Aventine Energy, Pinnacle Foods deals price; Fremont General jumps on loan portfolio sale

By Paul Deckelman and Michelle Anderson

New York, March 21 - Aventine Renewable Energy Inc. and Peak Finance LLC/Pinnacle Foods Finance Corp. successfully priced new deals during Wednesday's session, high yield syndicate sources said.

The Pinnacle deal - downsized to $575 million from $650 million originally - was a two-part offering that will partially fund the leveraged buyout of Cherry Hill, N.J.-based Pinnacle Foods Group Inc., producer of such well-known food brands as Swanson frozen TV dinners, Duncan Hines cake mix, Mrs. Paul's frozen fish products and Lender's bagels.

Aventine meantime sold $300 million of 10-year notes, the proceeds of which will fund the expansion of the Pekin, Ill.-based ethanol producer.

Aventine's new bonds were seen having firmed respectably when they were freed for secondary dealings. The Pinnacle deal priced fairly late in the session, producing only limited aftermarket movement.

Elsewhere in the new-deal sphere, pre-deal market price talk emerged on MSX International Inc.'s $200 million offering of note units, consisting of paper from three company subsidiaries. That deal is expected to price during Thursday's session.

EB Holdings, Inc. was heard getting ready to hit the road Thursday to pitch a €600 million offering of new fixed-rate PIK loan paper to potential buyers.

Coleman Cable Inc. was bringing an add-on tranche to its existing 9 7/8% senior notes due 2012.

In the secondary realm, Fremont General Corp.'s bonds shot up on Wednesday in response to the news that the Santa Monica, Calif.-based financial services company will sell a $4 billion portfolio of subprime loans, even though the sale is being done at a discount to the loans' principal amount.

Homebuilders whose bonds have recently taken a drubbing of late due to the virtual collapse of the subprime lending industry - a key source of financing for a sizable chunk of homebuyers - were mostly better Wednesday, helped by the news that the Federal Reserve Board has subtly shifted away from a bias towards further interest-rate tightening - a hopeful sign for those looking for an interest rate cut or two somewhere down the road. Homebuilders on the upside included KB Home and Hovnanian Enterprises Inc. However, Technical Olympic USA Inc.'s subordinated bonds continued to get hammered lower.

Bally Total Fitness Holding Corp.'s hard-hit subordinated bonds that are slated to come due on Oct. 15 gyrated around at mostly higher levels before settling in with a gain of about a point or two from where they had finished Tuesday, although there was no fresh news seen about the embattled company.

Pinnacle serves up downsized deal

Peak Finance and Pinnacle Foods Finance's two-part offering of senior and senior subordinated notes (Caa2/CCC) was downsized to $575 million from the $650 million originally planned.

As revised, it consisted of $325 million of eight-year senior notes and $250 million of 10-year senior subordinated notes. The senior note tranche was downsized from the original $400 million, as the borrowers instead upsized their new term loan B bank debt by a corresponding $75 million to $1.25 billion total.

Proceeds from the bank debt and from the bond issue will be used to finance the buyout of Pinnacle Foods by The Blackstone Group.

The senior notes priced at par to yield 9¼%, at the wide end of pre-deal market price talk envisioning a yield of between 9% and 9¼%, and at a spread of 471 basis points over the comparable U.S. Treasury issue, while the senior subordinated notes also priced at par to yield 10 5/8%, in the middle of price talk of 10½% to 10¾%. The subordinated tranche's spread was 609 bps.

The deal was brought to market via joint book-running managers Lehman Brothers and Goldman Sachs & Co. under Rule 144A and Regulation S.

The senior notes are non-callable for the first three years after issue, while the subordinated notes are non-callable for the first five years.

Aventine 10-year prices

Also pricing Wednesday was a $300 million offering of 10-year senior notes for Aventine Renewable Energy (B3/B-).

The Illinois ethanol producer's bonds priced at par to yield 10%, in line with pre-deal market price talk. They priced at a spread of 547 basis points over the comparable U.S. Treasury issue.

The bonds, offered under Rule 144A and Regulation S, were brought to market via joint book-running managers JP Morgan, Goldman Sachs and UBS Investment Bank.

Proceeds of the offering will be used to finance the company's capacity expansion plans.

MSX set to price, talk emerges

High yield syndicate sources heard price talk emerging on MSX International's $200 million offering of note units (B2/CCC+), which are expected to price late Thursday afternoon following the conclusion of the current roadshow.

The sources said the units are set to price at between 99 and 99.5, with the coupon at 12¼% to 12½%.

Each of the 200,000 units will consist of a total of $1,000 of paper from three of the company's subsidiaries - $350 of MSX International UK plc five-year senior secured notes, $325 of MSX International Business Services France, SAS five-year senior secured notes and $325 of MSX International GmbH five-year senior secured notes. Unless a separation occurs, bondholders will not be able to separately transfer the notes of each issuer.

Jefferies & Co. is leading the Rule 144A and Regulation S offering for the Warren, Mich.-based provider of outsourced services to the automotive industry, which will use the deal proceeds to repay debt.

EB slates 10-year PIK deal

Also heard in the market was the news that EB Holdings, the parent of U.K.-based battery recycling company Eco-Bat Technologies, will offer €600 million of fixed-rate PIK loans due 2017 (Ba3/B+).

A market source said that Credit Suisse and Citigroup will be joint bookrunners on the deal, which will be marketed to potential investors via a roadshow slated to begin Thursday.

Proceeds from the offering will be used to repay existing PIK notes and to fund a dividend to be paid to the company's shareholders.

Coleman Cable on the road

Also hitting the road, market sources said, is Coleman Cable, which will begin marketing its $100 million add-on to its $120 million of existing 9 7/8% senior notes due 2012 on Friday.

Wachovia is the bookrunner on the deal, which is expected to price at the end of the roadshow on March 28.

Proceeds from the notes, along with the refinancing of its credit facilities, will be used to finance the Waukegan, Ill.-based electrical wire and cable manufacturer's acquisition of Copperfield LLC.

Aventine heads upward, Pinnacle lags

When the new Aventine Energy 10% senior notes due 2017 were freed for secondary dealings, a trader saw those bonds get as good as 101 bid, 101.5 offered, before they "dropped back a tad" to 100.875 bid, 101.25 offered.

Another trader saw those bonds at 100.75 bid, 101.25 offered.

That trader also saw the new Pinnacle Foods 9¼% notes due 2015 little moved from their par issue price at 100.25 bid, 100.75 offered.

However, he said that the 10 5/8% subordinated notes due 2017 traded up to 100.75 bid, 101.75 offered - albeit on quite light trading - versus their par issue price, helped by investor approval of the issue's fat coupon.

Coleman Cable's existing 9 7/8% notes due 2012 were observed to have firmed to 103.25 from recent levels around 102.75, although trading activity was very light.

Fremont breaking free of subprime

Back among the established issues, the news that Fremont General will sell $4 billion of its subprime mortgage loans boosted the company's bonds as much as 3 points, according to one trader.

Several traders pegged the 7 7/8% notes due 2009 at 97 bid, up from around 94 on Tuesday.

Another source saw the bonds at 96.75 bid, up 2½ points on the day.

Fremont was among the most actively traded issues, spurred on by news of the portfolio sale - a step towards Fremont exiting the subprime business, which has seen a tumultuous past few weeks.

Fremont did not disclose the name of the buyer of the loans, which are being sold at a discount to their principal amount.

But, "the discount probably wasn't as bad as some people were expecting," a trader said.

"It looks like they sold [the portfolio] at a 3 to 4% discount," he estimated.

"It's a good sign that they were able to make a sale," he added.

The question now, according to the trader, is whether the remaining portion of loans owned by Fremont is the undesirable loans and how much of a discount they will have to be sold at.

KB, Hovnanian turn upward

The cautious investor hope that the subprime mortgage meltdown that has roiled the banking and homebuilding industries since about the end of February and the beginning of this month might finally be subsiding was helping some of the homebuilding names on Wednesday. Those companies have been hard hit by the subprime debacle, since any pullback on lending by the banks will hurt home sales.

A trader saw KB Home's bonds - which had gotten beaten down by more than 3 points on Tuesday by some estimates - as having recovered nicely on Wednesday, with the builder's 6¼% notes due 2015 having moved up to 91.375 bid, 91.5 offered from prior levels at 89.875. On a spread basis, the trader said, the notes' spread over Treasuries - which last week had hovered in about the 305 to 300 bps area, but which had suddenly jumped to 340 on Tuesday - had tightened back in to around 310 bps Wednesday. "There was big swing-out [Tuesday], but they recovered [Wednesday], probably helped by the Fed."

The members of the central bank's policy-making arm, the Federal Open Market Committee, chose to leave the key overnight loan rate unchanged at 5.25%. However, in announcing the decision, the Fed used language - carefully parsed by analysts and other financial market participants - that seemed to indicate that the central bank had backed away from its long-held readiness to hike rates, should inflation start to turn upward.

The apparently easier Fed stance helped to push up both stocks and Treasuries, and heartened investors in such homebuilders as Red Hook, N.J.-based Hovnanian; the latter's 6 3/8% notes due 2014 were up almost a full point at 91.

Technical Olympic still struggling

But a trader meantime saw Technical Olympic's bonds "continuing to languish around," with its subordinated 7½% notes due 2011 "really getting hit." The trader saw odd-lot prints at 74 bid, 75 offered, with round-lot markets at 72 bid, 74 offered - well down from the 76 bid, 77 offered context the bonds held Tuesday.

However, the company's senior 9% notes due 2010 were "barely changed," at 92.75 bid, 93.75 offered.

Another trader saw the company's bonds down another point, on top of its earlier slides, but said that the bonds had been down as much as 4 points earlier, but came back after the Fed meeting results were announced. The 10 3/8% notes due 2012, after falling 4 or 5 points Tuesday, ended down a point Wednesday at 76.5 bid, 78.5 offered.

Bally sub bonds gyrate

Outside the homebuilder sector, Bally Total Fitness' 9 7/8% notes slated to come due on Oct. 15 got an active workout, moving as low as the 69 bid area and trampolining as high as 77 and change, before settling in around 75, up more than 1½ points on the session, although no fresh news was seen out on the Chicago-based fitness club operator.

Bally's 10½% notes due 2011 were meantime seen holding pretty steady at around 93.

The bonds have been bouncing around for about a week now after Bally disclosed in a conference call last Thursday that its situation is so precarious that it will have to seek a debt restructuring and could face Chapter 11 if it is not able to come to a voluntary accord with its bondholders.

That caused the 10½% bonds to plummet from around par bid all the way down to the mid-80s last Thursday, before bouncing off the lows to end that session at around 89, while the 9 7/8s nosedived Friday to around 70 bid from prior levels in the mid 90s. Both issues have since recovered some of the lost ground during the intervening sessions - the senior bonds creeping back up to 93, the juniors climbing back into the mid 70s.

Noting the gyrations in the latter issue on Wednesday, a trader opined that Bally was likely "in the process of reaching out to holders with some sort of offer" that has not yet been disclosed. The trader added that holders "have gotten on board a few times" with management before, only to be disappointed, most notably during the rocky tenure of former chairman Paul A. Toback before his ouster last year, "but we'll see this time."

Spectrum bonds off on refinancing plans

A trader saw Spectrum Brands Inc.'s 8½% Rayovac notes due 2013 fall 3 points in volatile trading, on concerns the Atlanta-based consumer products company's proposed exchange for the bonds "is going to be very expensive." The bonds lost 3 points to end at 93.5 bid, 94.5 offered.

Spectrum's 7 3/8% notes due 2015 ended at 78.5 bid, 79.5 offered, down ½ point on the day, but improved from lows earlier at 76.5 bid, 77.5 offered. They "bounced back after the Fed - with almost everything else."

Another source, however, saw the latter bonds actually up 1½ points to 81 bid, on trading late in the session.

Stephanie N. Rotondo contributed to this report.

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