Stewart & Stevenson to sell $150 million eight-year notes

By Paul Deckelman

New York, June 22 - Stewart & Stevenson LLC was heard Thursday to be in the market with a $150 million issue of eight-year senior notes, expected to price next week.

Junk market primary sources said that the Houston-based oilfield services company had begun a roadshow Wednesday to pitch the issue to prospective investors. That sales campaign will last a week, with pricing expected next Thursday, they said, through book-running manager JP Morgan.

The bonds will be non-callable for the first four years after issue.

Stewart & Stevenson, which also manufactures and markets non-oilfield transportation equipment such as engines, forklifts, transmissions and rail car movers, plans to use the proceeds from the new deal to repay bank debt.

Moody's Investors Service has assigned a B3 rating to the prospective bond deal.

The company is no longer affiliated with Stewart & Stevenson Services Inc., a Houston-based manufacturer of tactical military vehicles, following the latter's approximately $277 million sale of its engineered products and power products business, in January. Those assets were sold to Houston oil industry entrepreneur and philanthropist Hushang Ansary, with the parent company's chief financial officer, John B. Simmons, becoming president and chief executive officer of the newly formed Stewart & Stevenson LLC entity.

Ironically, the deal is coming to market around the same time that the company which later bought Stewart & Stevenson Services in a $755 million transaction completed in May - Jacksonville, Fla.-based defense contractor Armor Holdings Inc. - is selling $400 million of senior subordinated 10-year notes , the proceeds of which will be used to refinance debt incurred in that acquisition. The two bond transactions are not related.

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