Heinz prices upsized $3.1 billion; five others tap market; trading pauses; Cengage softens

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, March 22 - H.J. Heinz Co. led high-yield market activity on Friday with a $3.1 billion offering that was upsized by $1 billion from its original amount. The notes, which will be used to help finance a buyout of the company by Berkshire Hathaway and 3G Capital and to fund the repayment of existing debt, were seen at 99 bid, par offered in trading.

The Pittsburgh-based food product company was one of six issuers in Friday's primary market activity. Between them they printed $4.77 billion of bonds.

One tranche priced inside of talk, three priced at the tight end, one came on top of talk and one came at the wide end.

Three of the six were upsized.

Only one of the deals came as a drive-by.

Meanwhile secondary trading "never really got going," a trader said Friday.

"It was quiet," he said, speculating that it was due to "basketball tournament hangover coupled with a slower week because of Spring Break."

Another trader opined that the market was simply "tired."

And, a third trader said the overall market was "barely moved" in terms of price.

Even recent new deals weren't seeing much play.

"None of them were really big benchmark deals that really got whipped around," a trader said.

In the secondary, Nokia Corp.'s debt was active, but weaker on the day. The only fresh news was an €800 million bond issue the company did with Siemens for its Nokia Siemens Networks joint venture.

AmerenEnergy Generating Co. meantime saw a recent rally "take a breather," a trader reported. The company's bonds had gained as much as 8 to 9 points in the last couple of sessions, but gave back a little on Friday.

Elsewhere, Cengage Learning Acquisitions Inc.'s bonds dropped 2 to 3 points after the company announced a draw on its revolving credit facility and also said that it had hired restructuring advisors.

Heinz upsizes by $1 billion

With a tranche apiece, half a dozen issuers

H.J. Heinz priced an upsized $3.1 billion issue of 7.5-year second-lien senior secured notes (B1/BB-/BB) at par to yield 4¼% on Friday, according to a syndicate source.

The deal was increased by $1 billion, and the yield printed on top of yield talk that was revised from earlier talk in the 4½% area.

The bonds were at 99 bid, par offered in the secondary, according to a sell-side source.

Wells Fargo Securities LLC was the left bookrunner for the LBO deal. J.P. Morgan Securities LLC, Barclays and Citigroup Global Markets were the joint bookrunners.

Walter Energy drives by

Walter Energy, Inc. priced an upsized $450 million issue of eight-year senior notes (B3/B) at par to yield 8½% on Friday, according to a syndicate source.

The yield printed at the tight end of yield talk set in the 8 5/8% area. The amount was raised from $350 million originally.

Morgan Stanley & Co. LLC, Barclays, Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc. and BofA Merrill Lynch were the joint bookrunners for the quick-to-market issue.

The Birmingham, Ala.-based pure-play metallurgical coal producer plans to use the proceeds to repay debt outstanding under term loans A and B and for general corporate purposes. The additional proceeds, resulting from the $100 million upsizing of the deal, will be used for general corporate purposes.

PetroLogistics inside talk

PetroLogistics LP and PetroLogistics Finance Corp. priced a $365 million issue of seven-year senior notes (/B/) at par to yield 6¼%, according to a syndicate source.

The yield printed 12.5 basis points below the low end of yield talk set at the 6½% area.

Morgan Stanley & Co, Barclays, Citigroup Global Markets Inc., Goldman Sachs & Co., Stifel Nicolaus Weisel, UBS Investment Bank and Wells Fargo Securities LLC were the joint bookrunners.

The Houston-based producer of propylene plans to use the proceeds to refinance its existing senior secured credit facilities.

Exterran upsizes

Exterran Partners, LP and EXLP Finance Corp. priced an upsized $350 million issue of 6% eight-year senior notes (B2/B-) at 98.439 to yield 6¼% on Friday, according to a syndicate source.

The yield printed at the tight end of the 6¼% to 6½% yield talk. The reoffer price came in line with discount talk of approximately 1.5 points. The size was increased from $300 million.

Wells Fargo Securities LLC was the left bookrunner. Credit Agricole Securities (USA) Inc., J.P. Morgan Securities LLC, RBC Capital Markets LLC and RBS Securities Inc. were the joint bookrunners.

The services provider to the natural gas industry plans to use the proceeds to repay revolver debt.

Fidelity & Guaranty at tight end of talk

Fidelity & Guaranty Life Holdings, Inc. priced a $300 million issue of eight-year senior notes (B1/B+/BB-) at par to yield 6 3/8% on Friday, according to a syndicate source.

The yield printed at the tight end of the 6 3/8% to 6½% yield talk. Timing was moved ahead; the roadshow had been expected to conclude during the March 25 week.

Jefferies LLC, Credit Suisse Securities (USA) LLC and Macquarie Capital (USA) Inc. were the joint bookrunners.

The Baltimore-based provider of annuity and life insurance products plans to use the proceeds to fund general corporate purposes and make a distribution to its sponsor.

St. Barbara at a discount

St. Barbara Ltd. priced a $250 million issue of 8 7/8% five-year first priority senior secured notes (B2/B) at 99.493 to yield 9% on Friday, according to an informed source.

The yield printed 12.5 bps beyond the wide end of the 8½% to 8¾% yield talk.

Deutsche Bank Securities Inc. and Barclays were the joint bookrunners.

The Melbourne, Australia-based gold producer plans to use the proceeds to repay A$150 million of bank debt, to provide collateralization for the A$20 million performance bond and for general corporate purposes.

Nokia upsizes

In the European market Nokia Siemens Networks Finance BV priced an upsized €800 million two-part senior notes transaction (B2/B+) on Friday, according to a company press release.

A €450 million tranche of five-year notes priced at par to yield 6¾%, and a €350 million tranche of seven-year notes priced at par to yield 7 1/8%.

The yields on both tranches of notes printed on top of yield talk, according to a market source.

The overall size of the transaction was increased from €600 million.

JPMorgan and Credit Suisse were joint global coordinators. Barclays, BofA Merrill Lynch, Citigroup, Nordea, RBS and SG CIB were joint bookrunners. JPMorgan will bill and deliver.

The Espoo, Finland-based networking and telecommunications equipment company plans to use the proceeds to refinance bank debt.

Smart downsizes, restructures

Smart Technologies ULC and Smart Technologies Finance Inc. downsized their offering of senior secured notes to $200 million from $250 million, according to an informed source.

The tenor of the notes was decreased to six years from seven years. Call protection was increased to four years from three years, while a special call provision, which would have allowed the issuer to redeem 10% of the notes annually at 103 during the non-call period, was withdrawn.

The notes are talked to price with a 10% coupon at the 92 area to yield 12%.

The issuer will make a $5 million repurchase offer at par semi-annually, commencing on the first anniversary of the notes. Bondholders can reject the offer.

The deal is expected to price on Monday.

Deutsche Bank Securities Inc. is the left bookrunner. RBC Capital Markets is the joint bookrunner.

As a result of the downsizing, the company plans to raise $50 million with a sale/leaseback facility provided by a third-party lender.

The Calgary, Alta.-based provider of technology solutions plans to use the proceeds, together with cash on hand, to repay its term loan and for general corporate purposes.

Market indicators mixed

Back in the secondary, the KDP High Yield Index dipped to 75.67 from 75.7 on Friday, pushing the yield up to 5.48%.

The CDX North American High Yield Index meanwhile rose 3/16 of a point to 104 1/8 bid, 104 9/16 offered.

A trader noted that the overall market had "barely moved" in terms of price all day, even new issues such as Chesapeake Energy Corp.'s 5¾% notes due 2022.

He called that issue off slightly at 1011/4.

United States Steel Corp.'s new 6 7/8% notes due 2021 were also off, trading down to par 5/8. The company priced $275 million of the securities on Wednesday at par and they were by far the busiest junk issue in Thursday's session, with $85 million changing hands. They were quoted as high as 101 1/8 bid late Thursday.

Nokia busy, but soft

Nokia's 5 3/8% notes due 2019 were deemed active in Friday trading, but weaker.

One trader called the issue off ½ point at 961/2.

Another trader echoed that level, also calling the debt softer.

The activity came as €800 million in bonds were issued via Nokia Siemens Networks, Nokia's joint venture with Siemens.

Proceeds will be used to pay down debt and for general corporate purposes.

Ameren's rally busted

AmerenEnergy Generating's two-day rally - which resulted in gains of as much as 8 to 9 points - came to a halt on Friday.

"They were flying over the last couple of days," a trader said, seeing the 7% notes due 2018 falling a point to 81 come Friday trading.

The 7.95% notes due 2032 were also off a point, closing at 74.

Another trader said the bonds "gave a little back," pegging the 7.95% notes at 73 bid, 74 offered.

A third trader said the debt "hit the wall," dropping ½ point to a point.

He quoted the 7% notes at 80 bid, 81 offered and the 7.95% notes at 73 bid, 74 offered.

On March 14, the power producer said it had inked an agreement with Dynegy to sell its merchant generating business. Though Ameren will not receive any cash in the deal, Dynegy is assuming about $850 million of Ameren's debt.

Ameren is also expected to realize $180 million in tax benefits.

Cengage debt slips

Cengage Learning's 11½% notes due 2020 were under pressure in the final trading day of the week, as the company announced it had drawn on its revolver and hired restructuring advisors.

A trader placed the notes at 74 bid, 75 offered, versus previous levels of 76 bid, 77 offered.

Another trader called the issue "down a couple points" at 73 bid, 74 offered, compared to levels around 76 previously.

And, the company's extended term loan dropped as low as 71 bid, 72½ offered. However, by late day, the debt had rebounded to 72¼ bid, 73¼ offered, according to a trader. On Thursday, the loan was quoted at 72 5/8 bid, 73 1/8 offered.

The company borrowed $430 million under its revolver, which basically puts the loan at fully drawn, in order to ensure that it has sufficient liquidity to fund working capital needs, a news release said.

Cengage also said it has retained Alvarez & Marsal as restructuring advisor, Lazard as financial advisor and Kirkland & Ellis LLP as legal advisor.

Cengage is a Stamford, Conn.-based provider of teaching, learning and research services for the academic, professional and library markets.

Sara Rosenberg contributed to this article

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