IKON, NewPage deals price; some Thursday gains fade, but housing hangs in; Del Labs up on buyout news

By Paul Deckelman and Paul A. Harris

New York, Dec. 7 - IKON Office Solutions Inc. and NewPage Corp. were heard by high yield syndicate sources to have successfully priced offerings on Friday, the former a tranche of four-year floating-rate notes and the latter an add-on to an existing issue of second-lien notes due 2012.

Elsewhere in the primary sphere, Helix Energy Solutions was heard getting ready to hit the road on Monday to market its half-billion-dollar two-part note offering; price talk emerged on Legends Gaming's restructured $220 million two-part deal; and Quality Distribution LLC was planning to sell a small add-on to its existing 2012 floating-rate notes.

In the secondary arena, which saw a strong relief rally on Thursday after the long-expected formal announcement of the plan aimed at helping subprime residential borrowers to avoid foreclosure on their homes - even though it was pretty much what everyone already expected - some of those gains were handed back on Friday, although the beleaguered homebuilders such as Hovnanian Enterprises Inc. and Standard Pacific Corp. continued to strengthen.

Also continuing upward, though modestly so, were Residential Capital LLC's bonds. But rival mortgage provider Countrywide Financial Corp. - whose bonds had firmed smartly on Thursday on formal announcement of the plan - was seen giving up some of its gains.

A big gainer in Friday's market was Del Laboratories Inc., whose bonds were seen several points better on the news that the New York-based manufacturer of cosmetics and over-the-counter pharmaceuticals is to be acquired by global beauty powerhouse Coty Inc.

At 3 p.m. ET Friday, a high yield syndicate official said that the market was steady, and spotted the CDX High Yield 9 index unchanged on the day at 96 1/8 bid.

NewPage, IKON price deals

Friday saw the week's only issuance.

NewPage priced a $456 million add-on to its 10% senior secured second-lien notes due May 1, 2012 (B2) at par.

The yield was printed at the tight end of the 10% to 10¼% price talk.

Goldman Sachs & Co. was the bookrunner for the acquisition, debt refinancing and general corporate purposes deal.

The original $350 million issue priced at 98.773 to yield 10¼%, so the Dayton, Ohio, coated and carbonless paper company realized 25 basis points of interest savings by doing the tap.

Elsewhere IKON Office Solutions priced a $150 million issue of four-year senior unsecured floating-rate notes (Ba3/BB) at 99.00 on Friday.

The notes will bear interest at three-month Libor plus 500 basis points until July 1, 2008, after which the rate will increase to three-month Libor plus 575 basis points.

There was no official price talk.

Wachovia Securities ran the books for the recapitalization deal.

Needed: $2 billion

Friday's two issuers raised $605 million of proceeds.

Those deals advanced the 2007 year-to-date issuance total to $154.6 billion.

That's almost exactly $2 billion shy of the 2006 record-setting total of $156.6 billion.

Heading into the Dec. 10 week the forward calendar contains $1.27 billion of deals that are in the market - not enough to get over the top.

However, underwriters are said to be "quietly marketing" deals, mostly from the backlog of hung LBO risk.

In the event that favorable market conditions take hold, observers expect some of that backlog to clear before the end of the year.

Assuming that the $1.27 billion that is now in the market actually clears, less that $800 million would be required to take 2007 issuance into new record territory.

And for those who prefer life on the edge, Sequa Corp., at last report, remains determined to price $700 million of bonds which it launched in early November.

If all of the above unfolds according to plan(s), the 2007 high yield primary market would be $100 million away from 2006's record-setting issuance.

Legends Gaming restructures

Legends Gaming (DiamondJacks Casinos) set price talk for a restructured $220 million two-part offering of notes due 2012 (B) on Friday.

The offering is comprised of a $160 million tranche of senior secured notes, with price talk in the 11½% area.

In a restructuring, the gaming company is also offering a $60 million tranche of senior subordinated secured PIK notes, of which 10% will be cash-pay and the remainder will be PIK for life. Price talk on the subordinated tranche is 16½% to 16¾%.

Initially the company came to market with a single $220 million tranche of senior secured notes due 2012.

The deal is expected to price late Monday afternoon via bookrunner Jefferies & Co.

Elsewhere Quality Distribution will begin a brief roadshow on Monday for a $50 million add-on to the company's three-month Libor plus 450 basis points senior floating-rate notes due Jan. 15, 2012 (Caa1/CCC).

Pricing is expected on Wednesday.

Credit Suisse has the books.

In addition to those, SPX Corp. is expected to price its $500 million offering of seven-year senior notes (Ba2) early in the week via Banc of America Securities and JP Morgan.

Helix Energy launches $500 million

News surfaced Friday of one roadshow start.

Helix Energy Solutions will begin a roadshow on Monday for a $500 million two-part senior notes offering, according to an informed source.

The Houston-based energy company is in the market with tranches of fixed-rate notes due 2015 and floating-rate notes due 2014.

The notes are expected to price early in the week of Dec. 17 via Banc of America Securities.

The Houston-based company will use the proceeds to repay bank debt.

IKON unseen; Unisys better

A trader said he had seen neither the IKON deal nor the NewPage offering in a generally very quiet Friday afternoon secondary.

He did see Unisys Corp.'s new 12½% senior notes due 2016 better. The Blue Bell, Pa.-based high-tech solutions company's issue, which had priced Thursday at 98.719, "broke to a premium," moving up to 100.25 bid, 100.75 offered.

And the company's existing debt, which had traded off Thursday in advance of the new issue, went along for the upside ride, with the 6 7/8% notes due 2010 seen up ½ point at 94.5 bid.

Market quiet, but firmer

Apart from new-deal related activity, things were pretty quiet - "a typical December Friday" was how one participant put it, with many people taking advantage of the dearth of real business to make an early getaway. Overall market volume was down about 22% from Thursday's level, while a slightly firmer tone prevailed, with advancing issues holding a narrow margin of not quite five-to-four over decliners.

Among market barometers, the KDP High Yield Daily Index, which had risen 0.03 on Thursday, was up another 0.11 on the day to 78.07, although its yield widened 6 basis points to 8.61%.

"It was dead today," a trader said, calling the market "pretty flat" on the day. Despite the stats showing gainers shading losers, it was his impression that "the market felt weak going out," although he allowed that "it was hard to tell because there just wasn't a lot of volume."

He agreed with the notion that the sudden cooling off of the equity markets - which had been rallying earlier in the week on expectations of the subprime rescue plan and speculation about another interest rate cut coming out of Tuesday's Federal Reserve policy meeting - may have had a spillover effect on junk bonds, which often take their cues from stock movements. With lackluster November job growth and the possibility of stronger inflation the takeaways from Friday's Washington statistics, the bellwether Dow Jones Industrial Average was up less than 6 points on the day, while the broader Nasdaq and Standard & Poor's 500 indexes were lower.

Countrywide cools down

With the new subprime borrower rescue plan now finally out there - and both stocks and junk bonds of companies and sectors affected by the mortgage industry meltdown had been firming for a full week on market anticipation - one of the strongest performers of the previous several sessions, Countrywide Financial, gave up some of the gains which its bonds had notched.

A market source saw the Calabasas, Calif.-based mortgage giant's 6¼% notes due 2016, which had firmed to 64 on Thursday, actually opening higher, around 64.5, and there were efforts during the day to extend the rally in the credit, with some trades printing as high as the 67 area. But by the end of the day, several larger-size trades had driven the bonds back even below their opening levels, and they ended down a point on the day at 63.

A trader at another shop likewise saw the bonds down a point at 63, while its 5.80% notes due 2012 lost 1½ points to close at 74.5.

But ResCap hangs on

While Countrywide's bonds seemed to lose their touch, a trader saw Residential Capital's 6½% notes due 2013 continuing the gains seen Thursday, rising another 2 points to 67 bid, 68 offered. Its 8 3/8% notes due 2015 were up 1½ points at 67.5.

Builders steady

The homebuilders' sector - hard-hit by the sudden drying-up of credit to some borrowers and the shocking wave of foreclosures which has scared other potential homebuyers into staying put where they are instead of buying new houses - is a major beneficiary of the new plan and enjoyed a boost in its bonds and shares on Thursday, and continued to pretty much firm on Friday, or at least hang onto what they had gained the session before.

Hovnanian's 8 7/8% notes due 2012 were being quoted up 2 points at 61 bid, while KB Home's 8 5/8% notes due 2008 were ½ point better at 98.5

A trader saw Standard Pacific's 7% notes due 2015 pretty much unchanged at 70 bid, 72 offered, and also saw Tousa Inc.'s 8¼% notes due 2011also unchanged at 45 bid, 47 offered. WCI Communities Inc.'s 9 1/8% notes due 2012 were similarly steady at 55 bid, 57 offered.

However, another market source called the WCI bonds down about 1 1/3 point at that same 55 bid level, while Beazer Homes USA Inc.'s 6 7/8% notes due 2015 were actually up nearly 2 points at 74, and Standard Pacific's 5 1/8% notes due 2009 were 2½ points better at 81.

At another desk, Beazer's 8 5/8% notes due 2011 were quoted down a point to 78 bid, 80 offered

E*Trade ekes out small gain

A trader said that E*Trade Financial Corp.'s bonds were "pretty volatile," with the New York-based online financial services company - also a mortgage writer, among other things - "bouncing around."

While its 8% notes due 2011 at one point firmed 2 points on the session to around the 87 bid level from their opening at 85 bid, 87 offered, by the end of the day they had given back most of those gains, ending only modestly higher at 8.625 bid, 8.75 offered.

"That was an interesting one," the trader said. He saw similar patterns in its 7 3/8% notes due 2013 and 7 7/8% notes due 2015, shooting up during the session from their opening levels, only to spit up most of those early gains. "They tried to rally, but they ended up only modestly," he declared, with the 7 3/8s ending around the 74 level at which they had started, well below its high print at 77.

Del gains on buyout deal

Apart from sectors directly affected by the subprime rescue news - clearly the week's major event - Del Laboratories' 8% notes due 2012 were seen having pushed up more than 3 points on the day to 102 bid on the news that the company, which manufactures cosmetics and over-the-counter pharmaceutical products, has agreed to be purchased by Coty, the world's largest fragrance company and a major player in the cosmetics industry. Financial terms were not disclosed.

Activity in the bonds was described as fairly light, although there were several large trades at those sharply higher levels.

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