Gates Global, Envision price in busy session; Gymboree, Toys ‘R’ Us bonds rise despite losses

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., June 12 – The high-volume high-yield primary market saw eight issuers price eight dollar-denominated tranches of notes on Thursday to raise a combined total of $3.31 billion.

Three of the eight tranches were upsized. One such deal was Envision Healthcare Corp.’s $750 million issue of 5 1/8% eight-year senior notes, which was upsized from $650 million.

Four came as drive-bys.

Of the seven that came with price talk, four came at the tight end and three came on top. Among them was Seventy Seven Energy Inc., which priced $500 million of eight-year notes at par to yield 6½%, the tight end of the 6½% to 6¾% yield talk.

The high-yield secondary finished Thursday’s session a bit weaker, but recently priced deals managed to hold their ground.

Gymboree Corp. and Toys ‘R’ Us Inc. reported earnings during the day. Though both companies reported a wider loss for the first fiscal quarter, their bonds actually managed to close in higher territory.

Gymboree bonds, for instance, were up as much as 4 points on the day, while Toys ‘R’ Us put on as much as 5 points. For its part, Toys ‘R’ Us did see a gain in same-store sales.

Gates dual-currency deal

Gates Global LLC and Gates Global Co. priced $1,365,000,000 equivalent of eight-year senior notes (Caa2/B) in dollar- and euro-denominated tranches.

A $1.04 billion tranche priced at par to yield 6%. The yield printed at the tight end of the 6% to 6¼% spread talk.

In addition, Gates Global priced €235 million of notes at par to yield 5¾%. The yield printed 12.5 basis points below the tight end of yield talk in the 6% area.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., UBS Investment Bank and Macquarie Capital were the joint bookrunners for the buyout deal.

Envision drives by

Envision Healthcare priced an upsized $750 million issue of eight-year senior notes (B3/B) at par to yield 5 1/8%.

The quick-to-market deal was upsized from $650 million.

The yield printed on top of yield talk.

Barclays was the lead left bookrunner for the debt refinancing. BofA Merrill Lynch, Deutsche Bank, Goldman Sachs, Citigroup, Jefferies LLC, Morgan Stanley, Natixis Securities Americas LLC, RBC Capital Markets LLC and UBS Securities LLC were the joint bookrunners.

Seventy Seven prices tight

Seventy Seven Energy priced a $500 million issue of eight-year senior notes (B2/B) at par to yield 6½%.

The yield printed at the tight end of the 6½% to 6¾% yield talk.

BofA Merrill Lynch, Morgan Stanley and Wells Fargo Securities LLC were the joint bookrunners.

Seventy Seven Energy, currently named Chesapeake Oilfield Operating, LLC, is being spun off from Chesapeake Energy Corp.

The Oklahoma City-based oilfield services company plans to use the proceeds to make a cash distribution to COS Holdings, LLC, its direct parent, to repay all debt outstanding under the new revolver to be entered into in connection with the spinoff and for general corporate purposes.

Hillman upsizes

Hillman Group Inc. priced an upsized $330 million issue of eight-year senior notes (Caa2/CCC+/) at par to yield 6 3/8%.

The deal was upsized from $270 million as the concurrent term loan was downsized by the same amount, $60 million, decreasing its size to $550 million from $610 million.

The yield printed at the tight end of yield talk in the 6½% area.

Morgan Stanley and Barclays were the joint bookrunners for the buyout deal.

Compass Minerals upsizes

In other Thursday drive-by action, Compass Minerals International, Inc. priced an upsized $250 million issue of non-callable 10-year senior notes (Ba2/BB+) at par to yield 4 7/8%.

The deal was upsized from $200 million.

The yield printed at the tight end of yield talk in the 5% area.

JPMorgan and Goldman Sachs were the joint bookrunners.

The Overland Park, Kan.-based producer of minerals for deicing, agricultural and industrial applications plans to use the proceeds to fund the redemption of its $100 million of 8% senior notes due 2019 and for general corporate purposes.

LMI Aerospace secured deal

LMI Aerospace, Inc. priced a $250 million issue of five-year second-priority senior secured notes (B3/B) at par to yield 7 3/8%.

The yield printed in the middle of the 7¼% to 7½% yield talk.

RBC was the left bookrunner for the debt refinancing. Wells Fargo and SunTrust were the joint bookrunners.

Avanti taps 10% notes

Avanti Communications Group plc priced a $150 million tack-on to its 10% senior secured notes due Oct. 1, 2019 (expected ratings Caa1/B) at 105 to yield 8.575%.

The reoffer price came on top of price talk.

Jefferies was the bookrunner.

Proceeds will be used to partially fund the design, construction, insurance and launch of a new HYLAS 4 satellite.

Chassix taps 9¼% notes

Chassix, Inc. priced a $25 million add-on to its 9¼% senior secured notes due Aug. 1, 2018 at 107.25.

The yield to worst is 6.475%. The yield to maturity is 7.183%.

BofA Merrill Lynch was the bookrunner.

Sanchez talk is 6¼% area

Sanchez Energy Corp. accelerated the timing of its $700 million offering of senior notes due January 2023 (confirmed B3/existing B-) and talked the deal to yield in the 6¼% area.

Books close at 10:30 a.m. ET Friday, and the notes are set to price thereafter. Timing was accelerated, as the roadshow was previously expected to run into the week ahead.

RBC is the left bookrunner. Credit Suisse is the joint bookrunner.

Bibby prices tight

In the European primary market, Bibby Offshore Holdings Ltd. priced a £175 million issue of seven-year senior secured notes (B2/B+) at par to yield 7½%.

The yield printed at the tight end of the 7½% to 7¾% yield talk. Early guidance was in the mid-7% to 8% yield range.

Joint bookrunner Credit Suisse will bill and deliver. Barclays was also a joint bookrunner.

Proceeds will used to repay debt, fund a dividend to the parent company, fund capital expenditures and provide working capital.

Dometic starts Friday

Sweden-based Dometic Group AB plans to start a roadshow on Friday for a €314 million offering of five-year senior PIK toggle notes, according to a market source.

The roadshow wraps up on June 19, and the deal is set to price thereafter.

Joint bookrunner Goldman Sachs will bill and deliver for the debt refinancing deal. Nordea is also a joint bookrunner.

Market edges down

High-yield market indicators were down slightly by the end of Thursday’s session.

One market source deemed the CDX North American High Yield index off a quarter-point at 108 7/16 bid, 108 9/16 offered.

The KDP High Yield index was meantime seen at 74.96, with a 5.08% yield. That compared with Wednesday’s reading of 74.97, with a 5.1% yield.

Recent deals steady

Recent deals remained active but were mostly seen treading water.

From Thursday’s business, Gates Global’s $1.04 billion of 6% senior notes due 2022 were pegged at par ½ by one trader.

The Denver-based company also priced an offering of €235 million 5¾% notes due 2022 during the session.

That trader also saw Men’s Wearhouse, Inc.’s $600 million issue of 7% notes due 2022, a deal that came Wednesday, at 103½ bid, 104 offered, which he said was “about unchanged.”

Among deals from Tuesday’s busy session, DaVita Healthcare Partners Inc.’s $1.75 billion of 5 1/8% notes due 2024 were “still right around” par ¾, a trader said. Another trader said the issue was up a touch at par 7/8, on “pretty good volume.”

Also from Tuesday, iStar Financial Inc.’s $770 million of 5% notes due 2019 were “hovering” around 101, according to one trader.

Another trader said the paper was unchanged at par 7/8.

In addition to the 5% notes, iStar also brought $550 million of 4% notes due 2017.

Gymboree reports wider loss

A trader said Gymboree’s 9 1/8% notes due 2018 were “rallying” after the company reported quarterly results.

He saw the notes closing at “71 and change.”

Another trader called the issue up 4 points, also in a 71 context.

For the first fiscal quarter ended May 3, the San Francisco-based retailer reported net sales of $272 million, down from $292.8 million the year before. Same-store sales were meantime down 10%, including online sales.

Net loss was $13.4 million, compared with a loss of $2.5 million for the same quarter of fiscal 2013.

During the quarter, the company burned through $14.6 million of cash, leaving it with $24.8 million in its coffers.

The company also had $128 million available under its various credit facilities.

Gymboree also provided guidance for fiscal 2014, stating that it expects adjusted EBITDA to stay relatively in line with that seen for the whole of fiscal 2013. The company also said it believes it has sufficient liquidity for the year.

Over the course of the year, Gymboree plans to open about 50 new stores while shuttering 25 to 30 other stores. Capital expenditures are expected to be in the range of $35 million to $40 million.

Toys’ sales improve

Toys ‘R’ Us also put out quarterly results on Thursday, and, like Gymboree, its bonds were faring better despite a wider net loss.

One trader said the 7 3/8% notes due 2018 were up 3 to 4 points, trading around 76. Another market source pegged that issue at 78 bid, up 5 points on the day.

Yet another trader called the 10 3/8% notes due 2017 up almost half a point at 84.

For the quarter ended May 3, the Wayne, N.J.-based toy retailer posted consolidated net sales of $2.5 billion, a 2.9% gain year over year. Domestic same-store sales rose 4%, while international sales increased 1%.

Net loss was $196 million, versus a loss of $111 million the year before.

At the end of the quarter, the company had $1.5 billion of liquidity, including $372 million of cash and equivalents and $1.1 billion available under a committed line of credit.

Logan’s loses ground

In another consumer-driven sector, Logan’s Roadhouse Inc.’s 10¾% notes due 2017 gave back some of the gains incurred at midweek.

A trader called the issue down half a point at 81¾. Paper had been up about that much the day before after the parent company, LRI Holdings Inc., released its earnings.

For the fiscal third quarter ended April 27, LRI Holdings reported net sales of $169.12 million, down 3.3% year over year. Net loss widened to $1.73 million from $515,000 the year before.

Adjusted EBITDA came to $17.24 million, versus $21.38 million the year before.

Comparable-restaurant sales fell 3.2%, but the average check increased 3.9%. Customer traffic was down 6.8%.

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