Susser prices; talk heard on Nuveen; ReAble launches offering; Delphi plunges on lower creditor payout

By Paul Deckelman and Paul A. Harris

New York, Oct. 30 - Susser Holdings, LLC successfully priced its $150 million add-on deal on Tuesday, high yield syndicate sources said.

Elsewhere in the new-deal arena, Nuveen Investments issued price talk on its upcoming $885 million issue of eight-year notes, the sources said, while ReAble Therapeutics Inc. was heard to have launched a $575 million offering of eight-year notes, with pricing expected next week.

In the secondary realm, Delphi Corp.'s bonds were seen solidly lower in active size trading, on the news that the bankrupt Troy, Mich.-based automotive parts supplier announced changes to its reorganization plan which will mean about $3 billion less in cash payouts to its various creditors, including former corporate parent General Motors Corp. However, GM's own bonds were seen little changed on the news.

Outside of the automotive parking lot, Countrywide Financial Corp.'s paper - which had soared on Friday after it reported a big loss but predicted a quick return to profitability, but which had then backpedaled on Monday amid growing market skepticism - continued to give up those gains.

NXP BV's notes tightened solidly after the Eindhoven, Netherlands-based semiconductor company reported sequentially improved third-quarter results.

Ceridian Corp.'s recently priced eight-year mega-deal continues to struggle, both of its tranches seen now well below par.

Generally, the market was quiet, traders said, with many participants just sitting on their hands ahead of Wednesday's scheduled announcement on interest rates from the Federal Reserve.

A high yield syndicate official said cash was perhaps a touch weaker, with most of the trading taking place in credit default swaps.

Sources tell Prospect News that a 25 basis points cut in the Fed Funds rate, which would leave the benchmark at 4½%, now seems priced into the high yield market.

Meanwhile in the primary market one deal was priced.

Reverse inquiry for Susser

Susser Holdings saw an advantage to closing the order book earlier than expected for a $150 million add-on to its 10 5/8% senior notes due Dec. 15, 2013 (B3/B), an informed source told Prospect News on Tuesday.

The Corpus Christi, Texas-based convenience store operator priced the deal at 102.50, resulting in a 10.063% yield to maturity.

That dollar price was on top of price talk heard earlier on Tuesday.

Banc of America Securities was the left bookrunner. Merrill Lynch & Co., Wachovia Securities and BMO Capital Markets were joint bookrunners.

The original $170 million issue was priced at par on Dec. 15, 2005, leaving the total amount outstanding following Tuesday's transaction at $320 million.

A source close to the deal said that it went well, and added that it had been driven by reverse inquiry, a scenario which ended up favoring the existing bondholders.

The source added that when the add-on was launched on Monday, the timing was left open.

However as the transaction unfolded it became advantageous to close the books early, the source commented.

Nuveen talks $885 million

Nuveen Investments set price talk for its $885 million offering of eight-year senior notes (expected ratings B3/B-) at 10½% to 10¾% on Tuesday.

The LBO deal, which is being led by Merrill Lynch & Co, Deutsche Bank Securities, Wachovia Securities and Morgan Stanley, is expected to price on Thursday.

Elsewhere, in a deal being described as an emerging markets play, but which is nevertheless being tracked by some high yield players, CII Carbon LLC and CII Carbon Corp. set price talk for a $235 million offering of eight-year senior subordinated notes (B3/CCC+/B-) at 11 ½% area on Tuesday.

The issuing entities, which are being acquired by India's Rain Calcining Ltd., will end their roadshow for the notes on Wednesday in Boston.

Citigroup is the bookrunner for the deal, proceeds from which will be used to repay the bridge loan incurred to finance the acquisition of CII Carbon by Rain Calcining.

Both CII Carbon and Rain Calcining are producers of calcined petroleum coke.

CII Carbon is headquartered in Kingwood, Tex. Rain Calcining is headquartered in Hyderabad, India.

ReAble launches $575 million

Meanwhile the forward calendar built out slightly on Tuesday.

ReAble Therapeutics will start a roadshow on Wednesday for its $575 million offering of eight-year senior notes (Caa1) via Credit Suisse and Banc of America Securities.

The acquisition financing is expected late next week.

ReAble is an Austin, Texas, medical device company.

Ceridian continues to struggle

Traders did not see the smallish add-on offering from Susser in the after market.

They did see the recently priced Ceridian Corp. deal - at $1.3 billion considerably more liquid - but those bonds, which had priced at par for both tranches on Friday and then tread water in the aftermarket - continued to retreat on Tuesday, just as they had on Monday.

A trader bluntly declared that the Ceridian paper "continued to drop," seeing both the 11¼% cash-pay tranche due 2015 and the 12¼% toggle tranche due 2015 at 97.5 bid, 98.25 offered, down from 98.75 bid, 99.25 offered on Monday.

Delphi down on plan changes

Delphi was among the most actively traded names in an otherwise pretty sedate market, traders said. One asserted that that Delphi's bonds "have been up and down today - but mostly down." He saw the 6.55% notes that were to have come due last year having opened at 95.5 bid, 96.5 offered, then trading as low as 87 bid, 89 offered, before ending at 91.875 bid, 92.875 offered.

Another trader saw those 6.55s down 4 points on the day at 91 bid, 92 offered.

At another desk, a market source quoted the bonds at 92 bid, seeing them down nearly 4 points from Monday's close just below 96, and down some 6 points from Tuesday's high print at 98. Meanwhile, its 7 1/8% notes due 2029 were down more than 5 points on the day at 91.5 bid

The Delphi bonds cratered after the company said that recent credit-market turmoil has forced it to seek a smaller financing package that cuts more than $3 billion in cash payments to its unsecured creditors and to GM, its former corporate parent, largest customer and major patron.

Delphi was originally going to borrow some $8.7 billion as exit financing - but citing the "severe dislocation in the capital markets," it now said that it will borrow $6.8 billion instead.

With less cash to spread around as it exits bankruptcy, probably early next year, Delphi, according to court papers filed Monday, will instead give its creditors the option to buy new Delphi stock at a discount through a rights offering. They were slated to be repaid 80% on their claims with Delphi's new common stock and 20% in cash, but will now instead get a higher percentage of stock and the option to buy additional shares at the discounted price of $34.98, assuming the plan is approved by the bankruptcy court. GM will get a combination of cash, new debt and new convertible preferred stock - rather than a $2.7 billion cash payment, the auto giant will receive $750 million in cash, a $750 million second-lien note and $1.2 billion in junior convertible preferred stock.

However, even though GM will not be getting as big a lump sum of cash as originally intended, GM bondholders were apparently not dismayed. A trader quoted its benchmark 8 3/8% notes due 2033 as unchanged at 90.25 bid, 90.75 offered.

Countrywide retreat continues

Elsewhere, Countrywide Financial's bonds continued to retreat from the big gains seen Friday, as analysts and investors grew more skeptical of the heady, optimistic predictions of a quick return to profitability by the Calabasas, Calif.-based mortgage giant that company executives had given out on Friday, causing Wall Street to essentially overlook the $1.2 billion quarterly loss that the company reported that day.

The company's 6¼% notes due 2016 were seen having widened out to a spread of about 527 bps over - about a 35 bps deterioration versus their late Monday level. In dollar-price terms, the bonds - nominally split rated at Ba1/BBB+/BB but trading among junk investors, and even some distressed-debt players as well as high-grade accounts - were seen down some 2 points on the session at 80.5 bid.

Countrywide's 4¼% notes coming due in December were seen down ¼ point at 99.25. Its 5.8% notes due 2012, which lost more than 2 points on Monday, were seen holding steady at the lower levels, around 86, to which they had moved .

Several analysts have cautioned that amid the continued uncertainty facing the housing market and the mortgage industry, a company such as Countrywide can't really say with any believability that it will bounce back from its huge third-quarter loss to be back in the black in the current quarter and stay there next year.

NXP better on numbers

NXP BV's 9½% notes due 2015 were among the most widely traded bonds of the session, firming after the Netherlands-based semiconductor company - formerly part of Dutch electronics giant Philips NV before the latter sold 80% of its semiconductor unit to private-equity investors last year - released its third-quarter earnings.

The notes went home trading at just under 95 bid, up 1¼ points on the session, according to a market source, who saw many of the trades in large, round lots.

NXP said that during the third quarter, it posted sales of €1.211 billion. While that was down 2.8% from year-ago levels, amid what company president and chief executive officer Frans van Houten called "a background of continuing soft industry conditions," it represented a 6.1% gain sequential gain over second-quarter results (7.4% factoring in currency changes). Adjusted EBITDA followed a similar pattern - the €226 million result was down from €267 million a year earlier, but well up from €141 million in the second period.

Van Houten said that even with soft business conditions, the results were "improved," owing to normal seasonal sales growth leading to improved factory loading, as well as the impact of NXP's Business Renewal Program, a company cost-cutting initiative aimed at producing €100 million of savings on a run-rate basis by year's send - a goal which the CEO said the company was "well on our way" to meeting.

Waiting for the Fed

Overall, traders said, the market seemed pretty quiet ahead of Wednesday's scheduled announcement from the Fed. "The majority" of people whom one had spoken to, he said, were looking for a ¼ point cut in the key rates, or perhaps "½ point, under pressure."

"It was pretty frustrating" another trader said, who characterized the day's activity as largely "position squaring." He added that "lots of bets were placed ahead of the Fed."

Advancing issues were about even with decliners. A trader saw the CDX junk bond performance index down 3/8 point to 98 bid, 98¼ offered. Among market barometers, the KDP High Yield Daily Index was down 0.03 from Monday's close, finishing at 79.78. Its yield was unchanged at an even 8%.

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