Thompson Creek Metals to sell notes; Savanna Energy plans roadshow; Valeant, Nortel better

By Cristal Cody

Prospect News, May 9 - The Canadian bond markets were generally quiet across the high-grade and high-yield sectors, though a couple of new deals appeared to be in the works, according to sources on Monday.

Canadian mining operation Thompson Creek Metals Co. Inc. launched a roadshow on Monday for a $300 million offering of senior notes due 2018.

Also, sources say a potential deal may follow from Savanna Energy Services Corp., which has appointed TD Securities Inc. and RBC Capital Markets Corp. as hosts for roadshow luncheon presentations.

"There're another two names looking to come to market, so there's three deals possible in the next week," a source said Monday.

Elsewhere in Canada, Valeant Pharmaceuticals International Inc. reported a $6.5 million profit in the first quarter, compared to a loss of $3.1 million last year. The company's notes traded up but on minimal activity, a source said.

"The market is very close to unchanged today - incredibly low activity today," the bond source said, noting "not much stuff traded."

For the most part, distressed action consisted of the "same old names," another trader said, such as OPTI Canada Inc., which was not much changed on the day.

However, Nortel Networks Corp. was somewhat busy and better. A trader opined that the bonds experienced gains because both are in the "late-stage arbitrage" phase of their bankruptcy cases.

In other secondary activity, Catalyst Paper Corp.'s 7.375% notes ended where they went out on Friday, a trader said.

Canadian government bonds closed higher, sending yields down about 2 basis points, after Standard & Poor's downgraded Greece two notches to B from BB-.

"They're a little bit better by about 10 cents or so," a source said.

The 10-year bond yield fell to 3.18% from 3.2%. The 30-year bond yield was flat at 3.58%.

In economic data, Canada Mortgage and Housing Corp. said housing starts fell to a seasonally adjusted 179,000 in April, down from 185,000.

Treasuries ended the day slightly better on the short end. The two-year note yield fell 1 bp to 0.54%. The 10-year note yield ended flat at 3.15%, while the 30-year bond yield rose 3 bps to 4.31%.

Thompson Creek on tap

Thompson Creek Metals launched a roadshow on Monday for a $300 million offering of senior notes due 2018, according to the company.

The notes are rated B3 by Moody's Investors Service and B by Standard & Poor's.

The deal will be offered in the United States under Rule 144A and outside the United States through Regulation S. Pricing is expected on Friday.

JPMorgan Securities LLC and Deutsche Bank AG are the bookrunners. Co-managers include BBVA, RBC Capital Markets Corp., UBS Investment Bank.

The deal includes a make-whole call at Treasuries plus 50 bps.

The notes will be guaranteed by subsidiaries Thompson Creek Metals Co. USA, Thompson Creek Mining Co., Thompson Creek Mining Ltd., Langeloth Metallurgical Co. LLC, Terrane Metals Corp., Berg General Partner Corp., Berg Metals LP, Cyprus Thompson Creek Mining Co., Long Creek Mining Co., Blue Pearl Mining Inc., Thompson Creek Services ULC and Mt. Emmons Moly Co.

The proceeds will be used to fund construction and development of the Mt. Milligan copper and gold mine in British Columbia and for general working capital.

The mining company is based in Vancouver, B.C., and Littleton, Colo.

Lions Gate talks $150 million

Lions Gate Entertainment Inc. talked a $150 million add-on to its 10¼% senior secured second-priority notes due Nov. 1, 2016 with a 9½% yield on Monday, according to a market source.

The deal was expected to price during the Monday session. However no terms were available at press time.

The underwriters include J.P. Morgan Securities LLC, Wells Fargo Securities, Barclays Capital, Mitsubishi and Piper Jaffray & Co.

The Rule 144A and Regulation S notes have a make-whole call at Treasuries plus 50 bps until Nov. 1, 2013 and then become callable at 105.125.

The notes feature a 35% equity clawback at 110.25% until Nov. 1, 2012 and a 101% poison put.

Proceeds will be used to repay revolver debt and for general corporate purposes.

The prospective issuer is a Vancouver, B.C., developer, producer and distributor of filmed entertainment content.

The original $236 million issue priced at 95.222 to yield 11¼% in October 2009.

Savanna Energy sets roadshow

Savannah Energy Services has appointed TD Securities Inc. and RBC Capital Markets as hosts for roadshow luncheon presentations, an informed bond source said Monday.

The presentations will be in Toronto on Thursday and Montreal on Friday.

The company then will hold a national investor call on May 16, following by the release of first-quarter earnings on May 17.

The Calgary, Alta.-based company is a drilling and well servicing provider in the oil and gas industry.

Valeant edges up

Valeant Pharmaceuticals' notes edged up in trading after the company reported a profit on Monday, a source said.

"They're trading close to where they came," the source said.

In March, the company sold $1.5 billion of notes (Ba3/BB-/) in the U.S. market. The tranche of 6.5% notes due July 15, 2016, which priced at par on March 3, traded Monday at 100.5 bid, the source said.

Valeant is a specialty pharmaceutical company based in Mississauga, Ont.

OPTI holds steady

A trader said OPTI Canada's notes were "about the same" at Monday's close.

He saw OPTI Canada's subordinated issues - the 7 7/8% and 8¼% notes due 2014 - trading with a 52 handle.

Another trader said OPTI was unchanged to up a quarter at 521/4.

A third trader said that OPTI's 8¼% notes due 2014 were "really hanging around" the same 52-53 range in which the troubled Calgary, Alta.-based oil-sands energy company's bonds were trading last week.

He said there was "some activity, pretty decent activity" in the credit - in contrast to its 7 7/8% notes due 2014. He said the 81/4s "seemed to be the more active one among the discount notes."

Nortel brightens

Nortel Networks is nearing the end of its bankruptcy case, and one trader is speculating that the bonds are heading higher because investors are "getting more comfortable."

Nortel's 10.125% notes due 2013 and its 10.75% notes due 2016 meantime were "up a little," the trader said, "near 92."

"They are getting close to their intellectual property auction," the trader remarked. As previously reported, Google Inc. has made a $900 million bid for the patent portfolio, but some are expecting a bidding war to ensue, potentially pushing the purchase price up to $1 billion or more.

At another desk, a trader called Toronto-based Nortel's bonds unchanged in a 911/2-92 context.

Catalyst flat

A trader meantime said that Catalyst Paper's 7.375% notes due 2014 traded between 66 and 68, "so they're hanging down, sort of where they went out at the end of last week."

He saw "very little trading" in the Richmond, B.C.-based papermaker's bonds, but said they were "being quoted at the levels where they ended up last week, which is lower" versus levels before that.

Paul Deckelman, Paul A. Harris and Stephanie Rotondo contributed to this review

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