Reliant, IWO deals price; Avecia group climbs on asset-sale news

By Paul Deckelman and Paul A. Harris

New York, Dec. 14 - Reliant Energy Inc. successfully priced its somewhat downsized offering of new 10-year notes Tuesday, one of several new deals that came to market. Other issuers included IWO Escrow Co., which brought in a two-part offering of floating par bonds and fixed-rate discount notes, Technical Olympic and Almatis.

In secondary dealings, Avecia Group plc bonds rose after the British-based specialty chemicals company announced asset-sale plans. And Nextel Communications Inc. bonds held steady at the firmer levels to which they had moved over the past few sessions, as investors anticipated a possible announcement, perhaps Wednesday, that it would be acquired by Sprint Corp., and as they discounted other speculation that rival wireless operator Verizon's corporate parent would try to interfere by stepping in and making a bid for Sprint.

Primary market volume intensified during Tuesday's session as five tranches priced totaling $1.28 billion.

Reliant Energy led the way with a $750 million issue of 10-year notes that came in the middle of price talk.

And late in the day word circulated that Independent Wireless One Corp., the Louisiana-based Sprint PCS affiliate, priced both tranches of its $233 million proceeds deal 25 basis points inside of price talk.

Meanwhile no new roadshow starts were heard, details emerged on deals expected to price by the end of the Dec. 13 week.

"The market felt firm today," one source said Tuesday afternoon. "Trading was active during the morning. And we saw some bonds recover from the recent sell-off."

Reliant prices $750 million mid-talk

The session's biggest deal came from Houston-based Reliant Energy, Inc. which priced $750 million of 10-year senior secured notes (B1/B+) at par to yield 6¾%, in the middle of the 6 5/8% to 6 7/8% price talk.

Goldman Sachs had the books for the debt refinancing deal.

A planned six-year floating-rate note tranche was eliminated, and the issue was downsized by $350 million, which was shifted to the Houston-based energy company's term loan B.

IWO prices two tranches through talk

Meanwhile, IWO Escrow Co. in conjunction with IWO Holdings (Independent Wireless One Corp.) priced two tranches of high-yield notes on Tuesday, with both of them pricing through price talk by 25 basis points.

The Lafayette, La.-based company sold $150 million of senior secured floating-rate notes (B3/CCC+) at par to yield three month Libor plus 375 basis points, inside of the Libor plus 400-425 basis points price talk.

IWO also sold $140 million of senior discount notes due Jan. 15, 2015 (Caa2/CCC-) at 59.086 to yield 10¾%, also inside of the 11%-11¼% price talk. The deal generated approximately $83 million of proceeds.

Bear Stearns & Co., Lehman Brothers and Merrill Lynch & Co. ran the books for the Chapter 11 exit financing.

Technical Olympic drives by with $200 million

The market saw one drive-by deal on Tuesday.

Technical Olympic USA, Inc. priced a $200 million issue of senior subordinated notes due Jan. 15, 2015 (B2/B-) at par to yield 7½%, at the wide end of the 7¼% to 7½% price talk.

Citigroup ran the books for the debt refinancing and general corporate purposes deal from the Hollywood, Fla.-based homebuilder.

And terms emerged Tuesday on Almatis Investment Holdings Sarl, which priced a $100 million issue of PIK notes due July 1, 2013 at par to yield 11%.

JP Morgan ran the books for the Regulation S-only deal.

The Frankfurt, Germany alumina-based specialty materials and chemicals company is using the proceeds to fund a dividend.

Price talk on Church & Dwight

Meanwhile on Tuesday details emerged on five of the deals that are expected to price before the end of the present week.

Price talk of 6% to 6¼% emerged on Church & Dwight Co. Inc.'s $175 million of eight-year non-call-four senior subordinated notes (Ba3/B+), which is expected to price mid-day Wednesday via JP Morgan and Citigroup.

Diane Keefe, portfolio manager of the Pax World High Yield Fund, told Prospect News that she likes Church & Dwight, although she anticipated that the deal, with its double-B rating from Moody's, would be rich.

Keefe told Prospect News that she had been impressed with the company's New York roadshow.

The Pax World portfolio manager, whose fund submits credits to a series of social issues screens, said that Church & Dwight's Trojan brand condoms are a key to the company's appeal on financial terms as well as social ones.

"The CEO gave a great speech about sexually transmissible diseases, and how a condom is used only one out of four times when it should be used, and how as a capitalist he saw that as a great market opportunity, but as a human being he saw it as an opportunity to fix something that needs to be fixed," Keefe related.

"He said that there had been 12 ads for Viagra in the Superbowl, so hopefully the language around these things is changing such that you can actually talk about them."

Elsewhere Tuesday, Cooper-Standard Automotive issued price talk Tuesday on its two-part $550 million of high-yield bonds.

Price talk is 7%-7 1/8% on $200 million of eight-year non-call-four guaranteed senior notes (B2/B).

Meanwhile price talk is 8½% area on $350 million of 10-year non-call-five subordinated notes (B3/B).

Pricing is expected Thursday morning, with Deutsche Bank Securities, Lehman Brothers, Goldman Sachs & Co. and UBS Investment Bank running the books.

Price talk is for a yield in the 8¾% area on Venoco Inc.'s $150 million of seven-year senior notes (Caa1/CCC+), expected Wednesday afternoon via Lehman Brothers and Harris Nesbitt.

Goodman Global Holdings Inc. issued price talk on its $650 million two-part offering of high-yield notes.

Talk is Libor plus 300 to 325 basis points on a tranche of 7.5-year non-call-two senior floating-rate notes (B3/B-). Meanwhile talk is 8% area on a tranche of eight-year non-call-four senior subordinated notes (Caa1/B-).

Tranche sizes on the offering remain to be determined. Pricing is expected late Wednesday afternoon, with UBS Investment Bank, JP Morgan and Credit Suisse First Boston running the books.

And finally price talk is 11¾%-12% on Stanadyne Holdings, Inc.'s quick-to-market $55 million proceeds of 10-year non-call-five senior discount notes (B-).

The issue is expected to price on Wednesday or Thursday via Goldman Sachs.

The Windsor, Conn.-based provider of technology and services for engine components and fuel systems will use the proceeds to fund a dividend to shareholders.

Reliant, IWO up in trading

When the new Reliant 6¾% notes due 2014 were freed for secondary dealings, a trader saw the bonds push as high as 101.75 bid, 102 offered on the break from their par issue price, but then saw them come back down to a more moderate 101 bid, 101.5 offered finish.

"They did OK," he said, "but didn't hold their gains as well as some other stuff has done."

For instance, he said, IWO's new floating-rate notes and fixed-rate discount notes "both popped up pretty well," with the floaters due 2012 seen advancing from their par issue price to end at 101.875 bid, 102.125 offered and the zeroes due 2015 seen bouncing to 61.25 bid, 61.75 offered from their 59.086 issue price earlier.

Overall, he said, news that the Federal Reserve had approved another quarter-point rise in interest rates "didn't seem to" much affect the junk secondary. "Governments went up and people seemed to be pretty complacent about things. I don't know how long that will last - but that seemed to be the case right now."

Avecia pushes up

The big mover, point-wise seemed to be Avecia, whose 11% notes due 2009 were quoted by one market source as having jumped 7½ points to 103.25 after the U.K. company announced its plans to sell its Dutch-based NeoResins unit to chemical maker Royal DSM NV for €515 million (about $685 million).

The company has over the past months announced several other asset sale transactions, all a part of its delevering efforts. It has about £373 million of gross debt outstanding - slightly under £300 million of bond debt and the rest in bank loans.

Nextel steady at higher levels

Elsewhere, the market awaited official word from Nextel and Sprint about the hot topic on the minds of telecom investors - the apparent decision of phone giant Sprint to acquire Reston, Va.-based wireless provider Nextel in a mostly stock transaction valued at about $35 billion. The Wall Street Journal has reported that such a transaction could be announced as soon as Wednesday.

The possibility of such a deal has been talked about, on and off, for months - but the speculation became more intense last week, when it was reported that Nextel was in talks with Overland Park, Kans.-based Sprint, the third-largest U.S. long-distance phone company after AT&T Corp. and MCI, Inc. and the third-largest wireless operator, behind top dog Cingular Wireless and runner-up Verizon Wireless (Nextel, meanwhile, is the fifth-largest U.S.-based wireless firm; T-Mobile is in fourth place).

The idea of a merger has given a solid boost to Nextel's bonds over the past several sessions; on Tuesday, the bonds were seen pretty much holding steady at the higher levels to which they had previously moved.

Nextel's 5.95% notes due 2014 were quoted up 1/8 point at 105.625 bid, although its 9½% notes due 2011 were seen off just a tad, at 113.5 - still a handsome gain in the bonds from where they had been a week ago. A trader quoted Nextel's 7 3/8% notes due 2015 at about 111.375 bid, off 1/8 on the day but still up several points on the week.

Earlier, the bonds had eased a bit more on speculation about a possible fly in the ointment - talk that Verizon Communications, one of Verizon Wireless' corporate parents, might seek to derail a Sprint /Nextel merger and the resulting combined company's challenge to Verizon Wireless for second place in the cellular industry, by buying Sprint and combining Sprint's wireless operations with Verizon's.

Tuesday's editions of the Journal said that Verizon has won the support of its partner in the wireless service, British-based Vodafone Group plc, should it decide to make a bid for Sprint. The Journal report also said that Verizon executives have been looking at possibly making a bid for Sprint for as long as 18 months, although their interest in such a course as a matter of self-defense seemed to only heat up over the last few days, as talk of a Sprint/Nextel merger came to the forefront.

But later in the day, a spokesman for Vodafone appeared to throw cold water on a Verizon-Sprint scenario, saying his company is "not in discussions with Verizon" regarding a possible bid for Sprint. He cited Vodafone's past comments to the effect that it is not interested in gaining any more U.S. assets. Other news services, quoting unidentified sources close to Verizon, also said the phone giant is not likely to make a bid for Sprint.

Should the Sprint/Nextel deal go through, the combination of Sprint's over 23 million-customer wireless subscriber base with Nextel's more than 16 million would create an entity of about 40 million subscribers, breathing heavily down Verizon's neck - it has about 42 million subscribers - and easily having about double T-Mobile's 20 million subscribers. Cingular leads the pack, with 47 million customers.

The Journal said Sprint's board met Monday and was expected to continue meeting Tuesday to discuss the proposed Nextel merger. It added that the Nextel board is also considering the possible deal.

Bombardier down again

On the downside, the bonds of Canadian aircraft manufacturer and train equipment maker Bombardier Inc. continued to fall, a day after the abrupt announcement that the money-losing company had dumped its chief executive officer, Paul Tellier, after less than two years at the wheel.

Bombardier's 6.30% notes due 2014 were seen by one market source as having dropped to about 87 bid.5 bid from 90 on Monday, while its 6¾% notes due 2012 were seen down a point at 92.

A trader at another house had the 6.30s going home Monday having already fallen to 87, and saw then decline a further two points Tuesday to 85 bid, 87 offered, while the company's 7.45% notes due 2034 fell to 83 bid, 85 offered from 87 bid on Monday.

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