Helix restructures deal; United Rentals up on Cerberus talks; Tropicana rebounds more

By Paul Deckelman and Andrea Heisinger

New York, Dec. 17 - Helix Energy Solutions was heard by high yield syndicate sources to have restructured what is expected to be the final scheduled junk bond deal of 2007, dropping the originally proposed tranche of seven-year floating-rate notes, opting instead to just sell half a billion dollars of fixed-rate notes due 2015. Price talk also emerged on the issue, which is expected to price Tuesday.

In the secondary market, United Rentals Inc.'s bonds were seen mixed, but the most widely traded issue was called up nearly 2 points, in line with a rise in the company's shares, on news that it is in talks aimed at settling its lawsuit against Cerberus Capital Management LP, which last month backed away from a deal to acquire the Greenwich, Conn.-based equipment rental firm.

Grant Prideco Inc.'s normally little-traded bonds were seen several points higher, albeit on limited trading, given a boost by the news that the Houston-based oilfield services company had agreed to be bought out.

There were a couple of big movers out of the distressed precincts, where Tropicana Entertainment LLC - also known in some quarters as Wimar OpCo - was up another couple of points, continuing to bounce back from last week's lows, aided by news that the Las Vegas-based gaming operator will sell some assets and had made a key interest payment.

Calpine Corp.'s bonds were solidly higher - particularly its 8½% 2008 notes - on the news that it had cut the amount of money it will borrow for exit financing, and had gotten some more favorable terms from its lenders.

Tekni-Plex Inc.'s bonds jumped a few points - but only because they began trading flat after the Somerville, N.J.-based packaging company missed a scheduled interest payment.

Helix restructures, talks

What is likely the last issue of the year in the high-yield market was announced talk Monday.

Market sources said Helix Energy's $500 million Rule 144A issue of senior notes is set to price Tuesday afternoon.

The eight-year bonds are talked at 9¼% to 9½%.

There were originally two tranches, with a planned tranche of seven-year floaters dropped before price talk, sources said.

Banc of America Securities LLC is bookrunner.

The company will use the proceeds to pay down its senior debt facility.

A little more than $826 million of its $840 million term loan was outstanding as of the end of September, according to a Securities and Exchange Commission filing.

"It's flown completely under the radar," a market source said of the issue.

He commented on the reason for dropping the floating-rate tranche.

"What we've heard is the structuring was not a favorite among investors," the source said.

"People's view is there's limited demand for floaters."

This is likely the end of high-yield activity for 2007, a source said.

"There's nothing else expected for the rest of the year," he said. "I think this is about it. Certainly nothing happened today."

Trading subdued

Back among the established issues, a trader saw the widely followed CDX junk bond performance index down ¼ point on the day at 95½ bid, 95¾ offered, while the KDP High Yield Daily Index began sliding from the get-go, finishing down 0.18 at 77.85. Its yield widened 5 basis points to 8.65%. In the broader market, declining issues led advancers by a nearly two-to-one margin. Overall market volume was up 26% from Friday's anemic levels.

Even so, the trader said, "it was very quiet, with not a lot of trading going on. Things are starting to wind down."

He added that the market "just seems like it's offered," with relatively few bids. "People are very reluctant to do things going into the year-end."

"It was a pretty tiresome day," another trader observed. "It felt like people were squaring things up, doing window-dressing for the year-end." He allowed that early on, "there were some markets" in different issues. "Things traded up, and were doing a little better earlier. Then as the equity markets sold off, things just kind of hung in there and probably went out unchanged to maybe a touch softer."

Outside of a couple of isolated names, he said, such as Tropicana Entertainment, "there were no real big movers that you can think of off the top of your head. It was pretty quiet out there, from people I talked to. It seems like people had a good run, in terms of things moving around, and [now] just can't wait for year-end to approach and start off '08 fresh."

United Rentals up on Cerberus talks

He saw United Rental's bonds quoted higher on the day, with its 6½% notes due 2012 going home at 97 bid, 98 offered, "up a couple of points" from Friday's levels around 94.5 bid, 95.5 offered.

Another trader said that he had only seen the 61/2s "on the bid side," where he pegged them up a point on the day at 96, on the news that the proceedings in the company's lawsuit had been delayed, giving United Rentals and its opponents additional opportunity to settle their dispute.

A market source saw the bonds a point higher at 96.75, while another saw them up 1½ points at 97.25.

The bonds firmed after the company said it was continuing talks in a bid to resolve its lawsuit to force Cerberus to complete the now-stalled buyout of United Rentals. The New York-based private-equity firm agreed at the beginning of the summer to acquire the big equipment rental company for $34.50 per share, plus debt assumption - bring the total value of the deal to almost $7 billion. The leveraged buyout was to have been largely funded by new debt, including a huge new junk bond mega-deal - but as the credit crunch lashed the capital markets, Cerberus had second thoughts and announced last month that it was not going through with the purchase. That sent United Rentals into court to force the investment firm to live up to the terms of their original deal. Some market skeptics suggested that the withdrawal was a negotiating tactic on Cerberus' part to squeeze a better deal out of United Rentals, given the recent changes in the investment landscape.

The two sides were scheduled to begin butting heads in court on Monday, but that session was put off for a day "to allow the parties to continue settlement discussions that were recently initiated." That gave hope to investors that some sort of deal might be salvaged, even if it were on different terms than those of the original arrangement.

Grant Prideco up on buyout news

A buyout deal which at this point looks like it could go through, on the other hand, was pushing the bonds of Grant Prideco up. A trader saw its 6½% notes due 2015, recently trading in a 102.5 bid, 104.5 offered context, printing as high Monday as 106 bid.

"There was short-covering right out of the chute," he said. The bonds were later offered at 105, looking for a bid, he said, although another market source saw the last trade above 106, up several points.

The company's New York Stock Exchange-traded shares jumped $6.45, or 13.59%, to end at $53.91, on volume of 26 million, more than 12 times the usual turnover in the name.

That followed the announcement that the maker of oilfield equipment and tools had agreed to be bought out by larger sector peer National Oilwell Varco Inc. in a deal valued at $7.37 billion. Grant Prideco shareholders will get a combination of cash and National Oilwell stock valued at $58 per share, and will own 14% of the combined company.

Moody's Investors Service said that it would review National Oilwell's Baa1 senior unsecured credit rating and Grant Prideco's Ba1 corporate family rating for possible upgrades. The ratings agency said that its review will consider the benefits of the transaction, the outlook for the combined business and the management's future financial policies. It noted National Oilwell's "strong financial profile and business outlook. "

Fresscale seen off

Elsewhere, Freescale Semiconductor Inc. was one of the day's more actively traded issues, although there was no fresh news seen out on the Austion, Tex.-based semiconductor manufacturer to explain its heightened activity.

A trader saw Freescale's 10 1/8% notes due 2016 down ¾ point at 81 bid, 82.5 offered. Another market source had those bonds off nearly 1½ points at the 81.5 level, while its 8 7/8% notes due 2014 were seen down 1½ points at 88.5.

Another market source also saw the latter bond at 88.5, but said the loss was closer to 2 points.

Trump slumps on Moody's scrutiny

A trader saw Trump Entertainment Holdings Inc.'s 8½% notes due 2015 down 2 points at 75.5 bid, 76.5 offered. He blamed the slide on the news that Moody's is reviewing the Atlantic City, N.J.-based casino operator's B3 corporate family and probability of default ratings, its Ba3 senior secured bank facility rating and its Caa1 second lien note rating for a possible downgrade.

Moody's cited several challenges the company faces, including competition from new casinos in New York and Pennsylvania and a step up by Trump's local rivals of their promotional spending in the Atlantic City market. The rating agency warned that "any one [of the challenges] could make it difficult for Trump to simultaneously invest additional capital in its existing assets and service its debt over the next 12 to 18 months."

Tropicana gains on asset-sale plan

Another mover in that same gaming sector Monday was Tropicana Entertainment, whose Wimar OpCo 9 5/8% notes due 2014 were seen a point or two better on news it had made the interest payment on its 9 5/8% senior subordinated notes and also plans to sell properties in Indiana and Mississippi, along with the forced sale of its Atlantic City casino resort. The proceeds will be used to pay its bank debt.

A trader said Wimar/Tropicana "continued its rebound grind from last week," when the bonds plunged to levels as low as the middle 50s, down 10 or 12 points, on the news that New Jersey state gaming regulators had denied its eponymous Tropicana resort a gaming license renewal, had ordered the Atlantic City casino sold and had appointed a trustee to run the place in the meantime.

He saw the bonds at 66 bid, 66.5 offered, up 2 points versus Friday, and said they were "down only a point or two" from the 68ish level at which the bonds had traded before the news of the license denial.

"They've come just about all the way back" from their recent lows around 56-58 following the news. "It's been a substantial move."

Another trader saw the bonds a point better at 66 bid, 67 offered.

However, at another desk, a trader quoted them a point lower on the session at 66 bid, 67 offered.

Calpine climbs

Another big mover out of the distressed sphere was Calpine; a trader saw the bankrupt San Jose, Calif.-based electric power producer's bonds better on the news Calpine will lower its bankruptcy-exit financing package by $400 million to $7.6 billion under a deal with its lenders that gives it an extra week to emerge from Chapter 11 and loosens some of the loan's financial covenants.

He saw its 8½% notes due 2008 jump 7 points to 114 bid, 116 offered, while its 7¾% notes due 2009 were up 7 points at 113 bid, 115 offered. He also saw Calpine's convertible notes up, with its 4¾% notes due 2023 4 points better at 101.5 bid, 103.5 offered, and its 6% notes due 2014 a point better at 87 bid, 89 offered.

At another shop, a trader saw the '08s up 8 points at 115 bid, 116 offered, and pegged its 8½% notes due 2011 a point better at 114 bid, 115 offered.

Another market source had the '11s up more than 2 points, at just below 116 bid.

Tekni-Plex bonds jump, trade flat

A trader saw Tekni-Plex's 12¾% notes due 2010 up 6 points at 60 bid, 61 offered. He noted that the bonds started trading flat, or without their accrued interest, while they had been trading with interest on Friday. Besides the switchover to trading flat having affected the bonds' nominal price, he also said that there was "a lot of technical trading - a short squeeze made the bonds go up." He opined that the bonds were "tremendously overvalued" at this level, and "definitely will go down."

A market source at another desk saw the bonds up 7½ points, above the 62 level.

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