LNR sells $300 million 10-years; Oxford announces; Levis Strauss down again

By Paul Deckelman and Paul A. Harris

New York, Oct. 15 - LNR Property Corp. was heard by high yield syndicate sources Wednesday to have sold an upsized $300 million issue of 10-year notes, which firmed slightly when they were freed for secondary dealings. Primary players also noted that Oxford Automotive Inc. - which over the summer pulled a planned $240 million offering, citing market conditions - has revived that planned bond sale and will take it on the road beginning Monday.

In contrast, the secondary market was muted, as the new-deal arena took the spotlight.

The primary market pace picked up Wednesday as a pair of deals priced, including an upsized $300 million issue from Miami Beach, Fla. real estate firm LNR Property Corp.

Meanwhile two new deals prepared to get underway in what sources are characterizing as an exceptionally liquid high-yield market that is seeing new paper price at notably tight levels.

LNR upsized its offering to $300 million from $275 million and priced the 10-year senior subordinated notes (Ba3/B+) at par to yield 7¼%.

The drive-by refinancing deal came at the tight end of the 7¼%-7 3/8% price talk, with Deutsche Bank Securities running the books.

Terms also emerged on Spanish Broadcasting System, Inc.'s sale of $75 million of cumulative exchangeable redeemable preferred shares (Caa2/CCC). It priced at par to yield 10¾%.

Price talk was 10¾%-10 7/8% on the Lehman Brothers-led deal.

Meanwhile two prospective issuers prepared to start marketing new notes to the accounts.

The roadshow starts Monday for Oxford Automotive, Inc.'s $240 million offering of seven-year senior secured notes, which are expected to price on or before Halloween.

Jefferies & Co. is running the deal from the Troy, Mich. supplier of specialized welded metal assemblies and related services.

Oxford Automotive had previously tried to bring an offering of senior secured second lien notes over the summer but pulled its deal on Aug. 19 citing market conditions, making it one of several to bite the dust at that time due to weakness in high yield.

For the previous offering, Oxford had been expected to come to market with between $140 and $170 million of fixed-rate notes due 2011, and between $70 million and $100 million of floating-rate notes due 2008. The notes were to have been sold in units with warrants to buy 2% of the company.

The old deal - which showed up on investors' radar screens the first week in August - was originally shopped around by joint book-running managers Lehman Brothers and Credit Suisse First Boston as a single-tranche of eight-year fixed-rate notes, with no warrants.

Meanwhile the roadshow starts Thursday for Metaldyne Corp.'s $100 million of 10-year senior notes.

Credit Suisse First Boston, Deutsche Bank Securities and JP Morgan are joint bookrunners the deal from the Plymouth, Mich.-based designer and supplier of metal-based components, assemblies and modules for transportation-related powertrain and chassis applications.

Price talk was heard Wednesday on Boise Cascade Corp.'s upcoming $500 million of senior unsecured notes (Ba2/BB+), which the company plans to sell in seven- and 10-year tranches on Thursday.

Talk is 6 5/8%-6 7/8% on the seven-year bullet tranche while the 10-year non-call-five tranche is talked at 37.5-50 basis points behind the seven-year tranche.

Goldman Sachs & Co. is the bookrunner.

Price talk is 9½%-9¾% on NationsRent Cos. Inc.'s planned $225 million of seven-year senior secured notes (B2/BB-), which are expected to price late Thursday via bookrunners Jefferies and Wachovia Securities.

Talk is 11½%-11¾% on Mountain Gods Resort & Casino's $185 million of seven-year notes (Caa1/B), expected to price on Friday via Citigroup.

And talk is 9%-9¼% on National Nephrology Associates, Inc.'s $150 million of eight-year senior subordinated notes (B3/B-), expected to price on Thursday via Banc of America Securities.

On the emerging markets front, Mexican glassmaker Vitro SA de CV sold a downsized issue of $225 million of 11¾% 10-year senior unsecured notes (B2/B-) at 98.556 to yield 12%. The deal was reduced from $250 million.

The deal led by Citigroup and Credit Suisse First Boston came at the wide end of the 11¾%-12% price talk.

Meanwhile Prospect News learned from a market source that an issue of Gazinvest Luxembourg SA, a subsidiary of Gazprombank, is expected to price $300 million of notes due 2008 (Ba2) on Friday via JP Morgan.

And another Russian financial institution, Sberbank, is expected to sell between $500 million and $1 billion of split-rated three-year floating-rate loan participation notes offering by the end of the present week.

Price talk is Libor plus 175-195 basis points.

Moody's rates the notes Baa3. Fitch, meanwhile, rates the offering BB+.

UBS Investment Bank is the bookrunner.

One emerging markets source told Prospect News that the forces at play in the U.S. high yield market are also coming to bear upon emerging markets deals.

"The market just keeps tightening," said the sell-side official. "Spreads in our market look tight but they just keep getting tighter."

This official added that the emerging markets, owing to the large sizes of sovereign issues, is even more liquid that the U.S. high yield, which is held to be phenomenally liquid, itself, at present.

"For many of the issuers you've got benchmark bonds that are $1 billion or $2 billion, or more, in size in many cases," said the sell-sider. "So you've got a lot of liquidity in the emerging markets.

"The corporates market is certainly no more liquid than a high yield corporate bond would be. But the sovereign liquidity helps the corporates a little. For a lot of these issuers the country risk is probably the most volatile of the overall corporate risk. And if you've got a good liquid sovereign market it's easier to price that element of the risk."

When the new LNR Property 7¼% senior subordinated notes due 2013 were freed for secondary dealings, they were heard by traders to have firmed slightly from their par issue price.

"Yeah, they traded a little bit," one said, quoting the new notes as having moved up a bit to 100.25 bid, 100.75 offered, with "better sellers on the break." At another desk, the new bonds were quoted a little wider, at 100.25 bid, 101.25 offered.

Back among the established issues, Levi Strauss & Co. bonds continued to decline for a third consecutive session in the wake of Friday's news that the San Francisco-based blue-jeans maker had told the Securities and Exchange Commission that it had overstated earnings in 2001 by $26 million because of accounting errors on its 1998 and 1999 tax returns.

A trader quoted Levi's 11 5/8% notes due 2008 as having fallen to 80 bid, 81.5 offered level, which he called a point-and-a-half below Tuesday's finish. He saw the company's 12¼% notes due 2012 down half a point at 78.5 bid, while its 7% notes due 2006 were also easier at 75 bid, 77 offered.

Also on the downside, the trader saw Trump Atlantic City Funding's 11¼% first mortgage bonds due 2006 "moving around" at lower levels following the release of September Atlantic City gaming results by New Jersey casino authorities. The Casino Control Commission figures showed that established Atlantic City operators, including Trump A.C.'s corporate parent, Trump Hotels & Casino Resorts Inc., showed a 12% drop in gross revenues, with most of that being siphoned off to the new Borgata mega-resort that Boyd Gaming Corp. and MGM Mirage opened in Atlantic City in July.

"Much of it was Borgata-related, and some of it was weather-related," he said, "but all of it was negative" for the existing casino operators, including Trump. The 111/4s opened Wednesday at 73 bid, 74 offered, well down from their recent levels around 76 bid, 76.5 offered, although the trader saw the A.C.s bouncing off their day's lows to end at 75.25 bid, 76 offered.

Back on the upside, Collins & Aikman Products Co. bonds continued to be buoyed by Friday's announcement by the Troy, Mich.-based automotive components maker that Number-Two U.S. carmaker Ford will buy interior components for its new Futura model from Collins & Aikman - whose investors had been shivering and quivering all of that week amid speculation, sparked by a newspaper story earlier in the week, that Collins & Aikman could lose some, most, or even all of its $1.2 billion of supply contracts with Chrysler, it's best customer.

"They got some good news from Ford," a trader said, "and it gave their bonds a lift" - certainly during Friday's thin, abbreviated pre-Columbus Day holiday session, and to some degrees, on Tuesday as well. But he saw "nothing significant" in the way of movement Wednesday, with the bonds just hanging in at the higher levels to which they had moved on news of the Ford contract - and the realization that Chrysler is not likely to immediately cancel its Collins & Aikman business, which would undermine the Number-Three carmaker's efforts to roll out its all-important new models.

Another trader also saw the Collins & Aikman bonds up perhaps modestly, with its 11½% subordinated notes due 2006 up perhaps as much as a point at 76.5 bid, 77.5 offered, while its 10¾% notes due 2011 were at 87.75, which he estimated to be up about a quarter point to half a point, but on "not so much volatility, because they are senior."

The trader also saw Delta Air Lines paper a little stronger in the wake of the Atlanta-based national carrier's announcement Tuesday of a third-quarter net loss of $164 million ($1.36 a share), sharply narrowed from $326 million ($2.67 a share) of red ink a year earlier.

The carrier also announced that it has sold 11 planes that had been scheduled for delivery in 2005 to an unidentified third party as part of a plan to reduce capital expenditure costs by about $500 million and boost liquidity.

He estimated Delta's 8.30% bonds due 2029 as having risen to 66.5 bid, 67 offered from Tuesday's close at 65 bid, 66 offered. Continental Airlines' 8% notes due 2005 also gained altitude, up a point-and-a-half at 97 bid.

At another desk, a trader said the secondary market remains "very well bid for. Guys were out there looking to buy just about everything under the sun" - even bankrupt credits like Adelphia Communications Corp. The trader cited market talk of some kind of meeting going on as a possible factor giving rise to the bonds, including the 9 7/8% notes due 2007, which were up about three points, to 81 bid. No fresh firm news about the Coudersport, Pa.-based cable operator was seen.

The trader also saw the bonds of rival cabler Charter Communications "firmer as well - but just slightly, nothing crazy." The St. Louis cable company's debt was up a point or so, "maybe up a couple of points in the last couple of weeks."

He saw Calpine Corp bonds "up half a point, nothing crazy," even with the news that the San Jose, Calif.-based independent power generator had sold natural gas reserves to a newly spun off entity, Calpine Natural Gas Trust. Calpine will net $153 million from the deal, which will go to general corporate purposes.

News that Triad Hospitals Inc. withdrew its 2003 and 2004 earnings forecasts, and said it would increase an allowance for doubtful accounts - i.e. uncollectible patient bills - by about $50 million (41 cents a share after-tax) dropped the Plano, Tex.-based hospital operator's shares about 12% on Wednesday, but "the bonds did not react at all," the trader said, quoting its 11% notes holding unchanged at 109 bid and its 8¾% notes at 108.5 bid, "no real change."

This, he declared "is more of an equity story."

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