Markets considers possible deals from DirectCash, PowerStream; Yellow Media notes climb

By Cristal Cody

Prospect News, July 23 - DirectCash Payments Inc. announced plans on Monday to price C$125 million of seven-year senior notes in conjunction with a C$65 million offering of its common shares. PowerStream Inc. kicked off a two-day roadshow on Monday for a potential transaction depending on market tone this week, a bond source said.

The company held the roadshow in Montreal on Monday and will meet in Toronto on Tuesday.

"We're expecting a 30-year issue from them just to refinance an EdFin maturity," a bond source said.

Otherwise, the day mostly was quiet as new issuance slowed and corporate bonds widened on a bid for safer haven debt over the continued euro debt crisis.

"It's quite the risk off day, all day," a bond source said.

Corporate bonds ended weaker. The Markit CDX Series 18 North American investment-grade index eased 2 basis points to a spread of 113 bps.

The Markit CDX Series 18 North American high-yield index dropped to 96.01 from 96.37.

Yellow Media Inc.'s senior notes climbed higher in active trading on the day following the company's recapitalization announcement to reduce debt.

DBRS said on Monday it downgraded Yellow Media's medium-term notes and subordinated debentures to C from CCC.

The agency said that if Yellow Media's plan is approved in a Sept. 6 vote, it will result in a default because lenders will receive less than the originally intended interest and principal.

Standard & Poor's also cut its rating on Yellow Media to C from CC based on the distressed exchange.

Government bonds ended higher on the bid for safer haven debt due to the euro debt crisis. Canada's 10-year note yield fell to 1.58% from 1.61%. The 30-year bond yield closed 3 bps lower at 2.21%.

DirectCash deal

DirectCash Payments announced plans on Monday to price C$125 million of seven-year senior notes in conjunction with a C$65 million offering of its common shares.

BMO Capital Markets Corp. is the bookrunner.

The company said the deal will include limited marketing, with closing expected on Aug. 8.

The notes will be offered in Canada and under Rule 144A on a private placement basis.

The share deal includes 2.8 million common shares priced at C$23.35 each in an offering expected to close on Aug. 9.

Proceeds from the common shares and the notes will be used to reduce DirectCash's outstanding senior and bridge debt that are related to the recently closed acquisition of Customers Ltd. in Australia and the acquisition of InfoCash Holdings Ltd. in the United Kingdom.

Calgary, Alta.-based DirectCash is a provider of ATMs, debit terminals and prepaid products.

PowerStream roadshow

Ontario electric distributor PowerStream started a two-day roadshow on Monday for a potential 30-year bond offering, a bond source said.

The company (DBRS: A) held the roadshow in Montreal on Monday and will meet in Toronto on Tuesday.

PowerStream is the second largest municipally owned electric distributor in Ontario.

Yellow Media rises

Yellow Media's bonds were active in early trading on Monday after the company's announcement of a recapitalization transaction, according to a source.

The company's 7.3% notes due 2015 opened the day at 48 bid, 50 offered and traded higher during the day at 53 bid, 55 offered before going out at 52 bid, 54 offered in the afternoon.

Yellow Media said in a statement on Monday that the recapitalization includes an exchange of credit facilities and medium-term notes for C$1.8 billion of debt. After the recapitalization, the company said its debt will be C$750 million of 9% senior secured notes due in 2018 and $100 million of subordinated exchangeable debentures due in 2022.

The recapitalization is expected to close in late September.

The company's stock soared 240%, or 6 cents, to 8 Canadian cents in trading on Monday.

Montreal-based Yellow Media a Canadian directory publisher.

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