GM gyrates on job-cut news; Alamosa up on Sprint-Nextel buyout; Avago $1 billion offering prices

By Paul Deckelman and Paul A. Harris

New York, Nov. 21 - General Motors Corp. bonds firmed smartly in the early going on Monday in response to company plans to close nine manufacturing plants and three other facilities and to cut its North American workforce by 30,000 in the next three years - but they couldn't hold the gains and surrendered most of them by the time the market closed, ending up only marginally.

Other automotive names followed a similar up-and-down pattern, traders said.

Apart from the autosphere, Alamosa Holdings Inc.'s bonds were up solidly on the news that Sprint Nextel Corp. will acquire its largest regional Sprint-branded wireless affiliate for $3.4 billion in cash, plus the assumption of some $900 million of Alamosa debt.

Overall, one market source marked the high-yield a quarter of a point higher on Monday trailing higher stock prices and strength in the Treasury market.

In the primary arena, Avago Technologies Finance Pte. Ltd. was heard to have brought a $1 billion three-tranche mega-deal to market. Pricings were also seen for Metals USA Inc., Tronox Worldwide LLC and Sherritt International, the latter a Canadian dollar-denominated offering.

One source characterized the primary as "surprisingly busy," given the fact that the Thanksgiving holiday break is pending. In total Monday saw $1.625 billion price in a handful of tranches from three issuers.

However the pricings tend to suggest that investors retain the momentum, as one of Monday's five tranches priced in the middle of talk, one came on the wide end, another on the wide end of upwardly revised talk and two priced wide of price talk.

Avago brings $1 billion

Terms circulated Monday on one issue from an Asia-based corporate issuer that was paraded in front of high-yield and emerging markets accounts.

Avago Technologies Finance Pte. Ltd. priced $1 billion of high-yield bonds in three tranches.

The Singapore-based company priced a $500 million issue of eight-year senior fixed-rate notes (B3/B) at par to yield 10 1/8%, 12.5 basis points beyond the wide end of the 9¾% to 10% price talk.

Avago also priced a $250 million issue of 7.5-year senior floating-rate notes (B3/B) at par to yield three month Libor plus 550 basis points, on the wide end of the Libor plus 525 to 550 basis points price talk.

In addition the company priced a $250 million issue of 10-year senior subordinated notes (Caa2/CCC+) at par to yield 11 7/8%, 25 basis points beyond the wide end of the 11½% area price talk.

Lehman Brothers, Citigroup and Credit Suisse First Boston were joint bookrunners for the LBO deal.

A syndicate source told Prospect News that in a presently choppy U.S. high-yield market Avago came together at the end.

The source spotted the new senior notes at 100.375 bid, and the subordinated bonds at par bid.

However another source saw Avago's new 10 1/8% bonds due 2013 at 99.75 bid, par offered late in the session, having eased from the issue price.

Tronox at wide end of revised talk

Elsewhere Tronox Worldwide LLC priced a $350 million issue of seven-year senior notes (B1/B+) at par on Monday to yield 9½%, at the wide end of the 9¼% to 9½% price talk which had already been revised from 8½% to 8¾%.

Lehman Brothers and Credit Suisse First Boston were the bookrunners for the deal, which was brought to market to help fund the spin off of the Oklahoma City-based chemical business from Kerr-McGee Corp. and pay a dividend to Kerr-McGee.

Metals USA in the middle of talk

Meanwhile Metals USA Inc. priced a restructured $275 million issue of 10-year senior secured fixed-rate notes (B3/B-) at par on Monday to yield 11 1/8%.

The yield came in the middle of the 11% to 11¼% price talk.

The company dropped a proposed floating-rate tranche.

Credit Suisse First Boston and CIBC World Markets ran the books for the LBO deal from the Houston-based manufacturer and processor of metal components.

Galaxy Casino coming with $500 million

As players in the United States prepare to make it warm for the turkeys, a roadshow is expected to get underway Wednesday in Asia for Galaxy Entertainment Finance Co. Ltd.'s $500 million two-part offering of global bonds (B+).

The deal will subsequently be marketed in Europe and the United States.

The prospective issuer, a subsidiary of Macau's Galaxy Casino, is offering seven-year fixed-rate notes which come with four years of call protection and five-year floating-rate notes that come with three years of call protection.

Merrill Lynch & Co. and Morgan Stanley are the bookrunners for the construction-funding deal.

Galaxy was the only new roadshow start heard during the session.

More deals to gobble up

With only one full session and one abbreviated session remaining before the four-day Thanksgiving break, primary market sources expect terms to arise on four or five more deals.

Chaparral Energy Inc. talked its $325 million offering of 10-year notes at 8¼% to 8 3/8% on Monday. JP Morgan has the books for the B3/B deal that is expected to price Tuesday.

Meanwhile Gibraltar Industries Inc. talked its $200 million offering of 10-year senior subordinated notes (BA3/B+) at 8% to 8¼% on Monday.

That deal, also via JP Morgan, is likewise expected to price Tuesday.

Elsewhere price talk was heard late last week on two other deals expected to price.

Greektown Holdings LLC's $185 million of eight-year senior notes (B3/CCC+), via Merrill Lynch, are talked at a yield of 9¾% to 10%.

Network Communications' restructured $175 million senior (from subordinated) eight-year notes (expected B2/confirmed B-), via Credit Suisse First Boston, are talked at 10½% to 10¾%.

Both Greektown and Network Communications are expected to price on Tuesday.

Less certain, primary market sources say, is the timing of Italian telecom Wind Telecomunicazioni's €1.250 billion equivalent of 10-year senior notes in dollar and euro tranches, via Deutsche Bank Securities, ABN Amro, Banca IMI.

Some sources expressed the belief that the deal could still come before Thanksgiving.

Others say the deal is more likely to get done after the feathers have settled.

Avago near par in trading

When the new Avago bonds were freed for secondary dealings, a trader saw the company's 10 1/8% senior notes due 2013 at 99.75 bid, 100.25 offered, saw its 11 7/8% subordinated notes due 2015 at 99.875 bid, 100.375 offered, and saw its floating-rate senior notes due 2013 at par bid, 100.5 offered, all versus a par issue price earlier in the session.

A second trader at another desk also saw all three issues within that context, although a source at another shop said he had seen the seniors as good as 100.375 bid and the subs at par.

Metals USA's restructured 11 1/8% senior secured notes due 2015 were being quoted at 100.5 bid, 101 offered.

The Tronox 9½% senior notes due 2012 "came too late in the day" for any meaningful aftermarket activity, a trader said, adding "maybe we'll see them in the morning."

GM climbs, falls back

Back among the established issues, GM was the object of most interest, with its flagship 8 3/8% notes due 2033 seen having jumped about four to five points in initial dealings, on the news that the recently beleaguered automotive giant will close a dozen manufacturing plants and parts facilities, accounting for about one-quarter of its North American manufacturing capacity, and will downsize its work force by some 30,000 hourly jobs from now through the end of 2008, mostly through attrition and by offering early retirement buyouts to employees in selected areas (see related story elsewhere in this issue).

That took those bonds up to around the 75 bid area, well above the levels in the mid 60s at which they were trading about a week ago, and up from Friday's closing levels around 70.5.

However, market participants said, the GM bonds came back down, and ended bid at about 71, up maybe half a point on the day.

"They were up four or five, points on their high for the day" a trader said, "but then they dropped back. I guess to some extent what [GM chairman and chief executive officer Rick] Wagoner said was already in the market," which had risen in Friday's dealings partly on the news that GM was going to announce a round of plant closings and job cuts this week.

"Plus, they still have to do something on the health side," he said. "Just cutting back production is only one shoe. They still have to do something with the benefits." Bloat in this area is calculated to be costing GM hundreds of millions, if not billions of dollars, helping the world's largest carmaker to lose nearly $4 billion some time this year.

Also complicating things, potentially, is the clear unhappiness of the United Auto Workers union with the plans that GM announced Monday. The union called the projected job cuts "unfair," saying that its members were being punished for bad decisions made in the executive suites.

Union cooperation will be needed if GM is to be allowed, under its current labor contract, to offer buyouts to any of its employees, so with the UAW less than thrilled by the planned job cuts, such buyouts are by no means a sure thing. The announcement, the trader said, thus was "just one more step in the process.

"GM opened very strong," another trader said, "on the anticipation more than the news, of what the CEO had to say," but after trading as high as 75, he said, it was all downhill from there for the 8 3/8s, which ended up half a point better at 71 bid, 72 offered. "As people read [the news], there was some meat in there, but nothing you could really sink your teeth into, because it was all time delayed, so they retracted" from the highs.

Other GM bonds rode the same roller coaster, with the carmaker's 7 1/8% notes due 2013 seen having initially risen about three or four points, before coming off the high to end up just a point at 71 bid.

At another desk, a market source saw the 7 1/8s firm to 71.5, up from 69.75 on Friday, but he also saw the 8 3/8s end at 71, which he called unchanged on the day.

"I think they moved up during the day, but they ended up coming back down and closed little changed, he said."

Another possible negative that soured investors after the heady early gains may have been Wagoner's admission that although GM, as previously announced, was sounding out potential buyers interested in taking a controlling stake in its General Motors Acceptance Corp. financing arm, it was "far from certain that a deal will get done".

GMAC ends unchanged

A trader saw GMAC's 8% notes due 2031 push up to 103 bid from around the par level, before coming back down to actually close down half a point. Another trader saw those GMAC 8s get as good as 105, before regurgitating their gains to finish unchanged at par bid, 101 offered. And yet a third trader saw the bonds rise to 104 from a 99 bid, par offered opening, but then end right back where they started from.

He also saw GMAC's 6¾% notes due 2014 take a similar journey to nowhere, falling back to around their opening levels at 91 bid, 92 offered, after having firmed up to 95 in morning dealings.

Other auto names follow GM

Outside of GM, "all of the autos were up this morning, but they pretty much gave it all back," a trader said.

He saw ArvinMeritor Inc.'s 8¾% notes as high as 94 bid, 95 offered at the opening, before ending at 91 bid, 92 offered, up just half a point from Friday, while Lear Corp.'s 8.11% notes were also up just half a point on the day at 91.5 bid, 92.5 offered, after having gotten as high as 93 bid, 94 offered.

Dura Operating Corp.'s 9% notes due 2009 were down a point on the day to 58, a market source said, although its 8 5/8% notes due 2012 improved to 84.375, nearly ¾ of a point better on the day.

Dana rises on waiver

He saw Dana Corp.'s bonds all better on the news that the Toledo, Ohio-based maker of axle, driveshaft, engine, frame, chassis, and transmission technologies had received a continuation and extension till next May 31 of waivers related to its five-year bank facility and accounts receivable securitization program and has amended the agreements related to both facilities. Those waivers were to have run out at the end of this month.

He saw Dana's 6½% notes due 2009 push up to 81 bid from 78.625 previously, while its 7% notes due 2028 firmed to 72.5 bid, up two points on the day. Dana's 8 5/8% notes due 2015 rose to 72.875, more than two points on the session, while its 6½% notes due 2008 were a point better at 84 bid.

However, a trader at another shop said that while the Dana bonds initially rose handsomely, the news about the waivers "was overshadowed by the fact that the banks got security - Dana had to secure the facility." He said that from his vantage point, the 5.85s, while originally up two points, closed up just a half point, at 72 bid, 73 offered.

Ford holds gains

The one automotive name which managed to hang onto its gains was Ford Motor Co., whose benchmark 7.45% notes due 2031 were 1½ to two points better, closing in the 72-73 area, "on no news," the trader said.

Another trader saw the '31s up about ¾ point on the day, but noted that at 71.5 bid, 72.5 offered, "they did better than [the flagship bond at] GM."

He also saw Ford Motor Credit's 7% notes due 2013 half a point better at 89.5 bid, 90 offered.

Alamosa soars on acquisition

Apart from automotive names, a major mover was Alamosa, on the news of the planned rollup of the Lubbock, Tex.-based provider of Sprint Nextel service to small-town and rural customers in 19 states. Alamosa's 8 ½% notes due 2012 jumped to 109 bid from 105.25, while its 11% notes due 2010 improved to 113 bid from 111.5, a market source said. He also saw its 12% notes due 2009 unchanged.

The coming takeover of Alamosa by Sprint Nextel raises the possibility that it may make similar acquisitions among the remaining regional rural service providers under its umbrella. That gave a boost to UbiquiTel Inc.'s 14% notes due 2010, which were ¾ better at 104.75, while its 9 7/8% notes due 2011 were up the same amount, at 111.

However, iPCS Inc.'s 11½% notes due 2012 were unchanged at 114, while Nextel Partners Inc.'s 8 1/8% notes due 2011 were likewise steady at 106.75.

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