million of the bonds at par on Tuesday, and they then proceeded to move up to around 100½ bid, 101 offered in subsequent initial aftermarket dealings. Wednesday's volume in the new bonds was a busy $30 million-plus, the trader said.

AK's offering, a trader at another shop said, "ground a little higher" to a little bit better than 101 bid, "after not doing much [Tuesday] afternoon, so that one probably improved by another ½ today."

A trader saw American Renal Holdings Inc.'s 8 3/8% senior secured notes due 2018 at 100 5/8 bid without, versus the 100 7/8-101 context in which the Beverly, Mass.-based kidney dialysis services provider's new deal had gone home on Tuesday, after and upsized $250 million had priced 99.28 to yield 8 ½%, "so they were [still] up slightly" from their issue price.

Another trader, though, saw the bonds going out around 101, saying at his shop, they had traded "a bunch, wrapped around that number.

"They continue to hold onto their gains from [Tuesday]."

The trader said that Syncreon Global (Ireland) Ltd./Syncreon Global Finance (US) Inc.'s 9½% notes due 2018 - considered by traders on Tuesday to be an aftermarket dud after the $300 million issue priced at par and then softened down into a 99ish level - "gained a little bit of momentum. It looks like it got cleaned up a little bit."

He quoted the Auburn Hills, Mich.-based logistics and supply chain solutions provider's new deal at 100¼ bid, 100½ offered going out, "so it was a little better than it closed" on Tuesday.

Traders saw no activity on Wednesday in Lennar Corp.'s 6.95% notes due 2018. The Miami-based homebuilder's $250 million issue priced Tuesday at 98.929 to yield 7 1/8%, but then retreated in initial aftermarket dealings to as low as 97 5/8 bid.

Advance Auto deal is active

A high yield trader said that Advance Auto Parts Inc.'s 5¾% notes due 2020 "was the big volume one today," seeing over $50 million of the Roanoke, Va.-based automotive parts and supplies retailer's new issue changing hands. He saw the split-rated (Ba1/BBB-) bonds - which have attracted interest from both junk accounts and from high-grade investors - trading in a 1003/4-101¼ range, with most of the day's trading around 101 and the last trades of the day around 100 7/8 bid, versus the 99.587 level at which the $300 million issue priced on Monday to yield 5.805%.

Among deals which priced last week, CF Industries Holdings Inc.'s 7 1/8% notes due 2020, $800 million of which priced at par on April 20 and then moved up initial trading to 102½ bid, 103 offered, were quoted by a market source on Wednesday at 104¾ bid, up about 5/8 point on the day, on top of Tuesday's 11/2-point rise.

The source did not see the Deerfield, Ill.-based chemical fertilizer producer's 6 7/8% notes due 2018, which on Tuesday had been quoted at 103¼ bid - well up from the par level at which had priced that $800 million tranche, also on April 20, and up as well from the levels around 102-102½ to which the bonds had moved in their initial aftermarket dealings.

Standard Pacific Corp.'s 8 3/8% notes due 2018 were seen down 1/8 point at 100 7/8 bid; the bonds had risen to 101 on Tuesday, up from the par level at which the Irvine, Calif.-based homebuilder had priced its $300 million offering of the notes - upsized from the originally announced $200 million -- on April 20.

Market indicators seen mixed

Among bonds not connected with the new-deal market,, a trader saw the CDX Series 14 index gain ½ point on Wednesday to end at 99¾ bid, 100¼ offered, rebounding from a 11/4-point plunge seen on Tuesday.

However, the KDP High Yield Daily Index was meantime down 6 basis points on Wednesday to 73.01, after having gained 7 bps on Tuesday. Its yield widened by 2 bps on Tuesday, to 7.52%, after having risen by a single basis point on Tuesday.

Declining issues stayed ahead of advancers for a second consecutive day Wednesday, although their margin of victory had been whittled down to just a handful of issues from among the nearly 1,500 tracked, rather than the previous session's four-to-three margin.

Overall market activity, represented by dollar-volume levels, rose by 1% Wednesday from the levels seen the previous session.

Paper gets pasted...

A trader said that the paper and packaging sector "was hit pretty hard today" after Catalyst Paper Corp. reported bad quarterly numbers. He said that the Richmond, B.C.-based coated-paper manufacturer's bonds were off by as much as 5 points pretty much across the board.

He saw its 11% senior secured notes due 2016 "wrapped around 98," which he called down 3 to 5 points on the day, post-numbers, "definitely down."

Its 8 5/8% notes due 2011 languished in the lower 90s.

Catalyst suffered a wider-than-expected first-quarter loss, hurt in part by lower specialty printing paper prices. It lost C$44.1 million, or 12 Canadian cents a share - a dramatic deterioration from a year earlier, when it had enjoyed earnings of C$20.1 million, or 6 Canadian cents a share.

The trader also saw NewPage Corp.'s 10% notes due 2017 at 68-681/4, "down a few," in sector sympathy.

Another trader said the NewPage paper was active in a 68-69 context, calling the Miamisburg, Ohio-based coated-paper manufacturer's bonds "down a couple of points" from the 70ish levels seen on Monday and Tuesday.

"The rest of the paper space was weaker as well," said the first trader, suggesting that Verso Paper Corp.'s bonds were also lower.

...but Smurfit bucks the trend

He saw Smurfit-Stone Container Corp.'s bonds continuing to firm on "decent activity," with the bankrupt Chicago-based paper packaging materials maker's 8 3/8% notes due 2012 around 98 to 981/2, which he called up about 2 points on the day. He also saw the company's 8¼% 2012 notes around the 98 level as well.

"The shorter ones were all up around a couple of points," he noted, while the company's longer bonds, like the 8% notes due 2017 gained around ½ point to ¾ point to the 97-97½ mark.

The first trader meantime said that Smurfit-Stone "bucked the trend" in the sector to trade higher, seeing its 8 5/8% notes due 2012 up another point to 98.

Synovus seen stronger

A trader said that Synovus Financial Corp.'s 5 1/8% notes due 2017 were "kind of active," with over $20 million of the bonds traded between 90½ and 911/4, after having gained about 7 or 8 points on Tuesday to around the 90 level on $40 million traded.

The bonds remained "very active again, on their move to do equity," another trader said, saying that "a bunch traded" and had risen at least ½ to 1 point from Tuesday's closing levels to get as good as 91 on Wednesday.

The intense activity over the two days was spurred by Monday's announcement by the Columbus, Ga.-based banking company of plans to boost capital by $630 million via a public stock offering and a stock-for-debt exchange aimed at taking out the 5 1/8% paper.

Financials mostly firmer

Elsewhere among the junk financial names, CIT Group Inc. - which surprised investors on Tuesday by reporting a first-quarter profit rather than the loss analysts were looking for, and then firmed on that news - continued to gain on Wednesday. The New York-based commercial lender's 7% notes due 2013 were up another ½ point at 98 bid, 98½ offered, on "good volume," a trader said, while its 7% notes due 2017 were likewise up ½ point at 94 bid, 94½ offered.

Another market source quoted the CIT 2013s at 973/4, while pegging the company's 7% notes due 2015 up some 2½ points on the day at 96¾ bid. He saw its 7% 2016 bonds up 1 1/8 points around 93.5.

A trader said that New York-based bond insurer MBIA Inc.'s 14% surplus notes due 2033 were unchanged on the day at 74 bid, 75 offered. Another bond insurer, Philadelphia-based Radian Group Inc.'s 5 5/8% notes due 2013, were quoted down about a point, he said, in a range of 931/2-941/2, "but on no real activity."

Auto bonds idling

A trader said that General Motors Corp.'s benchmark 8 3/8% bonds due 2033 were trading between 37 and 38½ on Wednesday, ending around 38 bid, which he called unchanged, on "good volume."

He saw GM's domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031"pretty much unchanged" around a 93ish level, on not much volume.

Another trader saw GM's benchmarks unchanged at 38 bid, 38½ offered, and Ford's long bonds down ½ point at 92½ bid, 93½ offered.

Six Flags unmoved by deal news

From deep in distressed-debt territory, a trader said that he had "seen the news" about Six Flags Inc., "but I didn't see anything that looked like a whole bunch of activity." He said that the bankrupt New York-based theme park's bonds, like its 9¾% notes due 2013, were still around 30-31, unchanged on the session, "on no volume."

Rival groups of bondholders who have been fighting over control of the company on Wednesday told the Wilmington, Del., federal bankruptcy judge supervising Six Flags' reorganization that they have reached agreement on a revised Chapter 11 restructuring plan, which would give holders of junior notes issued by the Six Flags Inc. holding company control of the company. Meanwhile, holders of senior secured notes issued by its Six Flags Operations Inc., operating subsidiary, will be paid $470 million in cash to satisfy their claims, rather than gaining control of 93% of the restructured company's equity, as Six Flags had originally proposed. The agreement came after last-minute negotiations, and clears the way for Six Flag's emergence from bankruptcy, perhaps as soon as next week.

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