Revlon prices upsized deal; Paxson off as strategic alternatives hunt ends

By Paul Deckelman and Paul A. Harris

New York, March 11 - Revlon Consumer Products Corp. prettied up its balance sheet Friday, bringing to market an upsized offering of six-year notes, the proceeds of which will be used to take out existing bond debt. Also on the new-deal front, The DirecTV Group Inc. announced plans to sell $500 million of new bonds next month as part of a $2.5 billion debt refinancing.

In the secondary market, Paxson Communications Corp. bonds were lower after the West Palm Beach, Fla.-based TV broadcaster announced that it was terminating its efforts to find strategic alternatives for the company and will instead focus on improving its core business operations.

Two issues priced and one re-priced during the final session of the March 7 week, as Rexel SA, shorn of its planned dollar tranche, sold €600 million in a deal that was said to have played to strong euro demand.

And Revlon Consumer Products Corp. upsized its issue by $105 million to $310 million and sold the bonds on top of price talk.

Meanwhile, Telcordia Technologies Inc. took on considerable additional interest expense as it re-priced its $300 million of eight-year notes at par to yield 10%, up from the 8 7/8% print that it transacted on Feb. 25 - a deal that was subsequently canceled just before the bonds were set to close.

Rexel abandons dollar tranche

Friday's biggest transaction came from French electrical equipment supplier Rexel, which priced a restructured €600 million issue of 10-year senior subordinated notes (Caa1/CCC+) at par to yield 9 3/8%, in the middle of the 9¼% to 9½% price talk.

JP Morgan had the books for the acquisition deal.

Rexel dropped a planned dollar tranche.

"The decided not to sell the dollar-bonds," one informed source told Prospect News. "The company was going to set up some swaps to get the currency that they needed."

The source added that earlier in the week the deal had been heard to be struggling a little, but it nevertheless ended up coming in the middle of price talk.

The source added that the break price was par. Well after mid-day the source saw the bonds trading at the 100.125 level.

A $2.75 billion week

The only dollar-denominated deal to price during the Friday session came from Revlon Consumer Products Corp., which upsized its issue of six-year senior notes (Caa2/CCC) to $310 million from $205 million.

The bonds priced at par to yield 9½%, right on top of the 9½% area price talk.

Citigroup ran the books for the debt refinancing and general corporate purposes deal from the New York City-based cosmetic company.

Revlon's deal took the new issue tally for the week ending March 11 to over $2.75 billion in 15 tranches.

That total easily topped the previous week's $2 billion in nine dollar-denominated tranches.

The year to March 11 has seen just over $26 billion price in 97 dollar-denominated tranches. Hence 2005 now significantly trails in year-to-date totals compared to 2004, which by the March 11 close had seen $32.35 billion price in 135 tranches.

An expensive week for Telcordia

One unusual story that developed during the March 7 week was the cancellation and eventual re-pricing of Piscataway, N.J., telecommunications software company Telcordia Technologies' $300 million of junk.

After canceling its bond offering earlier in the week Telcordia re-priced its $300 million of eight-year notes (B3/B-) at par on Friday to yield 10%.

The bookrunners, JP Morgan, Bear Stearns & Co., Deutsche Bank Securities and Lehman Brothers, stayed the same, as did the credit ratings.

However the interest rate for Telcordia increased by 112.5 basis points from the original 8 7/8% print.

The deal, which originally priced on Feb. 25, was canceled on Wednesday because of questions about the company's compliance with a "material adverse conditions" clause.

Early Friday Prospect News heard from market sources that the re-pricing whisper was "mid-to-high nines," but when the hammer came down Telcordia had ended up with its new double-digit yield.

One sell-side source said that Telcordia's re-pricing was that first since last May, when Case New Holland Inc. re-priced $500 million of 6% five-year senior notes.

The Lake Forest, Ill., tractor and combine company, which completed its original transaction on May 4, decreased the issue price to 92.80 from the original 97.459, with the result that the yield was hiked out to 7¾% from 6.6%.

The reason, a market source told Prospect News at the time, was that the assets backing the bonds were found to be of lesser credit quality than investors believed them to be when the deal priced.

At the time of the re-pricing the company stated that its net proceeds from the sale were approximately $474 million, representing a cost to the company, on a yield basis, of 7¼%.

Market sources told Prospect News that the underwriter, Deutsche Bank Securities, was left to pick up the 50 basis points difference between the 7¼% yield that the company pays and the 7¾% yield that will be paid to investors.

As with the Telcordia deal, the trades that took place in the wake of the original Case New Holland pricing were unwound with the re-pricing.

$3.25 billion on tap for March 14 week

With the Ides of March fast approaching, the new issue calendar sports a full $3.25 billion and change of business that is expected to be completed before the March 18 close.

Details on some of that business emerged Friday.

Stile Acquisition Corp./Masonite International Corp. returned Friday with an LBO deal that was sidelined in late February because of haggling over the stock price. The roadshow starts on Monday for its $825 million two-part offering of high-yield notes.

The company is offering $300 million of eight-year non-call-two senior floating-rate notes (B3/B-) and $525 million of 10-year non-call-five senior subordinated notes (Caa1/B-).

Deutsche Bank Securities, UBS Investment Bank and Scotia Capital are joint bookrunners for the deal from the Mississauga, Ont.-based building products company.

Elsewhere Nycomed A/S, a Danish pharmaceutical firm, plans to price €400 million of 8.5-year senior PIK notes on Monday afternoon in London. The bonds are expected to price at 99.00 with an 11½% indicative coupon.

Credit Suisse First Boston and Goldman Sachs & Co. have the books for the acquisition deal.

Nycomed joins Affinity Group Holding Co., which has the only other PIK note presently situated on the forward calendar.

The roadshow for Affinity Group's $75 million of senior notes due Feb. 15, 2012 via CIBC World Markets kicked off on March 10.

The market also learned on Friday that Nexstar Broadcasting Group, Inc. plans to price a $75 million add-on to its 7% senior subordinated notes due Jan. 15, 2014 during the March 14 week.

Banc of America Securities will run the books for the debt refinancing deal from the Irving, Tex.-based broadcasting company.

Revlon higher in trading

When the new Revlon 9½% notes due 2011 were freed for secondary dealings, they were seen having pushed up to 101 bid, 101.5 offered from their par issue price earlier in the session.

The New York-based cosmetics maker's existing bonds were seen unchanged, with its 8 1/8% notes and 9% notes due 2006 - which are to be redeemed using the proceeds of the new deal - steady at 100.25 bid and 101 bid, respectively. Revlon's widely traded 8 5/8% notes due 2008, which are not being taken out with the new-deal proceeds, were unchanged at 96.375.

DirecTV's 8 3/8% notes due 2013, a portion of which are to be redeemed using the proceeds from the new issue, were seen late in the session at 110.25, down two points on the session

Paxson lower

Back among regular existing issues without a new-deal focus, a trader saw Paxson Communications' 10¾% notes due 2008 retreat to a wide 101 bid, 105 offered from 104 bid, 105 offered previously, while its zero-coupon notes due 2009 retreated to 95 bid, 97 offered from prior levels at 97.5 bid, 98.5 offered.

That followed the broadcaster's announcement that it is no longer seeking strategic alternatives, such as a sale of the company, and instead will focus on improving core operations.

Paxson terminated agreements with Bear Stearns Cos. and Citigroup Inc. to act as financial advisers in finding "strategic alternatives" to turn it around. Paxson had hired the investment banks in 2002 and 2003, respectively, to begin shopping it around to potential investors or buyers once it became apparent that General Electric Co.'s NBC division, which held a sizable stake in the company and was thought at one time to be interested in acquiring all of it, abandoned such plans, after the Peacock Network instead acquired Spanish language broadcaster Telemundo.

However, "to date no viable strategic transactions have been developed on terms that the company believes would be in the best interests of all of its stockholders," Paxson said in its statement.

It further said that "while the company will continue to consider opportunities that may arise or be presented, management's principal efforts will be focused on improving the company's core business operations. The company intends to pursue refinancing alternatives, with a view to lowering the company's cost of capital and increasing shareholder value. Additionally, the company anticipates exploring the sale of certain non-core assets in order to upgrade liquidity."

Visteon jumps, slides back

Elsewhere, Visteon Corp.'s bonds initially shot up after the Dearborn, Mich.-based automotive components supplier - formerly a unit of Ford Motor Co., which is still Visteon's largest customer - announced a plan under which Ford would aid its struggling former subsidiary, while the two companies continue to negotiate a broader restructuring of their relationship.

Visteon's 7% notes due 2014 were heard to have pushed as high as 91.25 bid and its 8¼% notes due 2010 got as good as par, each up about three or four points on the session.

However, later in the session, the bonds came off those peaks to end up maybe a point or so on the day, with the 81/4s seen going out at 98.5 bid, a gain of 1¼ points, while the 7s "settled in" at 90 bid, 91 offered, a trader said, "up maybe a point on the day."

Visteon said that the measures include accelerating Ford's payments for parts and boosting the amount of wage assistance the No. 2 U.S. automaker gives its former unit. The changes will run through the end of the year and are aimed at improving the former Ford unit's operating results and cash flow.

Ford spun Visteon off in 2000 and it has struggled ever since then. It suffered a net loss of nearly $1.49 billion in 2004 and said it would not provide a 2005 outlook until it completes the comprehensive restructuring of its relationship with Ford, which accounts for fully 70% of Visteon's revenues.

Collins & Aikman lower

Visteon's problems are the latest development to roil the automotive supplier sector, where Collins & Aikman Products Corp., has lately been the most actively traded name. While several traders said they saw little movement in the Troy, Mich.-based automotive components maker's bonds away from the levels they held on Thursday - its 10¾% senior notes due 2011 at 92 bid, 94 offered, while its 12 7/8% subordinated notes due 2012 at 70 bid, 72 offered - at least one trader saw Collins & Aikman substantially lower, quoting the senior notes as having dropped back to 89.75 bid, 91.75 offered, while the juniors were at 68 bid, 69 offered.

Anchor down again

Anchor Glass Container Corp. - whose 11% notes due 2013 were seen off several points on Thursday to about the 99 bid, par offered, area, after the Tampa., Fla.-based packaging company announced the resignation of its chief executive officer - continued to retreat on Friday, following the release of poor 2004 fourth quarter and full-year results. Those bonds were seen down another two points, to about 97.

Anchor reported a net loss in the fourth quarter ended Dec. 31 of $81.4 million ($3.30 per share), including plant closure and other charges of $48.7 million, ($1.98 per share), widening out from the company's year-earlier loss of $11.3 million (46 cents per share).

For the full year, the net loss was $86.1 million ($3.50 per share), including plant closure and other charges of $48.7 million ($1.98 per share), considerably steeper than the full-year 2003 net loss of $26.1 million ($4.37 per share).

However, company executives said on their conference call following the release of the results that losses and all notwithstanding, Anchor had accomplished several key objectives during the year, and had recently negotiated agreements with its lenders giving the company covenant relief and increased borrowing capacity (see related story elsewhere in this issue).

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.