Rite Aid, Intelsat Jackson price deals; Stats ChipPAC postpones mega-deal; GM slide continues

By Paul Deckelman and Paul A. Harris

New York, June 30 - Anxious to clear the forward calendar before junk market activity slackens off later in the week ahead of the July 4th holiday break, Rite Aid Corp. and Intelsat Jackson Holdings Ltd. brought their new deals to market on Monday.

High yield syndicate sources meantime heard price talk on several other upcoming deals that could price this week, from Ferro Corp., Fox Acquisition Sub LLC and AEI.

The calendar also lost one deal - a big one - as the Singapore-based high-tech company Stats ChipPAC Ltd. was heard to have postponed its scheduled $1 billion two-part offering.

In the secondary market, the recently priced B/E Aerospace Inc. 8½% notes due 2018 were seen continuing to fly above par - no small feat for a new issue in the current market.

Rite Aid's established bonds were seen lower.

Among established bonds with no new-deal connections, General Motors Corp.'s bonds and those of its 49%-owned consumer financing arm, GMAC LLC, continued to stutter along in the breakdown lane, still reeling from last week's recommendation by a Goldman Sachs equity analyst that shareholders should jump out and sell the struggling auto giant's stock.

Several market sources saw parts maker Keystone Automotive Industries Inc.'s bonds trading well below their recent levels, although there was no fresh news seen out on the Pomona, Calif.-based company that might explain that drop.

A high-yield syndicate official marked cash bonds "unchanged at best," on Monday.

Meanwhile the new issue market began the pre-Independence Day week at a busy pace, with two issuers pricing a total of three tranches, which generated a combined total of $1.412 billion of proceeds.

Intelsat returns

Intelsat Jackson Holdings Ltd. priced $986.5 million of senior notes in two tranches on Monday.

The deal included $701.913 million 9½% (BB-) and $284.595 million of 11½% notes (CCC+).

Both tranches were initially priced at par.

Credit Suisse, Morgan Stanley and Banc of America Securities LLC were the initial purchasers.

Proceeds from Monday's notes sale, together with cash on hand, will be used to repay part of Intelsat Jackson's outstanding 11¼% senior notes due 2016 and its 9¼% senior notes due 2016.

Some of the outstanding notes have been tendered to Intelsat Jackson under a change-of-control offer conducted by Intelsat Jackson as part of the acquisition of Intelsat Holdings, Ltd., the indirect parent of Intelsat, Ltd., by an entity formed by funds advised by BC Partners Holdings Ltd., Silver Lake Partners and certain other equity investors.

On June 24 Intelsat Subsidiary Holding Co., Ltd., Intelsat (Bermuda), Ltd. and Intelsat Intermediate Holding Co., Ltd. combined to price $7.08 billion of notes in five tranches.

Rite Aid atop price talk

Meanwhile Rite Aid Corp. priced a $470 million issue of 10 3/8% eight-year senior secured second-lien notes (B3/B+/BB-) at 90.588 to yield 12¼%.

The yield was printed on top of price talk.

An informed source said that the deal was well oversubscribed.

Citigroup was the bookrunner.

The Camp Hill, Pa., national drugstore chain will used the proceeds to help fund the tender for $360 million of its 8 1/8% senior secured notes due 2010, $200 million of its 7½% senior secured notes due 2015 and $150 million of its 9¼% senior notes due 2013.

Tuesday's primary

The final session of June 2008 also saw developments on deals that are in the market as business which is expected to clear before the upcoming three-day weekend commences.

Fox Acquisition Sub LLC downsized to $200 million from $230 million its offering of eight-year senior notes (Caa1/B-), and shifted $30 million to its bank loan.

Meanwhile Fox talked the notes at 13% to 13¼%.

Deutsche Bank Securities, UBS Investment Bank and Banc of America Securities are joint bookrunners for the acquisition financing.

Elsewhere Ferro Corp. set price talk for its $200 million offering of eight-year senior notes (B2) at 8¾% to 9%.

Ferro, a debt refinancing and general corporate purposes deal via Credit Suisse, Citigroup and JP Morgan, is expected to price on Tuesday.

Meanwhile price talk of the 10¼% area surfaced on the $250 million 10-year senior bullet notes (B2/B) offer from AEI, the Houston-based energy services company started by Ashmore Group plc.

AEI is expected to price Wednesday via Credit Suisse.

The only other deal on the calendar at Monday's close was Ferrellgas, LP and Ferrellgas Finance Corp.'s $250 million offering of notes mirroring the company's existing 6¾% senior notes due May 1, 2014 (Ba3/B+).

Banc of America Securities LLC and JP Morgan are joint bookrunners for the debt refinancing deal.

There was no news on the deal, Monday.

Finally, Singapore-based microchip testing and packaging firm, Stats ChipPAC postponed its expected $1 billion two-part offering of senior notes (Ba1/BB+) on Monday.

Credit Suisse and Deutsche Bank Securities were joint bookrunners for that dividend funding and debt refinancing deal.

Rite aid bonds lower on new deal

A trader said that he had seen no sign of the new Rite Aid 10 3/8% notes due 2016 - although he exclaimed: "Wow! Look at that discount!" when he saw where the bonds had priced in order to give them the yield required by investors to get the deal done.

Among Rite Aid's established paper, a market source saw the drugstore operator's 7½% notes due 2017 trading at 80 bid, down 2 points on the session.

At another desk, the 71/2s were seen at 80.5 bid, down from the 82 level they held at the end of last week.

Rite Aid's 8 5/8% notes due 2015 held steady around the lower levels to which the bonds had tumbled over two sessions late last week in response to worst-than-expected quarterly results; they were last quoted at 67 bid.

B/E Aerospace still at high altitude

A market source saw the new 8½% notes due 2017 priced on Thursday by B/E Aerospace Inc. trading at 100.625, up from the par level at which the Wellington, Fla.-based aircraft interior components manufacturer had priced those bonds on Thursday.

Another trader quoted them at 100.75 bid, 101 offered, and said bid levels had gotten as good as 100.875. "So that's a very good performer in this arena that we're currently in, bucking the trend of 'sell today and buy back cheaper in a few days'."

Market indicators mostly continue retreat

Back among the established issues, a trader said that the widely followed CDX junk bond performance index was up 1/8 point Monday, seeing it around 93 7/8 bid, 94 5/8 offered level. The KDP High Yield Daily Index remained on the downside, down 3 basis points to 72.38, while its yield actually narrowed by 1 bp to 10.23%.

In the broader market, advancing issues once again trailed decliners by a more than five-to-three margin. Activity, represented by dollar volume levels, was 6% below Friday's levels.

"There isn't a lot out there," a trader said. "Obviously, there are accounts that are selling because they have redemptions - but there are accounts with cash that are just sitting on the sidelines because every day things are getting cheaper. Why jump in today if you can buy the same bond ½ point lower tomorrow? That seems to be the attitude."

Another trader thought that some issues, showing weakness, were bottoming out, and "a couple of things were even a smidge better on very, very light volume."

Things, he said, "kind of found a floor today." He said it might have been due to "month-end, or quarter-end window-dressing, but bids did fill in in a couple of spots. But other than that, it was a very slow session.

"Between golf outings, the holiday-shortened week [which will see the U.S. fixed-income markets close early on Thursday and remain shuttered on Friday, the Fourth] and a Monday in the summer, it was pretty slow out there."

GM continues to spin its wheels

In the autosphere, General Motors's 8 3/8% bonds due 2033 were seen up a point at 58.5 bid, 59.5 offered, while GMAC's 8% bonds due 2031 were ½ point higher at 63.5 bid, 65.5 offered. The same trader saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 unchanged at 56 bid, 58 offered.

Another trader saw the GM benchmarks down ½ point on the day at 59 bid, 60 offered, while the Fords were up ½ at 57.5 bid, 58.5 offered.

GM, said another trader, was down 1 point at 58 bid, although he did see GMAC's paper up a point at 64.

A market source at another shop saw the '33s up nearly 2 points at 59 - but also saw GM's 7.20% notes due 2011 fall more than a point in very active dealings, to end just below the 76 mark. GM's 7 1/8% due 2013 lost more than 2 points on the day to end around the 62 bid level.

GM's bonds have been in a skid since last week when a Goldman Sachs analyst said equity holders should sell GM's shares - once considered among the bluest of blue-chip stock. Analyst Patrick Archambault warned in a research note that the stock will "continue to underperform as market fundamentals deteriorate, which exacerbates liquidity concerns." He also cited expectations that with sales sagging, GM would continue to rapidly burn through its cash and would likely have to look to the capital markets for more cash, which in turn could lead to more dilution of its already underperforming stock.

Ford Motor Credit Co.'s 7 3/8% notes due 2009 gained 1 point to 92 bid, while its 5.80% notes due 2009 were quoted by a market source up nearly 3 points at the 98 level. However, the Ford consumer financing unit's 7.80% notes due 2012 were seen down more than a point at 77.

Also in the automotive realm, a trader saw Keystone Automotive Industries' 9¾% notes due 2013 trading in a 46-48 context, well below recent prior levels around 60, on "no news - it just happened" that the bonds were down 14 points.

A market source at another shop saw the company, which was bought earlier this year by LXQ Corp., trading between 47.875 and 48.5 Monday, in several late-day big-bloc trades. That was well below prior levels earlier this month in a 60-61 context.

A trader said that Delphi Corp.'s 6.55% notes that were to have come due in 2006 dropped more than 4 points to the 21 level.

Sprint continues to gain

Apart from the autos, market participants saw Sprint Nextel Corp.'s bonds continuing to firm, apparently given a lift by renewed talk that the Overland Park, Kan.-based Number-Three U.S. wireless carrier might be able to benefit from a consolidation trend which has taken over the wireless industry. That business has seen such deals recently as Verizon acquiring Alltel Corp. to strengthen its market share, Virgin Mobile buying Helio LLC while Helio parent SK Telecom takes a 17% stake in Virgin Mobile, and Best Buy taking a $1 billion stake in Carphone Warehouse Group plc.

The Sprint bonds rose on Friday, and kept going up on Monday at well. Sprint Nextel's 6% notes due 2016 were seen around 85, up a point from Friday, while its 7 5/8% notes due 2011 gained nearly a point to the 99 level in brisk trading, a market source said.

The company's Sprint Capital Corp. financing subsidiary's 8¾% notes due 2032 were seen ½ point better around the 95 mark.

Graham gets a boost on acquisition news

A trader saw Graham Packaging Holdings' bonds a bit better, apparently helped by the news that the York, Pa.-based maker of plastic beverage containers will be bought in a $3.2 billion deal that includes the assumption of $2.29 billion of debt plus other costs. Hicks Acquisition Co. Inc., an investment fund led by Texas Rangers owner Thomas O. Hicks, will hold a two-thirds stake in the company, which will go public and be renamed Graham Packaging Co. Current Graham owners, led by The Blackstone Group, will remain the largest single shareholder, with about 34% of the new company.

The old company's 8½% notes due 2012 were trading at 95, up ½ point from Friday, while its 9 7/8% notes due 2014 pushed up to around 88.5, also up ½ point.

The deal announcement noted that it had been structured to avoid the requirement to make a change-of-control tender for the notes.

Six Flags eases after accident

A trader saw Six Flags Inc.'s 9 5/8% notes due 2014 at 55 bid, 57 offered, down ½ point, while another quoted them at 56 bid, down ½ point from recent round-lot levels.

He speculated that "people might hesitate to go" to the company's theme parks in the wake of the gruesome - and highly publicized - weekend accident at its Georgia, when a teenager who had climbed a fence to get into a restricted area was decapitated by an onrushing roller-coaster ride.

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