New deals rule as Delta prices, also GeoEye, Nebraska Book, Inverness; Gaylord up on tender

By Paul Deckelman and Paul A. Harris

New York, Sept. 23 - Delta Air Lines, Inc. came in for a landing in Junkbondland, with a sharply upsized offering of senior secured notes - more than double the amount originally reported last week - which was also restructured to add another tranche.

Atlanta-based Delta's larger rival, American Airlines, was meantime heard in the market with its own offering of senior secured notes.

Other dollar-denominated deals pricing during the session included including an upsized offering of secured bonds from satellite imaging operator GeoEye, Inc.; college textbook provider Nebraska Book Co., also doing secured bonds; and a drive-by add-on transaction from Inverness Medical Innovations, Inc.

Central European Media Enterprises LLC brought a drive-by euro-denominated add-on offering to its senior notes which priced earlier this month.

Pregis Corp. was heard to be shopping a euro-denominated floating-rate offering around.

Price talk emerged on Spirit Aerosystems, Inc.'s upcoming offering of eight-year notes.

And Warner Chilcott plc executives said that the Irish drugmaker may sharply cut the size of a previously announced $1.4 billion junk bond offering being floated to help pay for its acquisition of Procter & Gamble Co.'s international pharmaceuticals business, replacing those proceeds with funds raised via an asset sale

With so much going on in the primary, the secondary market took a back seat.

Gaylord Entertainment Co.'s bonds were better, though in restrained trading, after the Nashville-based entertainment venue operator's announcement of its plans to tender for one series of those bonds.

Blockbuster Inc.'s new and existing bonds were seen mostly steady on the day, at the lower levels to which they had fallen after sliding off the highs reached last week, when the video rental company priced a big new bond deal that initially moved up smartly.

Delta prices $1.35 billion

The primary market saw just over $2 billion price Wednesday in five dollar-denominated tranches.

Delta Air priced an upsized, restructured $1.35 billion two-part notes transaction on Wednesday.

The Atlanta-based passenger air carrier priced $750 million of 9½% five-year senior secured notes (Ba2/BB) at 98.563 to yield 9 7/8%, on top of price talk.

In a tranche announced on Tuesday, Delta priced an upsized $600 million issue of 11¾% senior second-lien notes due March 15, 2015 (B2/) at 95.288 to yield 13%. The second-lien notes, which were upsized from $500 million, also came on top of the price talk.

J.P. Morgan Securities Inc., Barclays Capital Inc. and UBS Investment Bank were joint bookrunners for the Rule 144A for life deal, the overall size of which was upsized from $1.25 billion.

The company downsized its bank deal to $250 million from $500 million.

Proceeds will be used to repay all existing senior corporate credit facilities, with any remaining proceeds to be used for general corporate purposes.

GeoEye upsizes

Meanwhile GeoEye priced an upsized $400 million issue of 9 5/8% six-year senior secured notes due 2015 (B1/B+/) at 97.262 to yield 10¼%.

The yield printed at the tight end of the 10¼% to 10½% yield talk. The issue price was in line with the 2 to 3 points of original issue discount talk. The size was increased from $350 million.

J.P. Morgan Securities Inc. and Bank of America Merrill Lynch were joint bookrunners for the deal.

Proceeds will be used to fund the previously announced tender for the company's $250 million of floating-rate senior secured notes due 2012 and for general corporate purposes, which may include funding a portion of the costs of constructing a new high-resolution satellite.

The Dulles, Va.-based company is a provider of imagery, imagery information products and image processing services.

Nebraska Book brings $200 million

Nebraska Book priced a $200 million issue of 10% senior secured notes due Dec. 1, 2011 (B1/B) at 99.50 to yield 10.278%.

The coupon printed at the tight end of the 10% to 10¼% coupon talk. However the issue price came at the cheap end of the 98.50 to 99.00 price talk.

J.P. Morgan Securities Inc., Bank of America Merrill Lynch and Wells Fargo Securities were joint bookrunners for the Rule 144A and Regulation S with registration rights notes.

Proceeds will be used to repay term bank debt.

Inverness adds on

Inverness Medical Innovations priced a $100 million add-on to its 7 7/8% senior notes due Feb. 1, 2016 (B2/B-) at 96.50 to yield 8.599%.

The yield came towards the tight end of the 8 5/8% area price talk.

Jefferies & Co., Goldman Sachs & Co. and Wells Fargo Securities were joint bookrunners.

Proceeds will be used to help fund the acquisition of Free & Clear Inc.

The issuer is a Waltham, Mass.-based provider of consumer and professional medical diagnostic products and services.

The original $150 million issue priced Aug. 6, 2009 at 98.144 to yield 8¼%.

Spirit for Thursday

Spirit Aerosystems set price talk for its $300 million offering of eight-year senior notes (B2/BB) at the 7 7/8% area on Wednesday.

The books close noon ET on Thursday, 4 p.m. ET for West Coast accounts. The deal is expected to price shortly after.

Bank of America Merrill Lynch, Credit Suisse Securities, Morgan Stanley & Co. Inc. and Barclays Capital Inc. are joint bookrunners.

American Airlines to bring $450 million

Elsewhere American Airlines plans to price a $450 million offering of senior secured notes due 2012 on Thursday or Friday.

Citigroup, Deutsche Bank Securities and Morgan Stanley are leading the debt refinancing from the Fort Worth, Texas-based passenger air carrier.

Meanwhile Pregis Corp. plans to price €125 million of notes mirroring its three-month Euribor plus 500 basis points senior secured floating-rate notes due April 15, 2013 on Thursday in London.

The issue is being talked at par, according to a hedge fund manager.

Credit Suisse and Barclays Capital are joint bookrunners for the debt refinancing deal from the Deerfield, Ill.-based protective packaging producer.

The original €100 million issue priced at par in October 2005.

New Delta five-year bonds take flight

A trader saw Delta Air Lines' new 9½% senior secured first-lien notes due 2014 trading at 99½ bid, 101 offered, up from the 98.5 level where that $750 million issue priced earlier in the session.

However, the airline giant's 11¾% second-lien secured notes due 2015 couldn't get off the runway, with the trader quoting those bonds offered at 94½ -- well below the 95.228 level at which the $600 million issue had priced.

He predicted that there likely will be "a lot of activity" in the new Delta paper in Thursday's market.

New Inverness bonds up slightly

When the new Inverness Medical Innovations 7 7/8% notes due 2016 were freed for secondary dealings, a trader saw those bonds bid at 96¾ -- up a little from the 96½ level at which they had priced to yield 8.599% -- but saw no offerings in the credit, adding that "the bonds did go up [after that] - but there was still no offer."

Nebraska nudges higher

A trader said that he had heard that Nebraska Book Co.'s new 10% senior secured notes due 2011 were being bid around par, versus their 99.5 issue price.

However, he added that "I never saw that."

North American Energy powers up

But the clear big winner among new or recently priced issues seemed to be North American Energy Alliance LLC, which priced its $205 million of 10 7/8% senior secured second-lien notes due 2016 on Tuesday at 97.739 to yield 11 7.8%.

The New York-based utility owner and operator's new bonds jumped to 101 bid at the break; late in the session, a trader saw them going home as high as 102 12/4 bid.

Blockbuster slide bottoms

A trader saw Blockbuster's 9% notes due 2012 "have some activity," quoting them around a 67-69 context, which he said was largely unchanged, while the Dallas-based DVD, Blu-Ray and video game rental company's recently priced 11¾% senior secured notes due 2018 "are the ones that are trading."

He saw those new bonds at 95½ bid, 961/2, which "was about where they ended up [Tuesday] too."

Both levels are well below the peaks hit last week, when the company priced its $675 million issue of the '18s on Thursday - sharply upsized from the originally planned $340 million - and they shot up to levels as high as par bid from their 94 issue price, only to come down from the early aftermarket peaks to end around a 97-98 context and to keep retreating this week.

The 9s, meantime, had started firming into the 70s from prior levels in the upper 60s, peaking around 75-76 after the new deal priced, but then also coming back down, back to where they started from in the upper 60s.

Another trader, who also saw the 9s having retreated back to the upper 60s, while the new bonds had given up most of their gains to return to the mid-90s, said that his opinion is that Blockbuster "is a prime example of the fact that yes, it's good that these companies can come to market - but nobody has yet to demonstrate that they've come up with any better way to make money or to make their businesses more viable, and until that happens, it's that short-term shot in the arm."

Blockbuster is struggling to avoid the fate of rival Movie Gallery Inc. - which was driven into bankruptcy earlier in the decade after struggling with falling revenues from its traditional brick-and-mortar video stores - and hoping to move away from that declining business model and into more profitable areas like its more successful mail and internet-based competitor Netflix Inc.

However, the trader opined that "I haven't seen anything great come out of them for three or four years. So why anyone thinks that raising money is going to change the business plan doesn't make a lot of sense to me."

He said Blockbuster is just "one of 50 other companies that are in that same sort of ilk - it's terrific they can buy themselves some time" by doing a new deal and raising capital, "but away from that, it doesn't seem like a whole lot has actually changed."

Market indicators firm up

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 12 index up by ½ point on Wednesday to 953/4, after having gained a point in Tuesday's dealings.

The KDP High Yield Daily Index rose by 25 basis points on Wednesday, to 69.16, while its yield tightened by 9 bps to 8.32%, continuing the trend seen on Tuesday when the index had gained 21 bps and its yield narrowed by 7 bps.

In the broader market, advancing issues managed to lead decliners for a 15th straight session on Wednesday, by a better than eight-to-five margin.

"The bond world was very firm," a trader said, taking its cues from equities, which had initially risen smartly. Although stocks later lost their luster and ended lower, he said that junk pretty much held its own, with "the secondary flow picking up a little."

Gaylord gains on tender

The late-Tuesday announcement that Gaylord Entertainment Co. will tender for its 8% notes due 2013 sent those bonds sharply higher, although on only limited large-sized trading.

A market source saw the 8s move as high as 102 7/8 bid, well up from the 95 level at which those bonds had ended Tuesday's session.

The source also saw the company's 6¾% notes due 2014, which are not being tendered for, jump more than 7 points to an opening level of 99½ bid. The bonds were seen going home even better than that, at above the 93 level, although the final trades of the day were for less than round-lots.

"It was just for pieces," a trader said. "I haven't seen a real market in them."

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