Chiquita, Wolverine, Le-Nature's bonds bounce; Freescale to hit road

By Paul Deckelman and Paul A. Harris

New York, Nov. 3 - Chiquita Brands International Inc.'s bonds were seen bouncing back from their lows Friday, traders said, after being pushed down in late trading on Thursday after the Cincinnati-based banana importer reported a worse-than-expected third-quarter loss.

Also moving to the upside were the bonds of Wolverine Tube Inc., which had lost ground earlier in the week when the company raised the specter of a possible pre-packaged Chapter 11 bankruptcy filing.

And the bonds of Le-Nature's Inc. - which were absolutely beaten senseless around mid-week, plummeting down to the single-digits from prior levels around par bid on revelations of what observers are terming potential massive fraud - also improved. Traders cited the Latrobe, Pa.-based beverage company's move to convert an involuntary Chapter 7 bankruptcy petition filed by disgruntled shareholders seeking its liquidation into a more mainstream Chapter 11 reorganization proceeding.

A high yield syndicate official said that the broad market was firmer again on Friday, and added that junk had opened firm and was better bid.

In the primary arena, no new domestic issues were heard to have priced Friday. But Freescale Semiconductor Inc. was seen getting ready to hit the road Monday to market Its humongous ($5.95 billion equivalent) multi-tranche offering of new debt, being sold in connection with the Austin, Texas-based computer chip maker's upcoming leveraged buyout deal.

Rental Services Corp. will also open a roadshow - this one on Wednesday - for its $620 million issue of eight-year notes.

Big NRG deal may be ahead

And another potentially big bond deal - of yet indeterminate size - appeared on the horizon Friday, as NRG Energy Inc. announced a wide-ranging series of financial transactions built around a re-set of the company's existing power and gas hedges at its NRG Texas unit.

Most of the $1.3 billion cost of the re-set will be financed with new unsecured debt; however, executives of the Princeton, N.J.-based power producer were not saying yet whether it will be in the form of new bonds, additional bank debt, or some combination. More details are expected during the upcoming week.

While NRG's New York Stock Exchange-traded shares jumped $4.82 (9.98%) to close at $53.13, on volume of nearly 13 million shares, about 6½ times the norm, buoyed by plans for an increase in the company's stock buyback program, bond investors held their applause, sobered by the prospect of more than $1 billion of new debt, of whatever variety, being piled on.

A trader said NRG's existing bonds "didn't do much," with its 7¼% notes due 2014 at 101.25 bid, 101.75 offered, lower and tighter than their previous 101.5 bid, 102.5 offered level. Its 7 3/8% notes due 2016 were "a smidgen weaker," also at 101.25 bid, 101.75 offered.

Another trader saw those 71/4s ending at that same level, declaring that "they went up and down in a range" of about ½ point, before easing to their closing level.

A market source at another desk saw the 7 3/8s down ½ point at 101.5 bid.

Moody's Investors Service meantime changed the outlook on the company's Ba3 corporate family rating and B1 senior unsecured rating to negative from stable.

""While the rating affirmation incorporates the increase in near-term cash flow and the reduction in cash flow volatility following the reset and extension of power and gas hedges, the negative outlook considers the $1.1 billion of permanent indebtedness added to the capital structure at a time when share repurchases and future capital requirements have increased and are expected to stay at an elevated level," Moody's declared.

New MediMedia continues firming

Among other bonds linked to the new-issues market, MediMedia USA's new 11 3/8% senior subordinated notes due 2014 - which priced at par on Thursday and which then firmed smartly to levels above 102 bid when they broke - were seen up a bit more on Friday to 102.5 bid, 103.5 offered.

A trader saw Idearc Inc.'s 8% senior notes due 2016, which priced at par Wednesday and then pushed up to around the 101.5 level, pretty much hanging in there at around 101.25 bid, 101.75 offered.

"The new-issue market is very receptive," he said, although he noted that "there's a big calendar ahead. We'll see what happens."

The 'strange' rise of HCA

Even so, he saw HCA Inc.'s outstanding bonds continuing to rise - even though the Nashville-based industry-leading hospital operator is getting set to dump some $5.7 billion of new secured paper on top of those existing bonds, shoving them further down the capital structure food chain.

Echoing sentiments heard earlier in the week at other desks, the trader called this rise "strange," as he quoted the company's benchmark 6½% notes due 2016 as having firmed to about 81 bid, 82 offered, up a point on the session.

The company's existing bonds, he suggested, "still have got a decent yield to them, and people want to put cash to work."

HCA, he continued, "is not really a bad credit," certainly when compared to more troubled sector peers like Tenet Healthcare Corp. "It's actually a pretty good one," rated at Ba2 by Moody's Investors Service, B- by Standard & Poor's and BB+ by Fitch Ratings.

But, "who knows?" he shrugged. With a big new deal coming, to which the existing bonds will be structurally subordinated, "they really should be weaker."

Chiquita bounces back

Back among the existing issues, a trader saw Chiquita's 7½% notes due 2014 at 85 bid, 86 offered, up from late-Thursday levels at 84.625 bid, 85.625 offered. Its 8 7/8% notes due 2015 were likewise ½ point higher at 89.25 bid, 90.25 offered. Both of those bonds had fallen about 1½ to 2 points on Thursday after the company turned in much worse than expected third-quarter numbers.

A trader at another shop saw Chiquita bouncing 2 points on the session, with the 71/2s moving up to 86 bid, 87 offered, and the 8 7/8s at 90 bid, 91 offered.

The company's results, reported as trading was wrapping up for the day on Wednesday, were considerably worse than Wall Street had expected. It lost $96 million ($2.29 a share) for the third quarter versus a profit of $300,000 (one cent a share) a year ago, even as revenue increased 8% to $1 billion from $954 million last year. Revenues were in line with expectations - but analysts had only forecast a loss in the 28 cents per share area.

Chiquita blamed reports of tainted spinach, which hurt its Fresh Express packaged salad business, and depressed banana prices in Europe.

Dead cats bouncing around

Also on the comeback trail, the second trader said, was Wolverine Tube, although he attributed the rise in the Huntsville, Ala.-based tubular metal products producer's 10½% notes due 2009 to the proverbial "dead-cat bounce."

While the notes firmed 2 points on the session to 82 bid, 83 offered, they were still down 4 points from where they were at the beginning of the week.

Wolverine's bonds, and its shares as well, fell sharply on Wednesday after the company warned that it might consider a pre-packaged Chapter 11 filing if its current exchange offer and consent solicitation to the holders of those bonds is not completed.

Wolverine said in a filing with the Securities and Exchange Commission that a pre-packaged Chapter 11 filing to facilitate its restructuring plan would be under consideration if some conditions to its planned exchange offer and consent solicitation are not met. Its S-4 registration statement for the exchange offer and consent bid also included a solicitation for a pre-packaged Chapter 11 plan.

It said the pre-packaged plan would provide "substantially the same consideration" to the senior noteholders as the exchange offer and consent solicitation.

The company stressed in its statement that "we are still continuing to explore a range of alternatives, and no decision has been made on which course of action the company will ultimately take."

It also said that its liquidity is "sufficient" to sustain its operations in the near- to mid-term.

Le-Nature's firms off week's lows

Le-Nature's' 9% notes due 2013 were seen having nearly doubled in price - albeit from extremely low beginning levels - on the news that the turnaround company running the troubled beverage manufacturer following the court-mandated removal of its top management filed a motion with the U.S. Bankruptcy Court in Pittsburgh, seeking to convert the involuntary Chapter 11 petition filed against the company by several small creditors seeking its liquidation into a standard Chapter 11 reorganization proceedings.

A trader saw those notes push up to 14.5 bid, 15.5 offered from day's-low levels at 8.5 bid, 9.5 offered, and from Thursday's finish at 9.25 bid, 10.25 offered.

Another trader saw the bonds at 14.5 bid, 16.5 offered - well up from Thursday's close at 7.5 bid, 8 offered.

Considering that the bonds had been around par earlier in the week, the credits movements were still "a full-fledged disaster," the second trader said.

Week's issuance tops $6.3 billion

Meanwhile the primary market, trailing a Wednesday session that was the second biggest of the year in terms of dollar amount of issuance priced, closed out the October-November crossover week in a quiet fashion.

Greentown China Holdings Ltd., a mainland China property developer, priced a $400 million junk-rated Rule 144A issue of eight-year senior unsecured notes.

The notes (Ba2/BB) priced at par to yield 9%, on the tight end of the 9 1/8% area price talk.

JP Morgan and UBS were joint managers for the land acquisitions- and development costs-funding and general corporate purposes deal.

Tallying the Greentown transaction, the October-November bridge week saw $6.335 billion price in 10 dollar-denominated tranches, topping the previous week's $4.30 billion, also in 10 dollar-denominated tranches.

It is noteworthy that the Wednesday, Nov. 1, session - the year's second biggest day at $5.032 billion of issuance - saw a $2.85 billion tranche of 8% notes due 2016 priced by Idearc, a new public company formed by the spin-off of Verizon Communications Inc.'s directories businesses. Sources are calling it the biggest tranche ever to clear the junk market, topping NRG Energy Inc.'s $2.4 billion tranche of 7 3/8% senior notes due Feb. 1, 2016, which priced on Jan. 26, 2006.

At the Friday close, year-to-date dollar-denominated issuance stood at slightly more than $116.7 billion in 316 tranches, as 2006 issuance is now more than 40% higher than that of 2005 on a year-over-year basis.

At the Nov. 3, 2005 close the market had seen $83.3 billion priced in 326 dollar denominated tranches.

Freescale launches $5.95 billion

Meanwhile on Friday the forward calendar ballooned above the $14 billion mark for deals that are in the market.

With HCA Inc. expected to price $5.7 billion during the Nov. 6 week, Freescale Semiconductor Inc. showed up with an even bigger deal that is expected to price the following week.

Issuing via an entity formed in order to finance the LBO, Firestone Acquisition Corp., Freescale will begin a U.S. roadshow on Monday for a $5.95 billion equivalent multi-tranche offering.

The deal will be comprised of $4.35 billion equivalent of eight-year dollar-denominated and euro-denominated senior notes (B1/B) that will come in floating-rate, fixed-rate and PIK tranches.

There will also be $1.6 billion equivalent of 10-year dollar- and euro-denominated senior subordinated notes (B2/B).

A European roadshow is scheduled to begin later in the week for the deal, which will help finance the LBO by a private equity consortium led by The Blackstone Group and including The Carlyle Group, Permira Funds and Texas Pacific Group.

Rental Services plans $620 million

Rental Services Corp. also launched a deal on Friday.

The Scottsdale, Ariz., equipment rental company will begin a roadshow on Wednesday for its $620 million offering of eight-year senior notes, via Deutsche Bank Securities and Citigroup.

Proceeds will be used to fund the acquisition of the company by Ripplewood Holdings and Oak Hill Capital Management.

PIK notes from GNC

Also on Friday GNC Corp./GNC Parent Corp. launched a $325 million offering of five-year floating-rate PIK notes via JP Morgan and Goldman Sachs.

The Pittsburgh-based nutritional supplements firm will use the proceeds, together with cash on hand, to repay debt and fund a dividend.

The week ahead

Nearer at hand, market watchers are keeping a close eye on the above-mentioned Hercules Holding II/HCA Inc., $5.70 billion three-part deal via Citigroup, Bank of America Securities, JP Morgan, Merrill Lynch, Deutsche Bank Securities and Wachovia Securities.

Sources have told Prospect News that the deal, now on the road, is doing well.

It is comprised of $4.2 billion of senior secured second-lien notes with expected maturities in 2014 and in 2016, and $1.5 billion of senior second-lien "toggle" notes expected to mature in 2016.

Proceeds will be used to help fund the LBO by Hercules, a consortium comprised of Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and company founder Thomas F. Frist Jr.

Bombardier expected

Also expected to price during the Nov. 6 week is the Bombardier Capital Funding LP/Bombardier Inc. €1.8 billion equivalent three-part notes offering (Ba2/BB).

Deutsche Bank Securities, JP Morgan and BNP Paribas are in the lead.

The tranches include euro-denominated seven-year senior floating-rate notes, non-callable for two years, dollar denominated eight-year fixed-rate senior notes, non-callable for four years, and euro-denominated 10-year fixed-rate senior notes, non-callable for five years.

A buy-side source told Propect News that the debt refinancing deal may come with a larger amount of dollar issuance than the company had initially contemplated. The source, who spoke on Thursday, said that the structure of the deal remains in play.

Also in the market with deals expected to price in the Nov. 6 week are:

• Britannia Bulk Plc with $215 million offering of seven-year senior secured notes (B3/B-), via Jefferies. Talk is for a yield of 10¾% to 11%, with pricing expected on Tuesday;

• Sally Holdings LLC (Sally Beauty Co.) with a $710 million two-part offering via Merrill Lynch, Banc of America Securities, JP Morgan and Morgan Stanley;

• Australia's Griffin Coal Mining Co., with $400 million of 10-year senior notes (Ba2/BB-) via Merrill Lynch;

• NCO Group Inc. with a $365 million two-part offering via Morgan Stanley, JP Morgan and Banc of America Securities;

• Conexant Systems, Inc. with a $250 million offering of four-year floating-rate senior secured notes (B1/B+), via JP Morgan; and

• Gateway Telecommunications plc, which is headquartered in London and in Johannesburg, South Africa, and is in the market a $100 million offering of seven-year senior secured notes (B3/B) via Citigroup.

Barring surprises - which of course cannot be barred -the market expects to see just shy of $7.750 billion of bonds price before Friday's close.

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