Clondalkin floaters price; Dean Foods dives on dairy prices; MedQuest up

By Paul Deckelman and Paul A. Harris

New York, June 12 - Clondalkin was heard by high yield syndicate sources to have successfully priced a dual-currency offering of six-year dollar-and euro-denominated floating-rate notes on Tuesday. When the notes were freed for secondary dealings, they moved up modestly.

Elsewhere on the primary market scene, Thomson Learning was seen about to hit the road starting Wednesday to market its $2 billion-plus three-part mega-deal, while Dollar General Corp. unveiled plans for another gigantic deal - this one for $1.9 billion.

And yet another huge deal was seen heading for the road, later in the week, with U.S. Foodservice shopping a $1.55 billion two-parter.

Among smaller anticipated offerings, market participants heard that Plains Exploration & Production Co. had downsized and restructured its coming bond deal, on which price talk emerged.

In the secondary market, Dean Foods Co.'s bonds declined, after the Dallas-based food processing operation lowered its financial outlook - for the second time this year - citing the impact of rising dairy prices.

News that MedQuest Associates is lining up financing helped to boost the Alpharetta, Ga.-based medical imaging company's bonds handsomely, traders said.

And Trump Entertainment Resorts Inc. bonds were seen higher, as buyout speculation continued.

A high yield syndicate official, speaking at the end of the Tuesday session, said that the broad junk market was as much as a point lower, and added that the energy sector had been particularly hard hit.

The official explained that the sell-off in junk took place against a capital markets backdrop in which stocks sold off substantially, with the Dow Jones Industrial Average approximately 130 points lower on the day, and in which Treasuries had been mugged.

The sell-sider spotted 10-year governments yielding 5.29%.

However, even as these forces eroded junk prices, the primary market forward calendar built formidably on Tuesday, as four kingsized LBO megadeals marched into view.

Thomson Learning plans $2.14 billion

The biggest of the quartet by dollar-amount was Thomson Learning.

The Stamford, Conn., textbook publisher will begin a roadshow on Wednesday for its $2.14 billion three-part offering.

At the operating company level, TL Acquisitions Inc. is offering $1.35 billion of 7.5-year senior unsecured PIK toggle notes (Caa1) and $250 million of eight-year senior subordinated notes (Caa2).

At the holding company level, meanwhile, TL Holdings Inc. is offering $540 million of senior unsecured PIK toggle notes (Caa2).

JP Morgan, Citigroup, UBS Investment Bank, RBC Capital Markets and RBS Greenwich Capital are underwriters.

Dollar General to sell $1.9 billion

The second-largest of the four LBO deals launched Tuesday was Dollar General Corp.'s $1.9 billion three-part offering, which will begin roadshowing on Monday.

The Goodlettsville, Tenn.-based discount retailer plans to place $1.35 billion of eight-year senior notes (Caa1) in two tranches: $625 million of cash-pay notes and $725 million of PIK toggle notes.

In addition Dollar General plans to place a $550 million tranche of 10-year senior subordinated notes (Caa1).

Goldman Sachs & Co., Citigroup, Lehman Brothers and Wachovia Securities are joint bookrunners.

U.S. Foodservice will launch $1.55 billion

Next, in the LBO megadeal parade was U.S. Foodservice Inc., which will start a roadshow on Thursday for its $1.55 billion two-part notes offer.

The Columbia, Md., foodservice distributor plans to place a $1 billion tranche of senior notes that will come with a pay-in-kind provision which extends to the life of the bond.

In addition U.S. Foodservice plans to place a $550 million tranche of 10-year senior subordinated notes.

Deutsche Bank Securities, Citigroup, Goldman Sachs & Co., JP Morgan, Morgan Stanley and RBS Greenwich Capital are the underwriters.

VWR to roadshow $675 million

Rounding out the formidable four was the $675 million LBO-funding deal from Varietal Distribution Merger Sub, Inc. (VWR International, Inc.).

The lab equipment company will begin a roadshow on Monday for its eight-year senior PIK toggle notes (Caa1/CCC+).

Goldman Sachs & Co., Banc of America Securities, JP Morgan and Deutsche Bank Securities are joint bookrunners.

Hynix's half billion refinancing

Apart from the LBO deals described above, Hynix Semiconductor will start a roadshow on Friday for an offering of senior unsecured notes (Ba3/BB-/BB).

Citigroup, Credit Suisse, Goldman Sachs & Co., Korea Development Bank and Merrill Lynch & Co. are joint bookrunners for the debt refinancing deal from the Korean semiconductor company, which is expected to be sized at $500 million, with the notes expected to come with a maturity of 10 years.

Clondalkin prices two-parter

Elsewhere on Tuesday Clondalkin Acquisition BV priced €412.6 million equivalent in tranches of $150 million and €300 million of six-year senior secured floating-rate notes (Ba3/B+).

Both tranches of notes priced at par, and will pay coupons that will float at 200 basis points spreads to Libor and Euribor, respectively.

The coupons came at the tight end of the price talk, which was set as spreads of 200 to 225 basis points.

Deutsche Bank Securities and Lehman Brothers were joint bookrunners for the debt refinancing and acquisition funding deal from the Dublin, Ireland-based packaging and printing products company.

Plains downsizes, restructures

Finally, Houston-based Plains Exploration & Production Co. downsized to $400 million from $600 million its high yield notes offer, and restructured the deal on Tuesday.

The oil and gas exploration and production company set price talk of 7 5/8% area on its eight-year senior notes, withdrawing its proposed tranche of 12-year notes.

The eight-year notes are expected to price on Wednesday.

JP Morgan and Lehman Brothers are joint bookrunners for the quick-to-market general corporate purposes deal.

Clondalkin gains modestly

When the new Clondalkin floating-rate notes due 2013 were freed for secondary dealings, a trader saw the dollar-denominated tranche of bonds up slightly at 100.25 bid, 100.75 offered, versus their par issue price earlier in the session.

Another trader saw the bonds a little better than that, at 100.5 bid, 100.875 offered.

No other recently priced issues were seen trading around.

Dean takes a drubbing

Back among the established issues, a trader was quoting Dean Foods' 7% notes due 2016 down 2 points at 96.5 bid, 97.5 offered, citing higher dairy prices as the likely drag on those notes.

Dean on Tuesday lowered its profit outlook for the second time this year, citing the likely impact on earnings of higher costs for raw milk - a major expense for Dean, the biggest U.S. dairy foods producer.

Dean - which only last month guided investors to the low end of its previous projected per-share earnings range of $1.72 to $1.78, on Tuesday said it now expects adjusted net earnings for the year to come in between $1.52 and $1.58 per share - well below the $1.69 per share that analysts, on average, were looking for.

For the current second-quarter, Dean lowered its earnings outlook to the 30 to 31 cents per share neighborhood - down from its prior estimates of 37 to 38 cents per share, which is also what Wall Street has been expecting.

The company's chairman and chief executive officer, Gregg Engles warned that "conventional milk prices have risen rapidly and forecasts for the back half of the year have increased significantly as foreign and domestic market forces have combined to put significant pressure on the U.S. dairy industry.

"As a result, it has become increasingly likely that conventional raw milk prices will reach all-time highs by the third quarter."

MedQuest higher on financing news

Elsewhere, a trader saw MedQuest Associates' 11 7/8% notes due 2012 up 5 full points on the session to 85 bid, 86 offered, citing the impact of published reports indicating that the company plans to refinance its debt, particularly its $80 million revolving credit facility that is scheduled to mature in August.

Another source said the bonds were up about 3½ points on the day at 84.5, after touching highs above 85.5 earlier in the session. Trading was described as active.

While those operating company bonds were soaring, its MQ Associates holding company zero-coupon bonds due 2012 were actually seen off a point in light trading at 29 bid.

The first trader said that the published reports "showed the company in a good light."

The reports quoted company chief financial officer Todd Andrews as saying that MedQuest will refinance its bank facility by the end of the current second quarter, via Wachovia Bank and JP Morgan & Co. Besides the revolver, the facility consists of a $60 million term loan B tranche that matures in 2009.

Trump continues to jump

Also on the upside, a trader saw Trump Entertainment Resorts' 8½% notes due 2015 at 103.25 bid, 103.625 offered, a level which he called up a point since Friday - and said it was especially significant against a backdrop of "this bloodbath" in Treasury issues and equity names which was dragging many junk names into the loss column on Tuesday.

The Atlantic City, N.J.-based gaming operator's bonds have risen smartly ever since the company hired Merrill Lynch & Co. to beat the bushes for potential buyers. At the tail end of last week, the rise resumed after news reports identified two potential buyers, although nothing is official yet.

From out of that same sector, a trader saw Harrah's Operating's 5 3/8% notes due 2013 down a point at 86.5 bid, 87.5 offered

Dana stays up, Dura keeps falling

Traders said many of the more active names were in the distressed regions, and saw Dana Corp. - whose bonds were seen solidly higher on Monday - continuing to firm Tuesday, with its 5.85% notes due 2015 seen at 96.375 bid, 97.5 offered, up from around 95 bid, 95.5 offered on Monday, "amazing especially in this market," a trader said.

Another trader saw a more restrained rise, with the bankrupt Toldeo, Ohio-based components company's 6½% notes due 2008 up perhaps ½ point at 105.5 bid, 106.5 offered.

He also said that Delphi Corp. "did do something," although he saw no fresh news about the bankrupt Troy, Mich.-based parts producer, which has recently been in talks with former corporate parent General Motors Corp. and the United Auto Workers union aimed at cutting Delphi's bloated labor cost structure, a key factor in its slide into bankruptcy.

He saw the 6.55% notes that were to have come due last year at 117.75 bid, 118.75 offered, up ¾ point on the day.

Dura Automotive Industries Inc.'s bonds continued to fall after having peaked last week with the 8 5/8% notes due 2012 around 66 bid and its 9% notes due 2009 around a 16-17 context. In Tuesday's action, the former, which fell 2 points on Monday, was seen down another 2 points to 58 bid, 60 offered. Another trader saw them at 58 bid, 59 offered, and saw the 9s at 13.5 bid, 14.5 offered, down ½ point on the day.

Traders said it was likely that the bankrupt Rochester Hills, Mich.-based component-makers bonds were off on continued profit-taking after the seniors had zoomed more than 15 points and the juniors almost 5 points last week

Movie Gallery 'stays strong,' Blockbuster little moved

Apart from the autos, a trader said that Movie Gallery Inc.'s bonds "looked like they were going to go down, but then they firmed back up," the Dothan, Ala.-based video chain rental operator's 11% notes due 2012 going from 83 bid, 84 offered at the open to as low as 81 bid during the day, before coming off those lows to end at 82 bid, 83 offered.

Another trader who saw the same movements said that "in this market," for a distressed credit like Movie Gallery to lose only a point "is not a big deal for that bond."

Movie Gallery's larger rival, Blockbuster Inc., meantime introduced new, lower prices for its developing on-line rental service in an attempt to steal a march on on-line rental leader Netflix Inc. However, the Dallas-based Number-One video rental company's 9% notes due 2012 were not much moved on the news, an early rally try fizzling out and leaving the bonds up perhaps 1/8 point on the day at 97.625.

Spectrum off, but on no news

Traders saw Spectrum Brands Inc.'s bonds lower, although they saw no fresh negative news out about the Atlanta-based maker of Rayovac batteries, Remington shavers and other consumer products.

One quoted its 11¾% notes due 2013 off a point at 94 bid, 96 offered, and saw its 7 3/8% notes due 2015 likewise down a point at 81 bid, 83 offered.

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