Northern Tier, ClubCorp. price, move up; Ship Finance pulls deal, Murray restructures

By Paul Deckelman and Paul A. Harris

New York, Nov. 22 - Northern Tier Energy LLC/Northern Tier Finance Corp. and ClubCorp. Club Operations Inc. were heard by high-yield syndicate sources to have priced new issues on Monday, with both new deals moving up when they hit the aftermarket - ClubCorp. from a steeply discounted issue price.

But while that was happening, another prospective offering from Ship Finance International Ltd. was heard to have gone to the bottom, with the Bermuda-based maritime company citing worsening market conditions for its decision to pull its deal.

And while they were not spiked, two other forward-calendar deals - from Murray Energy Corp. and from American Reprographics Co. - were heard by the syndicate sources to have had to restructure those respective offerings in order to get would-be investors on board.

Elsewhere, price talk emerged on three other deals - from Rain CII Carbon LLC, Bright Star Corp. and Performance Foods Group, Inc. - with Rain CII and Brightstar widely expected to price on Tuesday. Order books on the Performance Foods deal are meanwhile slated to close at midday on Tuesday, with pricing possible as well.

U.K. homebuilder Taylor Wimpey plc announced plans for a sterling-denominated five-year issue.

New deals, which priced late last week, such as Paetec Escrow Corp. and Petco Animal Supplies Inc. from Friday and Thursday's deals from Giraffe Acquisition Corp. and Interface Inc., continued to hold the secondary gains they notched - but Valeant Pharmaceuticals International's upsized mega-deal continued to struggle.

Traders said activity levels were light and would likely continue to fade ahead of the Thanksgiving holiday.

Statistical performance indexes meantime all pointed south.

ClubCorp. eight-year notes

The tone of the market was poor early Monday afternoon, according to a trader from a high-yield mutual fund.

And liquidity was low heading into the four-day Thanksgiving holiday weekend, which commences following Wednesday's close, the trader added.

However, against this backdrop, the primary market continued to carve away at the still-formidable deal calendar, which carried over from last week.

Two issuers, each one pricing a single high-yield tranche, raised $683 million during the session.

ClubCorp. priced a $415 million issue of 10% eight-year senior notes (B3/B+) at 94.767 to yield 11% on Monday, according to an informed source.

The coupon, reoffer price and yield all printed on top of earlier price talk.

There were also covenant changes.

Citigroup Global Markets Inc. ran the books.

Proceeds, along with new credit facilities, other funds received in connection with reorganization transactions and cash on hand, will be used to repay debt under the company's existing credit facilities.

The ClubCorp. deal met some headwinds, according to market sources. However, there were anchor accounts determined to see that it got done, according to a buyside source who spoke to Prospect News on Monday.

Northern Tier prices at par

Meanwhile, Northern Tier Energy and Northern Tier Finance priced a $290 million issue of seven-year senior secured notes (B1/BB-) at par to yield 10½%, also on top of the price talk.

Goldman Sachs & Co. was the left bookrunner.

Macquarie, RBC Capital Markets Corp. and SunTrust Robinson Humphrey Inc. were the joint bookrunners.

The Houston-based energy company will use the proceeds to finance the purchase of assets from Marathon Oil Corp.

Taylor Wimpey roadshow

Only one new deal announcement surfaced on Monday.

London-based homebuilder Taylor Wimpey will begin a roadshow on Tuesday for its £250 million offering of five-year senior notes.

The Royal Bank of Scotland and Barclays Capital have the physical books for the Regulation S-only notes. HSBC and Lloyds TSB are joint bookrunners.

Proceeds will be used to refinance existing debt and to fund a contribution to the company's pension plan.

Talking the deals

Looking to the formidable deal calendar, which carried over from last week, details surfaced on several deals.

Performance Foods talked its $550 million offering of seven-year senior notes with a 10½% area yield at a discount.

Credit Suisse, Wells Fargo Securities, Bank of America Merrill Lynch and Macquarie are the joint bookrunners.

Meanwhile Rain CII Carbon and CII Carbon talked their $400 million offering of eight-year senior secured notes (B1/BB-) with a 7¾% to 8% yield.

The notes are expected to price on Tuesday morning.

Citigroup Global Markets Inc. is the left bookrunner. Goldman Sachs & Co. and Jefferies & Co. are the joint bookrunners.

And Brightstar talked its $250 million offering of six-year senior notes (B1/BB-) with an 8½% area yield.

Jefferies & Co. is the left bookrunner. Goldman Sachs & Co., J.P. Morgan Securities LLC, Barclays Capital and Credit Suisse are the joint bookrunners.

All three deals are set to price on Tuesday.

New structures

There was also news about revised deal structures on Monday.

American Reprographics downsized its senior notes offer to $200 million from $220 million.

Meanwhile, the tenor of the notes was reduced to seven years from eight years, and call protection was cut to three years from four years.

Although no official price talk circulated on Monday, discussions have been taking place in the mid- to high 9% range, according to a trader from a high-yield mutual fund.

Earlier discussions took place in the low 9% range. Weaker market conditions, however, played a part in pushing rate discussions higher, the trader added.

The deal, which is in the market via Bank of America Merrill Lynch, is expected to price before Wednesday's close.

And Murray Energy revised its $150 million high-yield bond offering.

The Pepper Pike, Ohio-based coal company now plans to bring the deal as an add-on to its 10¼% senior secured notes due 2015.

Previously the company had been marketing a new offering of seven-year senior notes.

Murray Energy commenced a consent solicitation on Monday in order to allow for the add-on.

The $150 million deal, which had been expected to price during the run-up to the Thanksgiving holiday weekend, is now expected to price during the middle part of the post-Thanksgiving week.

Jefferies & Co. is the left bookrunner. Goldman Sachs & Co. is the joint bookrunner.

Ship Finance suspends deal

Finally, Ship Finance International suspended its $400 million public offering of non-callable 10-year senior notes due to weakening market conditions, according to a Monday press release.

Jefferies & Co. and Goldman Sachs & Co. were the joint bookrunners.

The Hamilton, Bermuda-based maritime company planned to use the proceeds to repay debt, including tendering for its senior notes due 2013.

That tender offer was also withdrawn on Monday.

Northern Tier heads north

A trader said that when Northern Tier Energy's new seven-year secured notes were freed for secondary dealings, they broke up at about the 101 bid level.

A second trader saw the Houston-based energy operator's deal at 101 bid, 101¼ offered - up from its par issue price earlier in the session.

Yet another trader, queried later, saw the bonds going out as good as 100¼ bid, 100¾ offered.

Club Corp. climbs

A trader quoted Club Corp.'s new eight-year bonds at 96 bid, 97 offered - well up from the 94.767 level at which the Dallas-based golf and country club operator's deal had come to market.

He said that the deal was "absolutely" priced cheap enough to attract buyer in the secondary sphere.

Friday deals still flying

Among deals that had come to market on Friday, a trader saw Fairport, N.Y.-based business communications company Paetec's new 9 7/8% notes due 2018 trading at par bid, 101 offered.

That was up from the 99¼ bid, 99¾ offered level at which they had gone home on Friday - and well up from the deeply discounted 96.674 at which that $450 million issue. The notes, upsized from the originally announced $420 million, had priced earlier on Friday to yield 10½%.

Friday's other new deal - San Diego-based pet-supply store chain operator Petco's 9¼% notes due 2018 - was trading at 101 3/8 bid, 101 7/8 offered. That was up a little from the 101 bid, 101 5/8 offered level seen late Friday, and up further from par, where the $500 million issue had priced.

Deals holding their own

Going back a little further, a trader said that Wind Acquisition Finance SA's 7¼% senior secured mega-deal due 2017 was trading at 100 1/8 bid, 100 7/8 offered on Monday.

The company - a unit of Italian phone operator Wind Telecomunicazioni SpA - had priced $1.3 billion of the bonds, upsized from the originally shopped $1 billion at 99.363 on Thursday to yield 7 3/8%, as part of a larger €2.7 billion equivalent two-part issue, which also included a euro-denominated tranche of seven-year senior secured notes. The new bonds had gone home Thursday around 100½ bid, 100¾ offered and at 100 3/8 bid, 100 5/8 offered on Friday.

Among Thursday's other deals, which priced and were seen having gained solidly from issue, Giraffe Acquisition Corp. - the issuing vehicle for San Francisco-based specialty retailer Gymboree Corp.'s 9 1/8% notes due 2018 - was seen on Monday at 100 3/8 bid, 101 7/8 offered.

That was up from Friday's closing levels around 101 1/8 bid, 101½ offered, which in turn were up from the par price for the $400 million issue on Thursday.

A trader said that Atlanta-based carpet maker Interface Inc.'s 7 5/8% notes due 2018 were continuing to show strength on Monday, finishing at 102 bid, 103 offered.

On Friday, the bonds had pushed up to 102 bid, 102¼ offered, well up from the $275 million deal's par issue price on Thursday.

Valeant a bitter pill

Not all of the Thursday deals were seen firming on Monday. A trader said that the recent Valeant Pharmaceuticals International 6 7/8% notes due 2018 eased to 98 3/8 bid, 99½ offered in light dealings.

That was down from the 99 bid, 99½ offered level seen on Friday.

The Mississauga, Ont.-based drug maker's quickly shopped $1 billion offering - upsized from its originally announced $700 million - had priced late on Thursday at 99.24 to yield 7%, but has not been able to gain any traction with aftermarket investors so far.

Dunkin' still doin' it

A trader said that Dunkin' Brands' $625 million of 9 5/8% notes due 2018, which emerged as the star performer among the deals which priced last week, were still trading at a "pretty darn tight" 100½ bid, 100 5/8 offered.

A second trader said the bonds still "did well," holding in a 100 3/8 bid, 100 5/8 offered context.

That was about unchanged from where the offering had gone home on Friday afternoon - and well up from the 98.5 level at which the Canton, Mass.-based donut shop and ice cream store franchiser's deal had priced a week ago to yield 9.9%.

Secondary indicators slipping

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index losing ½ of a point on Monday to end at 100 3/8 bid, 100¾ offered, after having gained 1/8 point on Friday.

The KDP High Yield Daily index meantime fell by 19 basis points on Monday to finish at 73.84, on top of the 25 bps loss seen on Friday. Its yield rose by 7 bps to 7.39%, after having gained 9 bps on Friday.

The Merrill Lynch High Yield Master II index fell by 0.026% on Monday versus its 0.083% decline on Friday. That left its year-to-date return at 14.089%, down from Friday's 14.119% and from the 2010 peak level of 15.602% reading recorded on Nov. 9.

Advancing issues trailed decliners for a second straight session on Monday, with the difference widening to about a seven-to-five margin on Monday from Friday's six-to-five advantage for the losers.

Overall activity, represented by dollar-volume levels, fell by 19% on Monday, after having slid by 40% on Friday from the previous session's volume level.

A trader said that at his shop, it was "a very light day," with prices in Junkbondland unchanged to off 1/8 point, "across the entire board."

Monday's session was "just one of those days. It was dead," he said.

A second said, "The market was definitely weaker," pegging it down ¼ of a point to ½ a point on the day. There were "no real standouts - just the market in general was weaker."

Other than that, he added, "I really don't have anything to tell you."

Several traders said that volume is likely to continue to dwindle even from Monday's truncated level.

The first trader opined that already "it feels like everyone's checked out for Thanksgiving to be completely honest," adding that, "I've really got my eyes set on Wednesday morning - because I'm not even coming in."

The holiday on Thursday will see the financial markets in the United States completely closed, and although the fixed-income markets will technically be in session on Friday - albeit with an early end recommended by the Securities Industry and Financial Markets Association - the reality, several traders said, is that very few people are likely to be around to do anything.

"Volumes were light," he continued, "and a lot of the accounts I spoke to were just cleaning stuff up and doing homework today and [Tuesday] before they leave for the holidays.

"Wednesday will be a non-event - and so is Friday."

Non-new deals seen mixed

From out of deeply-distressed territory, a trader saw the Motors Liquidation Corp. benchmark 8 3/8% bonds due 2033 down another half point, at 31¼ bid, 32¼ offered.

The bonds have been sliding since early last week, first in anticipation and later on the results of the "new" General Motors' initial public stock offering. The benchmark bonds - issued by the former GM, which was left saddled with the carmaker's debt and other unwanted assets while the company emerged from Chapter 11 - had traded as high as 37 bid just days before the IPO on investor expectations of better valuations for the company, which would boost the recovery the bondholders will get when their paper is converted into stock.

GM domestic arch-rival Ford Motor Co.'s 7.45% notes due 2031 were seen down ¼ of a point at 108.25 bid, 109.25 offered. The No. 2 domestic carmaker's bonds had recently been as good as around 115 bid, before dropping back.

But Sbarro Inc.'s 10 3/8% notes due 2015 were quoted up 3½ points at 48.5 bid after several late large-bloc trades.

There was no fresh news out on the Melville, N.Y.-based Italian-style cafeteria restaurant operator that might explain the gain.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.