Station Casinos brings upsized quickie deal; Bally stabilizes; funds see $135 million inflow

By Paul Deckelman and Paul A. Harris

New York, March 4 - Like a gambler who feels he's got the hot hand and Lady Luck is sitting on his lap, Station Casinos Inc. continued to play the high-yield market Thursday with an upsized, quickly shopped offering of eight year notes - its second visit to the bond market this week, after Monday's small add-on deal, and its third foray into junkbond land in two weeks, including the $350 million 12-year deal which the Las Vegas casino operator brought to market on Feb. 24. Other issuers coming to market Thursday included J.B. Poindexter & Co., Global Cash Access LLC, and NYMagic Inc.

In the secondary market, Levi Strauss & Co. was the big gainer of the day, continuing to rebound from its recent lows. Bally's Total Fitness Holding Corp., which had stumbled badly over the previous two sessions, seemed to stabilize, with its senior notes not deteriorating any further and its subordinated paper off just a bit further - certainly nothing like the sharp decline of the two previous sessions.

Late in the day, market participants familiar with the high yield mutual fund flow numbers compiled weekly by AMG Data Services of Arcata, Calif. told Prospect News that in the week ended Wednesday $134.7 million more came into the junk funds than left them, reversing the trend seen the prior week (ended Feb. 25), when a net inflow of $392.151 million had been recorded, counting only those funds which report on a weekly basis and excluding distributions.

Even though the funds make up only part of the total assets in the high yield universe - other money sources include insurance companies, pension funds, endowments and retail investors - their behavior is viewed by many in the market as a reliable indicator of overall liquidity trends in the junk market.

Despite the latest week's upturn in the closely followed figures, and even though net inflows have now been seen in six weeks out of the nine since the start of the year, the cumulative, year-to-date funds flow number is negative, with $1.263 billion more having left the funds than come into them since the start of the year, although that number narrowed from $1.398 billion the week before.

After having started out the year the way 2003 had ended up - with a series of weekly inflows - the tide turned in early February, when outflows of more than $1 billion were recorded in two consecutive weeks, completely wiping out the cumulative gains for the new year and establishing negative momentum. Since then, the flows have been choppy, with up and down weeks alternating.

Expecting something more

As news of the inflow circulated the market one sell-side source said that judging by what appears to be a vigorous appetite for refinancing deals, ("I mean, just look at all these deals on the calendar!") investors continue to have cash to put to work. And it would be a reasonable hunch that they saw some come in over the past seven days.

Nevertheless, the number reported Thursday by AMG is kind of flat, the source added.

"I certainly thought it would be bigger than this," said the official.

Another sell-sider opined "There's not much to say about a number like this. Right now the funds flow data just don't give you a very clear indication about the sentiment in this market."

Station Casinos makes 4th pass of 2004

With the year scarcely more than two months old Las Vegas gaming and entertainment firm Station Casinos Inc. has been making itself a fixture in the 2004 new issue market.

The company brought its fourth deal of the year, an upsized $450 million of 6% eight-year notes that priced at 99.603 in a Thursday drive-by to yield 6.063%, within the 6% area talk.

Deutsche Bank Securities, Banc of America Securities and Lehman Brothers ran the books.

That brings the company's total issuance for the young year of 2004 to $1.25 billion.

Beginning Jan. 15 Station Casinos priced an upsized $400 million issue of 10-year senior subordinated notes (B2/B+) at par to yield 6½%, via Banc of America Securities and Deutsche Bank Securities.

Then at the beginning of this week the company priced a $50 million add-on to that issue (also B1/B+) at 100.50, resulting in a yield of 6.417%.

Banc of America Securities ran the books for the add-on.

In the interim, on Feb. 24 Station Casinos Inc. did another drive-by: $350 million of 12-year senior subordinated notes (B1/B+) which priced at par to yield 6 7/8%.

Banc of America Securities, Deutsche Bank Securities and Lehman Brothers ran the books on that issue.

All four deals were done to refinance debt.

Global Cash, Poindexter, NYMagic sell

In addition to Station Casinos, three other issuers completed transactions during Thursday's session.

Global Cash Access, LLC sold $235 million of eight-year senior subordinated notes (Caa1/B-) at par to yield 8¾%.

Banc of America Securities ran the books for the Las Vegas firm, which makes systems to keep cash flowing on casino floors.

The print on the new bonds was tight to the 8¾%-8 7/8% talk, which had been revised inward on Wednesday from 8 7/8%-9 1/8%.

Also on Thursday J.B. Poindexter & Co. sold $125 million of 10-year senior notes (B1/B-) at par to yield 8¾%, at the tight end of the 8¾%-9% price talk.

JP Morgan ran the books for the deal from the Houston-based manufacturer of truck bodies and other truck-related products.

And New York City-based insurance holding company NYMagic priced $100 million of 6½% 10-year senior notes at 99.763, to yield 6.533%, via bookrunner Keefe Bruyette & Woods.

Standard Commercial likes its chances

The roadshow starts Monday in Europe for Standard Commercial Corp.'s $150 million of eight-year senior notes, according to Robert Sheets, the company's chief financial officer.

A U.S. roadshow beings on March 18, Sheets added, declining to specify when the roadshow would end or when the deal would price.

Deutsche Bank Securities will run the books on the Rule 144A transaction.

In a Thursday conversation with Prospect News, Sheets said that the Wilson, N.C. independent leaf tobacco dealer likes its chances in the present high-yield new issue market.

"The high-yield market remains relatively attractive, as it has been for some time," he said, noting that the 10-year Treasury, mid-afternoon, stood at 4%.

Talk heard on five deals

Price talk echoed through the halls of the investment banks Thursday on a fistful of deals that are among the offerings that remain to be priced before Friday's close.

Talk of 9¾%-10% was heard on Cellu Tissue Holdings' planned $160 million of six-year senior secured notes (B2/B), expected to price on Friday afternoon via JP Morgan.

The price talk is 8 1/8%-8 3/8% on Clondalkin Industries BV's €170 million of 10-year senior notes (B3/B-), expected to price Friday in London. Deutsche Bank Securities, Barclays Capital and Lehman Brothers are joint bookrunners.

The talk is 6%-6¼% on Evergreen Resources, Inc.'s upcoming $200 million of eight-year senior subordinated notes (Ba3/BB-), expected to price on Friday morning, with Goldman Sachs & Co. in the lead.

Price talk of 11¼%-11½% emerged on an up to $121.7 million of seven-year senior secured notes offering by Mrs. Fields Famous Brands LLC and Mrs. Fields Financing Co. The Jefferies & Co. deal is expected to price late Friday or early Monday.

Finally, price talk of 6¾% area emerged Thursday on Trinity Industries, Inc.'s $300 million of 10-year senior notes (BB-), expected to price on Friday afternoon, via JP Morgan and Credit Suisse First Boston.

New issues trades well

When the new J.B. Poindexter 8¾% senior notes due 2014 were freed for secondary dealings, they were quoted as having moved up to 102.5 bid, 103 offered, well up from their par issue price earlier in the session.

"The new issues seem to be doing a lot better," said a trader, who quoted Global Cash Access' new 8¾% senior subordinated notes due 2012 having risen to 102.5 bid. 103.5 offered from their par issue price. He saw Herbalife's 9½% senior notes due 2011, which had priced Wednesday at par, "holding up well" at 102.75 bid, 103.75 offered, actually up slightly from the levels they had finished at after having broken on Wednesday.

And he noted that Station Casinos' upsized 6% senior notes due 2012 had managed to firm a bit from their par issue price, going home at 100.5 bid, 101 offered, while another trader pegged the new bonds at a narrower 100.625 bid, 100.875 offered.

He meanwhile saw the new Friendly Ice Cream Corp. 8 3/8% senior notes due 2012, "holding their own" at 101.76 bid, 102. 5 offered; the Wilbraham, Mass.-based ice cream maker's bonds had priced at par on Wednesday.

He also saw Visteon Corp.'s 7% notes due 2014, which had priced Wednesday at 99.957, as being offered at 100.75 bid. He saw the company's existing 8¼% notes due 2010 offered at 111.

Station Casinos' existing 8 3/8% senior notes due 2008, which are to be taken out via a tender offer announced Thursday, funded with the proceeds from its new bond sale (see Tenders and Redemptions elsewhere in this issue) were seen having moved up about a point-and-a-half to 109.25, the level at which the company will buy those bonds tendered before the offer's consent deadline.

Bally seniors up a little

Among existing issues not linked to the new-deal market, Bally Total Fitness Holdings 10½% senior notes due 2011, which had slid into the mid 80s Wednesday from prior levels in the 90s, were actually quoted up a point, at 86 bid, 87 offered at one shop, although it was seen essentially unchanged from Wednesday's close at other desks. Bally's 9 7/8% subordinated notes due 2007, were quoted by one trader "still falling a bit," offered at 71.5, down from Wednesday's 72.75 bid, 73.75 offered. It was his opinion that the fall in the senior notes was overdone, and that "people feel more comfortable with the seniors."

The Chicago-based fitness center operator's bonds and shares had nosedived in the previous session over apparent investor angst over the company's failure so far to release its fourth-quarter and full year numbers; in previous years, they had usually been released around mid-February.

Some posters on investment-related internet bulletin boards opined that perhaps the numbers to be reported were less than stellar, causing management to want to hang back, although legally the company has to report by March 31, come what may.

Bally itself did nothing to calm investor nerves on Thursday, making no statements as to when it plans to release the results; several phone calls from Prospect News to company officials were not returned.

Retailers's sales

Elsewhere, a number of retailers came out with comparable-store sales numbers for February, with Gap Inc. posting a 12% sales gain in stores open at least a year, almost triple the 4.2% analysts were looking for. J.C. Penney comparable-store sales were also up some 12%, double the 6% Wall Street had projected.

Gap's 8.15% notes due 2005 were quoted offered at 112.25 bid, while its 8.80% notes due 2008 were offered at 124.5 and its 6.90% notes due 2007 were at 110.25 bid, 100.75 offered. The trader did not know how those levels stacked up to where the company's bonds had lately been trading.

Meantime, J.C. Penney bonds were heard up one-eighth to one-quarter point on the session, the Plano, Texas-based department store operator's 7.60% notes due 2007 a quarter-point better at 111 bid, 112 offered, and its 6 7/8% notes due 2015 likewise a quarter better at 108 bid, 110 offered.

Great Atlantic & Pacific Tea Co. Inc. bonds were higher, a trader said, attributing it to favorable numbers the Montvale, N.J. -based supermarket operator recently released. He saw A&P's 7¾% notes, "which are in demand," trading up to 93 bid, a point better.

Levi rises again, Delco up

Levi Strauss bonds, which on Wednesday had moved up solidly into the low 70s from prior levels in the upper 60s, were seen up about another point or so again to levels around 73 bid on its 7% notes due 2006, with the San Francisco-based blue jeans maker's other bonds also improved in a similar context.

On the earnings front, Delco Remy International Inc.'s fourth-quarter numbers were good, with the Anderson, Ind.-based maker of automotive electrical components posting 2003 adjusted EBITDA of $27.7 million, up 62.9%, on a net sales increase of 4.2% to $261 million. A year earlier, it had EBITDA of $17 million and net sales of $250.5 million.

Delco Remy's 11% notes traded up to 106.5 bid, from prior levels at 105.5, while its 8 5/8% notes due 2007 moved up a point to 103. Its 10 5/8% notes scheduled to mature later this year and currently callable at par, traded at 101.75, a trader said, "so that name had a pretty decent day."

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