Intelsat Jackson megadeal, Surgery Partners price; Werner, First Quality deals slate; new Brand stays strong

By Paul Deckelman

New York, June 19 – The high-yield primary arena began the new week on Monday with a pair of quickly shopped offerings that generated some $1.87 billion of new paper from domestic or industrialized-country borrowers.

Luxembourg-based satellite communications company Intelsat SA had the big deal of the day – $1.5 billion of eight-year notes, priced through the company’s Intelsat Jackson Holdings SA unit.

News of the debt-refinancing deal helped to push the company’s existing bonds higher.

Also coming to market on Monday was healthcare company Surgery Partners Inc., which priced an upsized $370 million issue of eight-year notes via a funding subsidiary; proceeds of that new offering will be used to fund a major acquisition.

First Quality Enterprises, Inc., a maker of personal-care products, was heard getting ready to price a $500 million offering of eight-year notes during Tuesday’s session, with proceeds slated to go for debt refinancing.

Werner Co., a maker of ladders, scaffolding and other industrial climbing equipment began shopping a $265 million eight-year offering around to investors, with pricing expected later in the week. Proceeds will go to help fund the company’s leveraged buyout.

Out of Europe came word that solar- and wind-power producer European Energy A/S is lining up a smallish euro-denominated deal, in order to take out some existing debt.

Among recently priced issues, traders said that Friday’s sizable deal from Brand Energy & Infrastructure Services, Inc. continued to dazzle investors in the aftermarket.

Statistical market performance measures turned mostly better on Monday, after having been down across the board on both Thursday and again on Friday; they had turned southward on Thursday after having been mixed on Wednesday.

Intelsat brings megadeal

The biggest offering of the day came from Intelsat Jackson Holdings SA, which priced $1.5 billion of eight-year senior notes (CCC+) on Monday according to high-yield syndicate sources.

They said the quick-to-market offering was priced to yield 9¾%.

Luxembourg-based communications satellite operator Intelsat SA Intelsat Jackson, a wholly owned subsidiary of Luxembourg-based communications satellite company Intelsat SA said that the Intelsat Jackson unit plans to use the net proceeds of the Rule 144A and Regulation S deal, along with other available cash on hand, to fund the redemption of all $1.5 billion of its currently outstanding 7¼% senior notes due 2019.

Intelsat up on deal news

The news that Intelsat was bringing a big debt-refinancing deal to market helped the company’s existing bonds.

A trader said that Intelsat paper was “pretty active,” and up anywhere from ½ to 2 points on the news.

For instance, he said that the 7¼% notes due 2019, which are to be taken out using the proceeds from the new deal, was “very active,” creeping up to just above the par level, a ½-point upside move, he said.

A trader at another shop saw those notes up ¾ point on the day, at 100½ bid.

Other issues of Intelsat paper also got a boost from the news that the company was working on chopping down, or, as in this case, extending the maturities of its more than $15 billion of debt.

A market source said that Internet Connect Finance SA’s 12½% notes due 2022 gained 2¼ points, ultimately ending at 91½ bid.

Surgery Partners upsizes offering

The day’s other new-deal pricing involved Surgery Partners, Inc., a Nashville-based surgical facilities operator which did an upsized $370 million of eight-year senior notes (Caa2 / CCC+) via a funding subsidiary.

That quick-to-market offering priced at par to yield 6¾%, after having been upsized from an originally announced $335 million.

That pricing came at the tight end of the 6¾%-to-7% price talk which had circulated in the market earlier.

The Rule 144A/Regulation S offering, being sold without registration rights, was brought to market by joint book-running managers Jefferies LLC and KKR Capital Markets LLC.

Proceeds from the bond deal will be used to help fund Surgery Partners’ acquisition of National Surgical Healthcare Inc., a Chicago-based owner and operator of surgical facilities in partnership with local physicians, from Irving Place Capital for about $760 million, and to refinance an existing term loan.

The notes’ official issuer will the company’s wholly owned SP Finco, LLC subsidiary; after the NSH acquisition closes, SP Finco will be merged with and into another wholly owned subsidiary, Surgery Center Holdings, Inc., which will then become the official issuer.

First Quality deal on tap

High-yield syndicate sources said that First Quality Finance is expected to price $500 million of senior notes due 2025 (expected ratings B1/BB-) during Tuesday’s session.

They said the Rule 144A/Regulation S for life issue is being brought to market via bookrunners Wells Fargo Securities LLC, J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Citizens Capital Markets Inc. and SunTrust Robinson Humphrey Inc., along with co-managers SMBC Nikko Securities America, Inc. and BB&T Capital Markets.

The offering will be shopped to potential buyers via an 11 a.m. ET investor call, with pricing expected thereafter.

The company is a subsidiary of First Quality Enterprises, Inc., a Great Neck, N.Y.-based maker of personal-care products and industrial products.

It plans to use the new-deal proceeds to repay revolving loans outstanding under the company’s senior secured credit facilities, pay related transaction fees and expenses, and for general corporate purposes.

Werner shops LBO financing deal

Looking a little further out on the calendar, Werner Co. is shopping a $265 million offering of eight-year senior notes (Caa2/CCC+) via its Werner FinCo LP, funding subsidiary, high-yield syndicate sources said.

Pricing on the offering is expected to occur on Friday.

The deal is coming to market via bookrunner JPMorgan.

Werner, a Greenville, Pa.-based manufacturer of ladders and other climbing equipment, fall protection and access related products such as scaffolding, plans to use the deal proceeds to help fund the recently announced planned leveraged buyout of Werner on undisclosed financial terms, by funds affiliated with Triton Partners, a Schauffhausen, Switzerland-based investment company.

European Energy plans debt deal

In the European market, European Energy AS plans to sell between €50 million and €75 million of new senior secured notes, syndicate sources said on Monday.

They said that the Soborg, Denmark-based wind- and solar-energy producer would sell the notes through Carnegie Investment Bank AB and Nordea Bank AB, which would begin holding fixed-income investor meetings on Tuesday.

The new-deal proceeds would be used to fund the redemption of the company’s €45 million of senior unsecured callable floating-rate bonds due 2018 at a redemption price of 102 plus accrued interest.

Brand holds onto gains

Among recently priced new offerings, traders said that Friday’s deal from Brand Energy and Infrastructure Services continues to trade at a handsome premium to its par issue price.

A trader saw the Kenesaw, Ga.-based company’s 8½% notes due 2025 at 103½ bid.

A second pegged the bonds at 103 1/8-to-103 5/8 offered.

On Friday, the company priced $700 million of the notes at par in a regularity scheduled forward calendar deal.

The new bonds quickly firmed to near the 103 bid level and have not looked back.

Indicators firm up

Statistical market performance measures turned mostly better on Monday, after having been down across the board on both Thursday and again on Friday; they had turned southward on Thursday after having been mixed on Wednesday.

The KDP High Yield Daily index was unchanged Monday at 72.37, after having lost 6 basis points on Friday, its second straight loss; on Thursday, it had slid by 12 bps.

Its yield came in by 3 bps to 4.90%, its first narrowing after two straight sessions in which it rose – by 2 bps on Friday and by 1 bp on Thursday.

The Markit CDX Series 28 High Yield index improved by ¼ point on Monday to end at 107 7/16 bid, 107½ offered – its first gain after three straight losses before that, including Friday’s fall of nearly 9/32 point.

And the Merrill Lynch North American High Yield index gained 0.094% on Monday, rebounding after losses the previous two sessions, including Friday’s 0.72% setback.

Monday’s upturn raised the index’s year-to-date return to 5.058% from 4.959% on Friday, although it remains down from last Wednesday’s close at 5.173%, which had been its second consecutive new 2017 year-to-date peak level.

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