Cablevision long paper plunges on buyout news; Amkor up on filing; Cricket/Leap to sell $750 million

By Paul A. Harris

St. Louis, Oct. 10 - The broad high-yield markets was as much as a quarter of a point higher trailing the three-day Columbus Day weekend, sources said, noting that the firmness was despite a sell-off in government paper.

News that the Dolan Family Group plans to sell $2.81 billion in high-yield bonds and place $9.55 billion of new bank debt to back its proposed buyout of Cablevision Systems Corp., caused Cablevision's existing long paper to trade sharply lower. However late in the session some sources saw buyers, and were marking the paper up from its intra day lows.

Elsewhere tamer heads appeared to be taking the wheel in the bond market trailing Amkor Technology Inc.'s filing of its restated 2005 and first-quarter 2006 reports with the Securities and Exchange Commission, after delaying because of a stock options investigation being conducted by the SEC.

Traders and other sources saw some improvement in Amkor's existing debt on Tuesday.

A high yield syndicate official said that the broad market had traded flat on Tuesday, with some of the higher-rated issues "up a tad."

Meanwhile in the primary market, no dollar-denominated or euro-denominated issues were priced. However Leap Wireless International, Inc. operating subsidiary, Cricket Communications, Inc., launched a $750 million offering of new junk.

Cablevision kindles leverage jitters

The announcement of the Dolan Family Group's plans to bring $2.81 billion in new junk and $9.55 billion in new bank debt to back its proposed buyout of Cablevision sent the Bethpage, N.Y., telecommunications company's existing paper down, although it may have regained a little traction as the Tuesday session wore on.

Late in the morning a trader spotted Cablevision's 7 5/8% notes due 2018 down 6 points at 96.75 bid, 97.75 offered.

"Obviously people are reacting to a huge potential increase in leverage," the source said, but added that Cablevision's post-buyout leverage situation may not turn out to be quite as dire as some of Tuesday's early sellers were fearing.

Later in the day another trader spotted the same issue at 99.25 bid, 100.25 offered, and marked it down 5 points, noting that buyers appeared to have surfaced.

At the close, another trader saw the company's 7 5/8% notes due 2011 "hanging in" at 100 bid, 101 offered, actually up ½ point on the session.

However, this source added, the above-mentioned 7 5/8% due 2018 had gotten beat up, closing at 98.50 bid, 99.50 offered.

This source said that the 2018 bonds had traded as low as 94 bid, 95 offered on Tuesday, but also said that late buyers had apparently come on the scene.

An hour after the close yet another trader spotted the pummeled 7 5/8% notes due 2018 at 98 bid, 99 offered going out, down from 102.25 bid, 103.25 offered before the news. This source added that earlier in the day the 2018 paper had been ½ point weaker than that.

The trader also saw the Cablevision 7 5/8% notes due 2011 at 99.50 bid, 100.50 offered, and added that they had been 102.25 bid, 103.25 offered before the buyout news.

Later still a market source said that the Cablevision 7 5/8% notes due 2018 were at 98.25 bid, 99.25 offered, down 4 points on the session.

Cablevision's proposed debt

In Monday's SEC filing, Cablevision disclosed that the $2.81 billion of bonds will be issued at three entities: Super Holdco will sell $1.13 billion of unsecured senior fixed- and floating-rate notes that mature at least 10 years out. Intermediate Holdco will sell $900 million unsecured senior fixed- and floating-rate notes that mature at least eight years out. And, Rainbow Programming Holdings LLC will sell $780 million unsecured senior fixed- and floating-rate notes that mature at least eight years out.

The proposed buyout financing also includes $9.55 billion in new bank debt via Merrill Lynch and Bear Stearns.

Under the proposed transaction, Cablevision stockholders would receive $27 per share in cash. The proposal values the total equity of Cablevision at approximately $7.9 billion and implies an enterprise value of approximately $19.2 billion.

The Dolan Family said it would also finance the deal by investing all of its shares in the company, which would have a value of approximately $1.7 billion.

Amkor filing buoys bonds

Meanwhile Amkor Technology's filing of its restated 2005 and first-quarter 2006 reports with the SEC, after a delay because the SEC is investigating Amkor because of a stock options issue, provided some lift for the Arizona-based semiconductor company's existing debt.

One source, early in the afternoon, saw Amkor's 9¼% notes due 2008 at 99.50 bid, 100.50 offered, after they had been as low as 93.50 bid, 94 offered last week.

The trader noted that absent the filing, which came on Monday, Amkor would have been in default, and added that some bondholders had been demanding an immediate payment of debt.

Late in the afternoon a trader acknowledged that Amkor's filing had moved the bonds in a positive direction.

This source spotted the semiconductor company's 7 1/8% notes due 2011 closing at 91 bid, 91.50 offered, after opening the session at 90 bid, 91 offered, and so up ½ point on the day.

Meanwhile Amkor's 7¾% notes were going out at 90.25 bid, 90.75 offered, also up ½ point.

And the 9¼% notes due 2016 finished 93.50 bid, 94.50 offered, up ½ point as well.

Later another trader, commenting that Amkor's paper was generally ½ point better, reported seeing a lot of trading "around 94" in the 9¼% notes due 2016, and spotted them going out at 93.25 bid, 94.25 offered.

This source also had the 7 1/8% noted due 2011 closing at 91 bid, 92 offered, up about ½ point.

Solo loans up, bonds lower

A trader said that Solo Cup's bonds sold off on Tuesday as the company is seeking to waive financial covenants including leverage covenants and financial reporting covenants for the second, third and fourth quarters of 2006, and will increase pricing on its revolver.

The source added that Solo would look to put in place more permanent changes to its credit facility early in the new year.

The source also noted that last month the company announced that that it would have to restate its financials.

This trader said that Solo Cup's 8½% bonds due 2014 closed Tuesday at 83.50 bid, 84 offered, and noted that late last week they were at 86 bid, 87 offered.

However, the source added, the company's term loan improved to 100.375 bid, 100.75 offered on Tuesday, trailing a Friday call petitioning lenders for the covenant waivers in return for increasing pricing to Libor plus 325 basis points.

Late last week, the source said, the term loan was seen at 99.75 bid, 100 offered.

The bank debt did better at the expense of the bonds, the trader asserted.

Knock on (soft)wood

News that the Canada-U.S. Softwood Lumber Agreement will take effect before the end of this week, rather than on the previously expected November start date - circumventing some nettlesome litigation - sparked improvement in the distressed paper of Tembec Inc., a trader said.

The source saw Tembec's 8½% notes due 2011 up 1½ points on the day at 52 bid, 53 offered.

The recent issues

New bonds from NXP and Peabody Energy Corp. which sold during last Thursday's massive primary market session were seen mixed in Tuesday trading.

NXP's new 7 7/8% secured notes due 2014, which priced at par in a $1.026 billion tranche on Thursday, were seen Tuesday at 101.75 bid, 102 offered, up strongly on the day, according to one trader.

Another trader saw the 7 7/8% notes offered at 101.875, but saw no bid.

A market source said that the NXP 7 7/8% notes due 2014 had gone out at 101.50 bid, 102 offered, up ¼ on the day.

As to NXP's dollar-denominated Libor plus 275 basis points secured notes due 2013 which priced at par in a $1.535 billion tranche, a trader saw them Tuesday at 101 bid, 101.50 offered.

Another source, after the close, gave exactly the same levels on NXP's secured floaters, and marked them unchanged on the day.

However this source saw NXP's dollar-denominated 9½% unsecured notes due 2015, which priced at par in a $1.250 billion tranche last Thursday, at 100.50 bid, 101 offered, down 1/4, on Tuesday.

Also pricing notes during last Thursday's primary market session - the biggest thus far in 2006 - was Peabody Energy Corp., which sold a tranche of 7 3/8% notes due 2016 at par Thursday in a $650 million tranche.

One source marked Peabody's new notes maturing in 2016 at 101.50 bid, 102, offered, unchanged on Tuesday.

A trader saw the Peabody 7 3/8% due 2016 at 101.625 bid, 102.375 offered, up about ½ point on the session.

However these two sources were in agreement that Peabody's new long-dated bonds, the 7 7/8% notes due 2026 which priced at 98.753 in a $250 million tranche last Thursday, had seen some price erosion on Tuesday.

The trader said that the Peabody 2026 notes had been struggling along with the longer-dated Treasuries, and would close Tuesday at 100 bid, 100.50 offered

"They trade with Treasuries, and the long bond is off about ¾ point," the trader commented.

Meanwhile a market source saw the long Peabodys at 99.25 bid, 99.75 offered on Tuesday - down a quarter.

Cricket leaps in

In the ultra-quiet Monday primary market, Cricket Communications, Inc., the operating subsidiary of Leap Wireless International, Inc., launched a $750 million offering of eight-year unsecured senior notes (Caa2/CCC).

Citigroup, Goldman Sachs, Morgan Stanley, Banc of America Securities and Deutsche Bank Securities are joint bookrunners for the debt refinancing and general corporate purposes deal from the San Diego-based wireless communications provider.

Elsewhere South Carolina-based glass fiber manufacturer, AGY Holding Corp., will begin a roadshow on Wednesday for its $175 million offering of eight-year senior second lien notes (expected ratings B2/B-).

UBS Investment Bank has the books for the debt refinancing deal.

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