Bally gains on financing news; Sea Containers better on GE move; GM up; primary waits for NXP

By Paul Deckelman and Paul A. Harris

New York, Oct. 4 - Bally Total Fitness Holding Corp.'s bonds and those of the troubled Sea Containers Ltd. were seen moving higher Wednesday as both companies made announcements - seen by market participants as potentially getting each issuer out of an upcoming jam.

In the automotive sector, the news that General Motors Corp. failed to reach agreement with overseas carmakers Renault SA and Nissan Motor Co. on joining the latter two companies' alliance failed to make any kind of a dent in the Detroit giant's bonds - in fact, they were seen higher on the session.

Not so for the bonds of parts supplier Metaldyne Corp., which retreated after the Plymouth, Mich.-based manufacturer issued bearish guidance - raising concerns among its investors that the news could undermine plans for the company to be acquired.

A high yield syndicate official marked the broad market firm but quiet on Wednesday, adding that the Deutsche Bank Annual Global High Yield Conference, now underway in Scottsdale, Ariz., was serving to damp down market activity.

Meanwhile the stage was set for what is expected to be a notable Thursday in the primary market, with nearly a billion of dollar-denominated junk-rated Rule 144A bonds expected to price, but more conspicuously €5.0 billion of anticipated euro-denominated issuance, including the biggest ever burst of issuance from a European issuer, NXP BV, the entity formerly known as Philips Semiconductor.

Bally looks fit

Back in the secondary market, traders noted a robust early move by Bally Total Fitness, whose bonds and shares pushed upward after the embattled Chicago-based fitness center chain operator announced a package of new financing, which also gets it out of hot water with its bondholders. However, the bonds gave back some of those gains later in the session.

"They were higher in the morning and then came off a little bit," said a trader who quoted the company's 9 7/8% notes due 2007 at 89 bid, 90 offered, still a 2 point gain on the day, while its 10½% notes due 2011 were up nearly a point at 97 bid, 98 offered.

At another desk, the 9 7/8s were seen up as much as 3 points on the session around midday at 91 bid but closed about a point off that at 90, still up 2 points.

However, yet another trader called the rise in the 9 7/8s a 3 point gain, while he saw the 101/2s up perhaps 1½ points at 98 bid, 99 offered.

Bally's New York Stock Exchange-traded shares, in contrast, started moving upward early on and never looked back. They ended up 83 cents (49.70%), at $2.50. Volume of 4.1 million shares was more than five times the usual turnover

Bally announced that it had lined up $280 million of financing from a consortium of banks led by JPMorgan Chase.

In a filing with the Securities and Exchange Commission, the fitness club operator said that the lenders had agreed to a term loan of $205.9 million, a delayed-draw term loan of $34.1 million, and a revolving credit facility of $40 million.

The proceeds will go to refinancing the company's existing credit facilities, to fund capital expenditures and provide for additional liquidity.

Last month, Bally had warned that it would have to refinance or extend the maturity on its then-current credit agreement in order to satisfy obligations coming due on April 15 on its 9 7/8% notes and to continue operations. Although the notes are due in mid-October, Bally was obligated to have financing in place for them by April; in the event that it was unable to do so, the early-termination provision in the credit agreement would be triggered, forcing repayment of the entire outstanding $171 million amount at that time.

A trader said the new agreement "buys the company some time" to decide what it will do about the 9 7/8 notes - whether it will line up financing to redeem the notes or make other arrangements.

Sea Containers buoyed

Another group of noteholders breathing a "saved by the bell" sigh of relief Wednesday were those of Sea Containers - even though the news they were hailing is by no means a sure thing.

There isn't even real assurance that the company welcomes the latest development.

Sea Containers' 10¾% notes slated to come due on Oct. 15, were seen up 5 points at 79 bid, 81 offered, several traders said. Its 10½% notes due 2012, which generally trade in tandem with the '06 bonds, were also up 5 points at that same 79 bid, 81 offered level, while its 7 7/8% notes due 2008 moved up about 5 points on the day to 81 bid, 82 offered.

The bonds had recently been battered down into the low-to-mid 70s as participants worried about whether the company would be able to redeem those bonds at their maturity, now only 10 days away.

The Bermuda-based maritime and railroad transportation company's Pink Sheets-traded shares - de-listed this week by the NYSE for failure to file financial reports - jumped 14 cents (15.91%) to $1.02, on volume of 3.6 million.

With all of those bad vibes floating around, the bonds and shares still went up, a trader said, after the company filed an 8-K notice with the SEC in which it disclosed that General Electric Capital Corp. - its partner in GE SeaCo America LLC, the two companies' 50-50 cargo container shipping venture "indicated an interest in buying them out" on GE SeaCo.

Sea Containers said that GE Capital sent it letters last week asserting that the resignation in March of long-time Sea Containers chairman James B. Sherwood constituted a "change of control" under the terms of the joint venture agreement, and it was therefore exercising its right to purchase Sea Containers' half of the valuable company at a "fair market value." It said that if the two sides could not agree on a price, "the determination will be made by either a nationally recognized investment banking firm or a nationally recognized independent public accounting firm."

However, Sea Containers is, for the moment, not having any of it. The company said in its filing that it rejects GE Capital's contention that a "change of control" occurred, and said that it will "contest vigorously" such claims. The company may really mean it - or the language may represent posturing ahead of negotiations to set a price on its share of GE SeaCo.

GM talks over, bonds firm

In the automotive realm, GM's bonds were not adversely affected by the news that the company's talks with potential alliance partners Renault and Nissan came up empty.

GM's 8 3/8% notes due 2033 were seen, if anything, up about a point at 87 bid, 88 offered, while the 8% notes due 2031 of its General Motors Acceptance Corp. financial arm were also firmer at 105.5 bid, 106.5 offered.

GM said that the talks, which had been going on since mid-summer and which could have continued, foundered over GM's insistence that the two overseas carmakers pay the U.S. company a premium for reaping what GM said would have been a disproportionate share of the benefits from a link up - and their refusal to entertain the idea.

GM was also not keen on Renault's desire to take a major stake in the American company - and said further that under the structure the two foreign carmakers wanted, GM would have been barred from entering into joint ventures with other companies.

The alliance talks had been the brainchild of major GM shareholder Kirk Kerkorian - a vigorous critic of current management - who said that GM had to link up with other partners to cut its cost and revitalize its business.

GM has held out the possibility that it could seek out other potential partners for talks.

Metaldyne warning roils bonds

Elsewhere in autoland, Metaldyne's bonds slid, after the company warned that third-quarter results will be lower than expected, due to production cutbacks by its car manufacturer customers, such as GM, Ford Motor Co. and the Chrysler Group unit of DaimlerChrysler AG.

A trader saw the company's 11% notes due 2012, which had been trading around an 89-90 context recently, nosedive down to 83.75 bid, before coming off that low to finish at 86.5 bid, 87.5 offered, still down 3 points on the day.

Its 10% notes due 2013 meantime moved down two points on the session, to 99 bid, 100.5 offered.

Metaldyne did not give out any revised numbers - but it warned that its "actual financial results for the third quarter of 2006 will be lower than indicated in the preliminary outlook provided in early August."

The company also raised the possibility that the lower results could affect its pending acquisition by Japanese partsmaker Asahi Tec Corp., which agreed to pay $1.2 billion for the U.S. firm. Metaldyne said the lower projections could affect the closing conditions of the proposed takeover.

New SemGroup bonds inch up

Among recently priced issues, SemGroup LP's new 8¾% notes due 2015 were quoted at 99.75 bid, par offered.

The Tulsa, Okla.-based energy service company's add-on issue to an earlier tranche of the same bonds, priced on Tuesday at 99.5 bid.

Peabody talks $825 million

The largest dollar-denominated deal expected to price Thursday is a two-parter from St. Louis coal company Peabody Energy Corp.

Peabody set price talk for its $825 million the two tranches of senior bullet notes (Ba1/BB) on Wednesday.

The company talked its 10-year notes at a yield in the 7½% area, and the 20-year notes at 62.5 basis points higher than the 10-year notes in terms of absolute yield.

Morgan Stanley and Lehman Brothers are joint bookrunners.

Also from the dollar-denominated domain Brazilian Beef producer and exporter Bertin Ltda. is in the market with a $150 million Rule144A offering of 10-year senior notes (Ba3/B+) which it talked Wednesday at 10¼% to 10 3/8%.

The Credit Suisse, Morgan Stanley and Standard Bank led deal is also expected to price on Thursday.

The euro deals

With NXP having talked its €4.5 billion five-tranche deal on Tuesday, the only euro-related news nugget during the Wednesday session came from Tokyo-based Softbank Corp., which talked its €500 million offering of seven-year senior unsecured notes (Ba2/BB-) at 7 7/8% to 8 1/8%.

The Deutsche Bank-led Regulation S deal is expected to price Thursday or Friday.

However the lion's share of the market's attention seemed to be directed to the above-mentioned NXP deal - the largest-ever offering of high-yield notes from a European issuer.

The books closed on Wednesday.

To recap, tranche sizes and price talk are as follows:

• Approximately $1.5 billion seven-year senior secured floating-rate notes (Ba2/BB+), non-callable for one year, price talk Libor plus 275 basis points area;

• Approximately €1 billion seven-year senior secured floating-rate notes (Ba2/BB+), non-callable for one year, price talk Euribor plus 275 basis points area;

• $750 million to $1.0 billion eight-year senior secured fixed-rate notes (Ba2/BB+), non-callable for four years, price talk 7 7/8% area;

• Approximately $1.3 billion nine-year senior unsecured fixed-rate notes (B2/B+), non-callable for five years, price talk 9¼% to 9½%;

• €500 million nine-year senior unsecured fixed-rate notes (B2/B+), non-callable for five years, price talk 8½% area.

Morgan Stanley, Deutsche Bank Securities and Merrill Lynch & Co. are joint bookrunners for the mammoth transaction, which is expected to price Thursday.

The word on Wednesday afternoon was that the secured tranches are going very well. The source who had that color did not have information on the unsecured tranches.

West hits the road

Finally on Wednesday, Omaha, Neb.-based outsourced communications solutions provider West Corp. started a roadshow for its $1.1 billion two-part offering of notes, which is expected to price a week from this coming Monday.

The company is in the market with a $650 million tranche of eight-year senior notes which are proforma-ed at 9¼%.

West Corp. is also marketing a $450 million offering of 10-year senior subordinated notes, proforma-ed at 11%.

Deutsche Bank Securities, Lehman Brothers and Banc of America Securities are joint bookrunners for the LBO-funding deal.

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