Upsized Borgata, Continental price, Stats ChipPAC too; await Ferro; Chesapeake plans mega-deal

By Paul Deckelman and Paul A. Harris

New York, Aug. 4 - Continental Airlines, Inc. and Marina District Finance Co. Inc. - the joint-venture entity that owns and runs Atlantic City's glitzy Borgata mega-resort - each priced an upsized $800 million offering of senior secured notes on Wednesday, high-yield syndicate sources said. Houston-based air carrier Continental's five-year deal priced too late in the session for any kind of aftermarket, but traders saw both tranches of the Borgata offering - five-year and eight-year notes - firm smartly after pricing at a discount to par.

Also pricing was Singapore-based semiconductor maker Stats ChipPAC Ltd.'s $600 million offering of five-year notes, which moved up in secondary dealings.

Price talk emerged on Ferro Corp.'s $250 million offering of eight-year notes, which is expected to price after the order books are closed on Thursday morning.

Chesapeake Energy Corp. announced plans to sell at least $1.6 billion of new junk bonds to fund its tender offer for three series of its outstanding bonds. Also announcing a new deals was Cott Beverages Inc.

Among recently priced issues, traders saw brisk activity in Tuesday's split-rated offering from Pride International Inc., with both investment-grade and junk players liking the two-tranche mega-deal.

Away from the new deals, Cricket Communications Inc.'s and Harrah's Entertainment, Inc.'s bonds were both lower on disappointing second-quarter results.

Borgata upsizes

Three issuers brought four tranches of junk into the Rule 144A market on Wednesday. They combined to raise $2.19 billion of proceeds.

Atlantic City's Borgata Hotel Casino & Spa, issuing via financing unit Marina District Finance Co., completed an upsized $800 million two-part senior secured notes transaction (B2/BB).

The company priced a $400 million tranche of 9½% notes due Oct. 15, 2015 at 98.943 to yield 9¾%.

The yield printed on top of the 9¾% area yield talk. The reoffer price came in line with discount talk of approximately 1 point.

Meanwhile, Borgata priced a $400 million tranche of 9 7/8% notes due Aug. 15, 2018 at 99.315 to yield 10%.

The yield on the 2018 notes printed tight to yield talk that had them coming 25 basis points to 37.5 bps behind the 2015 notes. The reoffer price came slightly rich to discount talk of approximately one point.

The total size was increased from $725 million.

Bank of America Merrill Lynch, Wells Fargo Securities, J.P. Morgan Securities Inc., Barclays Capital Inc., RBS Securities Inc. and UBS Investment Bank were the joint bookrunners for the debt refinancing and dividend-funding deal.

The transaction went very well, according to an informed source.

There were a couple of big anchor orders in the deal.

The bonds traded 2½ points higher in the secondary market, the source added.

Continental prices at tight end

Meanwhile, Continental Airlines, Inc. also priced an upsized $800 million deal.

The Houston-based airline's 6¾% five-year senior secured first-lien notes (Ba2/BB-) priced at 98.938 to yield 7%, at the tight end of the 7% to 7¼% price talk. The deal was upsized from $750 million.

J.P. Morgan Securities Inc., Credit Suisse Securities and Morgan Stanley & Co. Inc. were the joint bookrunners for the debt refinancing and general corporate purposes deal.

Stats ChipPAC $600 million

Singapore semiconductor manufacturer Stats ChipPAC priced a $600 million issue of five-year senior notes (Ba1/BB+) at par to yield 7½%.

The yield printed at the tight end of the 7½% to 7¾% price talk.

Credit Suisse and Deutsche Bank Securities were the joint bookrunners for the issue which was priced from the emerging markets syndicate desk.

Proceeds will be used to fund a cash distribution to shareholders and to finance a tender offer and consent solicitation for the company's 6¾% senior notes due 2011.

Ferro sets talk

Meanwhile, the forward calendar continued to build, on Wednesday.

Ferro Corp. talked a $250 million offering of eight-year senior notes (B2//) to yield in the 8% area.

The order books will close on Thursday morning.

Credit Suisse, JP Morgan, Bank of America Merrill Lynch and Citigroup are the joint bookrunners for the public offering.

Proceeds will be used to fund the purchase of the company's 6½% convertible senior notes due 2013 in a tender offer, and to repay a portion of the remaining $181 million term loan and revolver under its existing credit facility, or a portion of any new facility.

Cott to bring $375 million

Meanwhile, there were roadshow announcements.

Cott Beverages Inc., a wholly owned subsidiary of Cott Corp., plans to price a $375 million offer of eight-year senior notes on Wednesday.

Deutsche Bank Securities, JP Morgan and Morgan Stanley are the joint bookrunners for the deal to fund a portion of the acquisition of Cliffstar Corp.

Elsewhere, Gentiva Health Services Inc. launched its $305 million offering of eight-year senior unsecured notes.

A roadshow will get underway on Thursday in New York.

That deal is also expected to price on Wednesday.

Barclays Capital Inc., Bank of America Merrill Lynch and SunTrust Robinson Humphrey are joint bookrunners for the acquisition financing.

Massive pipeline

The high-yield market may have officially entered the Dog Days of August.

However, this time around the dog is a greyhound, one sell-side source quipped.

And for the next 10 days or so, it's going to run.

With respect to the pre-Labor Day pipeline, names continued to be bandied about on Wednesday, Multiplan Inc. and Warner Chilcott plc, among them.

However Chesapeake Energy Corp. perhaps made the most persuasive play for the spotlight.

The Oklahoma City-based natural gas company is expected to bring $1.6 billion minimum of junk in the form of a drive-by deal in the run-up to Labor Day, according to market sources.

Specific timing remains to be determined, one source said.

However the deal will likely be rolled out soon.

Credit Suisse will lead a syndicate that will likely include a dozen or more banks, the source added.

The Oklahoma City-based natural gas company is bringing the notes to help fund its concurrent tender offers.

Looking further out toward the horizon, one debt capital markets banker who spoke well after Wednesday's close, professed visibility on a $13 billion pipeline of deals that remain to be transacted before the end of the third quarter.

Borgata bonds better

When the new Borgata bonds began trading in the secondary realm, traders saw the Atlantic City-based Boyd Gaming Corp./MGM Resorts International joint-venture's paper having firmed smartly from the two tranches' respective issue prices.

A trader said that his shop "was active in that," quoting both issues trading right at the 102 bid level on "some decent volume." That was up from 98.943, where the 9½% notes due 2015 priced, and 99.315, where the 9 7/8% notes due 2018 came to market.

A second trader said that the Borgata bonds "really traded well, no question," seeing the five-year bonds going out at 101 3/8 bid, 101 5/8 offered, while the eight-year paper ended at 101¾ bid, 102 offered. He said both tranches were up around 2½ points from issue.

At another desk, a trader pegged the 91/2s at 101¼ bid, 101½ offered, while the 9 7/8s finished at 101½ bid, 102 7/8 offered.

Stats ChipPAC a star

A trader said that Stats ChipPAC's new 7½% notes due 2015 "traded well," rising to around the 102 mark from the issue's par pricing earlier in the session.

Upside ride for new Pride

A trader said that Pride International's two-part mega-deal that priced on Tuesday and then traded up in the aftermarket was again posting gains on Wednesday.

"They were real busy [Tuesday] night, and this morning those things were up an additional couple of points."

He saw the $300 million of 7 7/8% notes due 2040 at around the 103¼ level, which he called up around 1½ to 2 points from where the bonds went out on Tuesday night, around 101¼ to 101 3/8, right after the notes had priced at par.

He also saw the $900 million of 6 7/8% notes due 2020 at 103 bid, 103 3/8 offered, versus Monday's closing level around 102 bid, estimating the issue to be up 1 to 1¼ points, "depending on what time of the day it was. But there was a lot of activity in PDE this morning, and last night too." He said that some $81 million of the 10-year bonds had traded on Wednesday and $30 million of the 30-year notes.

He pointed out that as a split-rated offering (Ba1/BBB-/BB+) which priced off the investment-grade desks, "the investment-grade accounts, they like to trade it." He also mentioned that "it was priced on the tight end," a sign of good demand for the Houston-based offshore energy drilling company's deal.

At another desk, a trader saw the 6 7/8s at 103 bid, 103½ offered.

Pride's existing 8½% notes due 2019 gained about 5/8 point to end just under 113 bid.

Petrohawk on the rebound...

A trader said that Petrohawk Energy Corp,'s new 7¼% notes due 2018 "actually bounced back after they had faded down towards the par level" on Tuesday following the pricing of the $825 million issue, giving up the initial aftermarket dealings they had notched.

He pegged the bonds at 100¾ bid, 101 offered, where a second trader also saw them.

The Houston-based natural gas exploration and production company's senior bonds had priced on Tuesday at par in a quickly shopped drive-by offering and had gotten as good as 101¼ bid, 101½ offered in the aftermarket, before falling back down to par bid, 100½ offered.

...but Trilogy still troubled

Traders said that Trilogy International Partners LLC's new issue of 10¼% senior secured notes due 2016 continued to trade well under the 98.902 level at which the Bellevue, Wash.-based international wireless service provider's $370 million of bonds had priced on Tuesday.

One saw them at 97¼ bid, 98¼ offered, off slightly from the 97½ bid level at which the bonds had gone home Tuesday.

Market indicators mostly better

Away from the new-deal sector, a trader saw the CDX North American HY Series 14 index up 1/8 point on Wednesday at 98 5/8 bid, 98 7/8 offered, after having been unchanged on Tuesday.

The KDP High Yield Daily index meantime rose by 6 basis points on Wednesday to end at 72.52, after having edged downward by 1 bp on Tuesday. Its yield moved up by 1 bp Wednesday to 8.07%, after having been unchanged on Tuesday.

The Merrill Lynch High Yield Master II index continued to hit new highs for the year on Wednesday, when it showed a year-to-date gain of 8.799% - a new peak level for the year, eclipsing the previous mark of 8.686% seen on Tuesday.

Advancing issues led decliners for a 23rd consecutive session on Wednesday, although their winning margin narrowed to around seven-to-five from Tuesday's eight-to-five advantage.

Overall activity, represented by dollar-volume levels, rose by 12% on Wednesday, after having shot up by 43% on Tuesday.

Cricket gets crushed

Among specific issues, Cricket Communications' 9 3/8% notes due 2014 got smacked around after corporate parent Leap Wireless International Inc. issued disappointing second-quarter numbers - including an unexpected 112,000 drop in the San Diego-based prepaid wireless carrier's subscriber totals, when analysts were anticipating a gain in customers.

That pushed the '14s down to 101½ bid - a 2 point loss from the levels around 103¾ which the bonds had previously occupied.

Trading in the credit was heavy, with over $44 million changing hands in large-block trades, making Cricket one of the busiest names in Junkbondland on Wednesday

Harrah's slips post-earnings

Harrah's Entertainment's bonds were also among the few losers seen in Wednesday's market, a trader said.

"It was one of the few bonds to not trade up," he observed.

He called the 10% notes due 2018 the "big trader" of the various Harrah's issues, with $40 million to $50 million changing hands. The paper dipped half a point, closing at 84 bid, 84½ offered.

The trader also saw the 11¼% notes due 2017 slip to 108 bid, 108½ offered and the 10¾% notes due 2016 "up and down" around 83.

Another trader said the 10% notes fell ½ point to around 841/4.

For the second quarter, the Las Vegas-based casino operator reported a 2.2% decline in revenues at $2.22 billion, down from $2.27 billion the year before. The company said the revenue slide was "due primarily to the continuing impact of the recession on customers' discretionary spending."

Net loss came to $274 million, versus a year-ago profit of $2.29 billion.

For the first half of the year, Harrah's saw its revenue fall 2.6% to $4.41 billion from $4.53 billion. The company has lost $469.6 million since January, which compared to a $2.16 billion gain in the first half of 2009.

"After two years of the worst economic downturn since the Great Depression, it appears that year-over-year revenue declines are moderating in virtually all of our markets," commented Gary Loveman, chairman, chief executive officer and president, in the earnings release. "To ensure our margins are maintained, we will remain vigilant with respect to our expense structure."

First Data firms on financing move

A trader saw "First Data [Corp.].'s bonds up a couple," on the back of the news that the Atlanta-based electronic transaction processor is asking its lenders for permission to change terms of its loan agreements so that it can pay down debt.

First Data's 9 7/8% notes due 2015 were being quoted as having firmed to around the 82 bid level, up 1½ points, while its 11¼% notes due 2016 rose nearly 3 points to just over the 68 level.

However, at another desk, a market source called the 9 7/8s down around a point at 80½ bid.

First Data was scheduled to hold a lender call during Wednesday's session to discuss the proposed changes.

Specifically, the amendment to the loan agreements would require First Data to issue up to $500 million in new notes within 90 days of execution of the agreement. The proceeds would be used to prepay term loans at par.

The revisions would also allow for the issuance of junior debt, the proceeds of which would be used to redeemed or repay current debt.

Stephanie N. Rotondo contributed to this report

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