MSW Energy, Dollar Financial Group price new deals; Ahold seen firmer on restructuring news

By Paul Deckelman and Paul A. Harris

New York, Nov. 7- MSW Energy Holdings II and Dollar Financial Group Inc. priced new deals Friday, high yield syndicate sources said, but it was a relatively quiet end to a week which had seen a whirlwind of pricing activity, particularly for quickly-shopped "drive-by" offerings hurried to market to opportunistically take advantage of favorable pricing conditions.

Secondary players continued to hug the sidelines, although the new Dollar Financial Group's bonds were heard to have done well once they were freed to trade around. Among the established issues, bonds of Royal Ahold NV were quoted higher than recent levels after the Amsterdam-based international supermarket operator announced plans for a restructuring that will include asset sales and a big issue of stock.

On the heels of a Thursday session that saw eight junk bond deals price, Friday's primary market session seemed comparatively tame, with $445 million coming in two deals. That brought the week's total of dollar-denominated new junk debt to $5.35 billion in 20 tranches.

Dollar Financial Group, Inc. priced an upsized offering at the tight end of talk. The Berwyn, Pa. check cashing store company sold $220 million of eight-year senior notes (B3/B) at par to yield 9¾%.

Price talk on the refinancing deal, which was run by Credit Suisse First Boston and Citigroup, was 9¾%-10%. It was increased from $200 million.

Also during the session, in another transaction led by Credit Suisse First Boston, MSW Energy Holdings II LLC and MSW Energy Finance Co. II, Inc. sold $225 million of seven-year senior secured notes (Ba2/BB-) at par to yield 7 3/8%.

Price talk on the acquisition deal - with proceeds going to partially fund CSFB Private Equity's acquisition of United American Energy Holdings Corp. - was 7¼%-7½%.

As the dust settled on that pair of deals one sell-side official told Prospect News that the investment banks are presently counseling their junk bond-issuing clients on the subject of timing. And the thrust of their advice to those companies that may be considering a pass at the junk bond market can be summed up in a single word: "Now."

"We keep telling issuers that are thinking about it that it's still as good a time as ever to get deals done," said the official. "We're seeing stuff price mostly at the tight end of talk and sometimes inside of talk. And we are also seeing deals getting upsized.

"All in all the market remains really strong."

However, this source added, some of the paper that is coming out of the new issue market has lately been seen to slip when released for trading in the secondary market.

The sell-sider pointed to a pair of new issues that priced during Thursday's turbo charged session: Triad Hospitals, Inc., which priced an upsized $600 million of 10-year paper (B3/B) at par to yield 7%, and Calpine Corp. which priced a quick-to-market $400 million of 9 7/8% eight-year second priority senior secured notes (/B/BB-) at 98.01 to yield 10.243%.

Shortly after the break the Triad paper was seen 99.626 bid, par offered, while the new Calpine paper was seen early Friday at 97.875 bid, 98.125 offered.

On the other hand, the new notes from Stratus Technologies, Inc., which sold $170 million of five-year senior notes (B3/B) at par Thursday to yield 10 3/8%, were seen to firm in the aftermarket.

Late in Thursday's session one source had the new Stratus notes at 102 bid, 103 offered.

"It could be credit specific," suggested the sell-side official. "Or it could be an early indication that supply is starting to meet up with demand.

"Still, it looks like market conditions are pretty solid despite the sell-off in Treasuries last week," added the source. "Some people worry that that could cause high yield to sell off.

"Back in August when Treasuries busted out by 100 basis points the whole market kind of shut down for a few weeks."

The official also pointed out that the time-period in question saw some issuers take a powder - pulling deals as price talk widened amid news of outflows from high yield mutual funds.

Two of those issuers, Charter Communications, Inc., and Quality Distribution LLC returned to the much more favorable new issue market during the week just ended, and went away with completed transactions. Charter issued $500 million through CCO Holdings, LLC and CCO Capital Corp., and walked away with an 8¾% interest rate, while Quality Distribution, which sold $125 million, will pay 9%.

"People were saying that back in August the market was repricing based on sudden unexpected movement in Treasuries," the sell-sider continued. "It caught people offguard. All of the sudden you had spreads that really didn't make sense, which caused everybody to rethink where they should be."

However, said the official, that was then and this is now. And "Now" is the time, as far as the sell-side is concerned, that issuers ought to heading purposefully toward the edge of the diving board.

Four were seen doing just that, as the Nov. 3 week drew to a close.

The roadshow began Friday in Europe, and will run there through Nov. 11, for Millicom International Cellular SA's $550 million of 10-year senior notes due 2013 (B3). The U.S. roadshow for the deal runs Nov. 12-18. Lead on the refinancing deal will be Morgan Stanley.

The roadshow starts Wednesday for Millar Western Forest Products' $175 million of 10-year senior notes (B3/B+), expected to price on Nov. 19 or 20. Goldman Sachs & Co. is the bookrunner for the Edmonton, Alta. integrated forest products company's offer.

And Berry Plastics Corp. plans to price a $90 million add-on to its 10¾% senior subordinated notes due July 15, 2012 (B3/B-) mid-day on Monday, with an investor conference call scheduled for Monday morning.

JP Morgan and Goldman Sachs & Co. are joint bookrunners on the acquisition financing. The original $250 million priced at par on July 17, 2002.

Finally, the roadshow starts Tuesday for Ineos Vinyls Finance plc's €160 million of eight-year senior notes, which are expected to price during the Nov. 17 week. Deutsche Bank Securities and UBS Investment Bank are underwriters on the offer from the vertically-integrated manufacturer of PVC polymers, compounds and films, which is based in Eijsden, the Netherlands.

When the new MSW Energy 7 3/8% notes due 2010 were freed for secondary dealings, they were heard to have not advanced much beyond their par issue pricing, going home at 100.5 bid, 101.

But the Dollar Financial 9¾% senior notes due 2011, which also priced at par, was heard to have firmed to 102.5 bid, 103.5 offered, with a trader noting that "there were some buyers there."

The new Calpine Corp. 9 7/8% second-priority senior secured notes due 2011, which had priced Thursday at 98.01, were being quoted at 97.25 bid, 98 offered, with the trader dismissing the new issue. "There was nothing major there," he said.

Calpine's existing bonds were meantime seen hanging in around the same somewhat higher levels to which they had risen Thursday on the news of the $400 million junk bond sale and a separate $600 million convertible debt sale. The San Jose, Calif.-based independent power producer plans to use the $1 billion of deal proceeds to repay existing debt.

The trader said that Calpine's 8½% notes due 2011 held steady around 73.5 bid, 74.5 offered, while its 8 5/8% notes due 2010 were at 73.75 bid, 74.75 offered., with trading "very light."

Outside of the new-deal sphere, a trader noted that Ahold's bonds were firmer on the news that the troubled international supermarket operator had unveiled plans for a rights issue of between €2.5 billion and €3 billion, and the sale of its non-core Spanish operation, part of the company's effort to raise an additional €2.5 billion via asset sales.

A trader said that Ahold's debt had not really moved much during Friday's session, quoting the company's 6¼% notes due 2009 at par bid, 102 offered; he saw the 8¼% notes due 2010 at the 108-109 level "with not much activity" seen, while its 6 7/8% bonds "didn't do much" and were at 90 bid, 92 offered.

Another trader, however, took a slightly longer view of things, quoting Ahold's bonds up solidly over the past three days and noting that the rise had begun even before the announcement, as rumors that Ahold would be doing a big rights sale to generate cash had made the rounds of the financial markets earlier in the week.

He saw the 6¼% notes as having firmed to 102 bid, 103 offered, up from 99.75 bid, 100.75 offered three days earlier; the 8¼% notes, he said, had gone as high as 111.5 bid, 112.5 offered from 107.75 bid, 108.75 offered three days earlier; and the 6 7/8% notes had improved over several sessions to 91 bid, 92 offered from 88 bid, 91 offered.

The trader also saw Ahold's 7.82% bonds due 2020 at 102 bid, 103.5 offered, up from par bid, 102 offered earlier in the week; and saw its 8.62% bonds due 2025 likewise up some two points over three sessions, at 102 bid, 104 offered.

Standard & Poor's said it might consider raising the company's debt ratings - including its BB- corporate credit rating - on its restructuring plans, although the ratings agency cautioned that any upgrade would be limited to just one notch, citing Ahold's "still substantial leverage and hefty 2005 debt maturities."

Ahold - the world's number three food retailer and food services group - which was rocked by a giant accounting scandal at the start of the year which ended up costing the company some €1.2 billion - said it aimed to return to an investment-grade profile by the end of 2005, with proceeds from the rights issue earmarked for cutting debt. Ahold is estimated to have about €10.87 billion of debt, but said Friday that it expected to bring that number below €10 billion by the end of the year.

The company announced further belt-tightening measures, including a €1 billion cut in capital expenditures this year and elimination of the dividend on its common shares for the next three years.

Elsewhere, things were "very, very quiet," a trader said. "I don't even think there was a ton of activity going on among the new deal issues," let alone among the existing issues.

XM Satellite Radio Holdings, despite having released positive third-quarter data (the satellite radio broadcasting company posted a wider net loss than a year ago, but saw revenues rise and new-subscriber additions gain 34% percent over the prior quarter to 929,648, and fourfold over a year ago), was little changed on Friday, its 12% notes due 2010 steady at 110, and its zero-coupon notes due 2009 perhaps half a point better at 86.75 bid, 87.75 offered.

Traders saw Levi Strauss & Co. unchanged to up half a point across the board, with the San Francisco-based blue jeans maker's 11 5/8% notes due 2008 half a point better, at 86.5 bid, while its 7% notes due 2006 were static at 79 bid, 80 offered.

The Williams Cos. - which announced a favorable result to its tender offer for $1.641 billion of bond debt (see Tenders and Redemptions elsewhere in this issue) was about half a point firmer Friday, its 7¾% bonds due 2031 at 96 bid and its 7 5/8% bonds due 2019 at 98.

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