Quicksilver prices upsized deal; Aztar bonds up on merger news

By Paul Deckelman and Paul A. Harris

New York, March 13 - Quicksilver Resources Inc. was heard by high yield syndicate sources to have successfully priced an upsized issue of 10-year notes on Monday.

Also in the new-deal arena, price talk emerged on Angiotech Pharmaceuticals Inc.'s upcoming issue of eight-year notes. And Hard Rock Park - the new theme park arm of Hard Rock Café International Inc. - hits the road Tuesday with its planned offering of six-year floating-rate notes.

In the secondary sphere, Aztar Corp.'s bonds were up solidly on the news that rival casino operator Pinnacle Entertainment Inc. has agreed to acquire the Phoenix-based gaming company for $1.45 billion in cash, plus assume $723 million of Aztar debt.

Automotive bonds were firmer, at least in the early going, as The Wall Street Journal reported that Cerberus Capital Management LP's bid for a controlling interest in General Motors Acceptance Corp., the financing arm of General Motors Corp., seems to be "gathering steam" with the recruitment of a Japanese bank controlled by Cerberus as a source for some of the funding such a deal would require.

A market source said that high yield overall was unchanged on Monday, adding that it was becalmed by the quiet that pervaded both the equity and Treasury markets.

Another source said that the CDX index advanced one-eighth of a point on the session.

Quicksilver upsizes

One deal priced during the Monday session as Fort Worth, Texas-based oil and gas exploration and production company Quicksilver Resources completed an upsized $350 million issue of 10-year senior subordinated notes (B2/B) at par to yield 7 1/8%.

The yield came in the middle of the 7% to 7¼% price talk.

JP Morgan and Credit Suisse were joint bookrunners for the debt refinancing transaction that was upsized from $300 million.

Hard Rock Park plans $155 million

A decimated new issue calendar managed to take aboard one new offering as the March 13 week got underway.

Hard Rock Park will begin a roadshow on Tuesday for its $155 million offering of six-year senior secured floating-rate notes.

Deutsche Bank Securities has the books for the offering, proceeds from which will be used to help fund the approximately $200 million design, development, construction and equipment of a new theme park in Myrtle Beach, S.C.

The developers are Fantasy Harbour Theme Park LLC and Hard Rock Cafe International Inc., a subsidiary of the London-based Rank Group.

Angiotech talks $250 million

With the completion of the Quicksilver deal, only one offering remained on the calendar as business expected to be completed this week.

Vancouver, B.C.-based specialty pharmaceuticals producer Angiotech Pharmaceuticals Inc. talked its $250 million offering of eight-year senior subordinated notes (B2/B) at 7¾% to 8%.

The Credit Suisse and Merrill Lynch led acquisition deal is expected to price Thursday.

Rumors of Xerox

Although the primary market essentially sleep-walked through the Monday session, one rumor did make the rounds.

Several sources professed the expectation that Stamford, Conn., document company Xerox Corp. could show up soon with an offering, probably in the form of a drive-by.

Xerox last tapped the junk market in the late summer of 2004 with a $500 million issue of 6 7/8% senior notes due Aug. 15, 2011 which priced at par on Aug. 5, followed on Sept. 20 by a $250 million add-on to that issue that priced at 104.25 to yield 6.108%.

Citigroup and JP Morgan led both transactions.

Quicksilver unchanged in trading

When the new Quicksilver 7 1/8% senior subordinated notes due 2016 were freed for secondary dealings, traders saw the new bonds anchored around their par issue price, with one seeing them trade at bid levels around par to 100.125 before settling in at 99.875 bid, 100.125 offered. Another pegged them at par bid, 100.25 offered.

Levi Strauss & Co.'s new 8 7/8% notes due 2016, which priced on Friday at par, were holding steady around that level on Monday. Level 3 Communications Inc.'s new 12¼% notes due 2013, which priced on Thursday at 96.618, were hanging in at 97 bid, 97.75 offered.

Aztar gains on merger

Back among the established issues without any new-deal connections, a trader saw the Aztar-Pinnacle announcement as the big news on a day when "not much" was happening otherwise.

He saw Aztar's 7 7/8% notes due 2014 three points better at 106.5 bid, 107.5 offered, while Pinnacle's 8¼% notes due 2012 were also up three points at 104 bid, 105 offered.

At another desk, a trader saw the Aztar bonds push up to 105 bid, 105.5 offered in morning trading after the announcement of the merger news, and then firm further to a going-home price of 104.25 bid, 108.25 offered, well up from a pre-news opening level at 103.5.

However, he only saw the Pinnacle notes up half a point on the day at 103.5 bid 104.5 offered.

Yet another trader saw Aztar up 3½ points on the day at 107, but had no quotes available for the Pinnacle bonds.

The combination of the two companies will give Pinnacle - which has its corporate headquarters in Las Vegas but which up until now actually has had no gaming properties there - an entree at last into the Number-One gaming market, where Aztar operates the Tropicana resort on the famed Las Vegas Strip. It also gets Pinnacle into the Number-Two gaming destination, Atlantic City, N.J., where Aztar operates its other Tropicana casino-hotel. Pinnacle is already in Nevada outside of Vegas, with its Boomtown casino in Reno, and in number of the newer gaming jurisdictions, such as Mississippi, Louisiana, Indiana and Missouri.

Pinnacle said its acquisition of Aztar is expected to close by the end of the year. It has received a financing commitment from Bear, Stearns & Co. Inc. and Lehman Brothers Inc. to complete the transaction, although the deal is not conditioned on financing.

Activant up on LBO

The other merger and acquisition news noted by the junk bond market, Activant Solutions Inc., an Austin, Tex.-based provider of software and other technology solutions to small- and midsized businesses, said that it signed a definitive agreement to be acquired by funds affiliated with private equity investment firm Hellman & Friedman LLC and private equity investment firm Thoma Cressey Equity Partners.

Financial details of the transaction were not disclosed.

A trader saw Activant's 10½% notes due 2011 at 109.75 bid, 110.75 offered, which he said was up 1¾ points from where the bonds had traded late last week.

However, he saw the company's 10.53% notes due 2010 at 102 bid, 103 offered, the same levels they held last week.

Standard & Poor's put Activant's ratings on CreditWatch with negative implications, contending that the company's operating leverage is likely to increase no matter how the financing is structured.

Autos gain on GMAC news

In the automotive realm, a trader saw the sector's bonds firm in early trading after The Wall Street Journal reported that Cerberus Capital Management may secure some of the funding for its bid for control of GMAC from its portfolio firm, Aozora Bank Ltd. of Japan.

"Basically, all of the auto suppliers were up by about a point from around 8 a.m. [ET], until around 10 o'clock [ET]. Then they all gave it back and would all finish the day unchanged.

"So they're raising some capital - but who knows if they're strong-arming them into it," since Cerberus controls Aozora.

"It gave a little bit of push to the sector - and then they gave it all back."

He said the recently robust Dana Corp. "opened up strong," with its 6½% notes due 2009 going as high as 77.25 bid, 78.25 offered, up about a point on the day, but then dropping back later on to finish at 76 bid, 77 offered, "virtually unchanged net-net. But intraday they were up a little bit."

The Journal said that the Japanese bank might put up $1 billion of what is expected to be $11 billion that Cerberus is likely to bid for a 51% stake in GMAC.

Another Japanese bank, Norinchukin Bank - one of the country's largest financial institutions - was reported last week to also be considering joining the Cerberus-led effort to buy control of GMAC. Cerberus, a New York-based private equity firm, has already enlisted Citigroup Alternative Investments, a Citigroup Inc. buyout unit, as a partner. The Journal said that other Cerberus-affiliated portfolio companies might become part of the coalition.

The Cerberus-led group is at this juncture the only real contender for control of GMAC, which General Motors is selling in the hopes of raising the financing unit's debt ratings from their current junky levels and generating more than $10 billion in additional liquidity for GM. A number of companies thought to be potential buyers, including Wells Fargo Bank and Bank of America, have said they were not interested, and Wachovia Bank was recently reported to have dropped out of a joint bid with Cerberus rival Kohlberg Kravis Roberts & Co.

That development was greeted with dismay by the financial markets. But news reports said the giant carmaker is pressing on with its effort, hopes to have a preliminary agreement with its buyer - probably the Cerberus group - by the end of the month, to bring the deal before its board for formal approval by June, and to have the transaction closed by the end of the year.

Another trader, though, saw Dana's bonds "well bid-for," with its 5.85% notes due 2015 push as high as 75.75 bid, 76.25 offered, and then come off that peak level to close at 75.25 bid, 75.75 offered - off the peak level but still well up from 73 bid, 74 offered on Friday.

He agreed with the theory that the bankrupt Toledo, Ohio-based automotive components maker's bonds are being propped up by demand for bonds needed for physical delivery in order to satisfy some of the billions of dollars of credit default swap contracts written before Dana filed. Those CDS contracts function like an insurance policy on the company's debt that pays off to the contract holder in the event of a default.

Yet another trader saw those 5.85s pretty much unchanged at 75.25 bid, 76.25 offered, with Dana's 6½% notes due 2008 at 76.5 bid, 77.5 offered, up half a point, while its 7% notes due 2028 were ¾ point better at 76.5 bid, 77.25 offered.

The trader meantime saw GM's benchmark 8 3/8% notes due 2033 at 74 bid, 74.5 offered, down ¼ point on the day, while GMAC's 8% notes due 3031 were unchanged on the day at 93.75 bid, 94.25 offered.

Ford Motor Co.'s 7.45% notes due 2031 were down ¼ point at 72 bid, 72.5 offered, while its 7% notes due 2013 were at 88 bid, 88.5 offered, unchanged.

Yet another trader saw the Dana bonds higher by a point on the bid side at 76 bid, 77 offered, while former GM unit Delphi Corp. was also a point better, at 60 bid, 62 offered for its 6.55% notes slated to come due later this year.

GM and GMAC, meantime, "were trading a lot, but within a range. I don't think they did anything."

He saw the GMAC 8s at 94 bid, 95, with "a lot of trading, but no price movements."

Charter sinks

A trader saw Charter Communications Inc.'s bonds lower across the board, with the St. Louis-based cable operator's 9 5/8% notes down as much as five points from Friday's level, at 64.75 bid, 65.75 offered. He cited the continued market feeling that the cable operators in general - and heavily leveraged, financially less-stable cablers like Charter will come under pressure in the wake of the pending AT&T acquisition of BellSouth Corp., which will create a more formidable telecom competitor as the cable companies and the phone firms add services and poach into each other's territories and try to steal their traditional customers. On Monday, Lehman Brothers was out with a research note that called Charter the cable operator "most exposed" to the probes by Verizon, AT&T and other phone giants.

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