Silgan, O'Charley's price deals; Elan, Levi firmer, Biovail off on earnings; funds essentially flat

By Paul Deckelman

New York, Oct. 30 - Silgan Holdings Inc. and O'Charley's Inc. were heard by high yield syndicate sources Thursday to have priced new offerings, while Cincinnati Bell Inc. announced plans for a new 11-year deal. Apollo Management LP announced plans to acquire United Agri Products North America in a $600 million deal that will be mostly funded by new bond and bank debt, while HCA Inc. was heard by market sources to be readying a $500 million split-rated issue.

In the secondary arena, Elan Corp. plc bonds firmed smartly after the Irish pharmaceutical company announced plans to sell 35 million shares as well as new convertible debt. Levi Strauss & Co. bonds were also among the gainers, as the high-yield market held a firm tone. One of the few notable downsiders was Biovail Corp., whose bonds fell five points after the company reported sharply lower-than-expected third-quarter results.

Late in the day, high yield market participants familiar with the mutual fund flow numbers compiled by AMG Data Services of Arcata, Calif. said that in the week ended Wednesday, $1.1 million more left the funds than came into them - an essentially flat reading.

"It was very immaterial," said one market source.

The flow of money into and out of the junk funds is viewed by many as an accurate barometer of overall junk market liquidity trends.

The very small outflow is the first after five consecutive weeks of inflows, including $212.3 million seen in the week ended Oct. 22. Over those previous five weeks, inflows totaled about $1.28 billion, including only those funds which report on a weekly basis and excluding distributions.

With the latest weekly number a wash, the cumulative total for the year remains an impressive $17.529 billion, with inflows seen in 28 of the 43 weeks since the beginning of the year.

The generally easy liquidity seen most weeks is regarded as the key to the strong surge of new-deal activity which has held sway for most of the year, outside of the traditional late-summer lull.

And the new-deal parade kept rolling right along, with Silgan Holdings heard to have sold $200 million of new 10-year senior subordinated notes, which priced at par to yield 6.75%. The Stamford, Conn.-based food packaging manufacturer announced the new Rule 144A deal in the morning and by the end of the day the bonds had priced.

In the aftermarket, a trader said, Silgan traded "at its [par] issue price, which is as good as you could hope to get."

He pegged the new bonds at 100-100.125, opining that "the underwriters are bidding for them'" to hold the bond's price above par. At his shop, he added: "I was seeing just sellers."

With the bonds having priced at a very un-junk-like 242-basis point spread over Treasury issues, another trader said, "it's tough to get excited over a lower-yielding issue.

O' Charley's - which was beset by market buzz that the $125 million issue might have to be delayed in the wake of an incidence of Hepatitis A linked to one of its restaurants in Knoxville, Tenn. - defied expectations and priced its deal at par to yield 9%.

A syndicate source, commenting on all of the negative noise that had surrounded the bond deal, scoffed that "it was never gonna be pulled. It was never at risk. There was just some new info out that we had to clarify." The deal's execution, he said, "went well. The book was filled."

O'Charley's was just one of several high yield issuers thrown into the spotlight by problems; on Thursday, news spread throughout the market about the collapse of a parking garage under construction at Aztar Corp.'s Tropicana Hotel and Casino in Atlantic City, N.J. Four people were killed in the incident, and more than 20 others were injured when the building caved in.

But although Aztar's shares fell 86 cents (3.80%) in New York Stock Exchange dealings to $21.75, the impact on the bonds was minimal. The bonds don't trade around much to begin with, traders said, having moved up to pretty tight levels. The company's 8 7/8% notes due 2007 were seen holding steady at 104.25 bid, 105 offered, while its 9% notes due 2011 were unchanged at 108.5 bid, 110.5 offered

And there was likewise no movement seen in the bonds of automotive wheel-maker Hayes Lemmerz International, which announced that it has temporarily closed its plant in Huntington, Ind. after an explosion there late Wednesday killed one person and injured six. Hayes' 11 5/8% notes were at 53 bid, with "nothing doing" despite the news of the accident, a market source said.

One company whose bonds were falling Thursday, however, was Biovail, after the Canadian pharmaceuticals maker said its net earnings fell to $13 million (8 cents a share) in the third quarter, from $75 million (49 cents a share) a year earlier.

Biovail's 7 7/8% notes due 2010, recently above par, fell to 97 bid Thursday, a loss of about five points on the session, even as its shares dropped 10.48%.

But Irish pharmaceuticals maker Elan's bonds got just the right elixir from the news that the company had priced an offering of 35 million common shares at $4.95 for gross proceeds of about $173 million, and had also sold $400 million of new convertible bonds, upsized from the originally planned $250 million. Proceeds will be used to cut debt and for general corporate purposes.

Elan's 7¼% notes due 2008, which on Wednesday had finished around 82.5 bid, 84.5 offered, were seen having soared as high as 90 bid during the day before falling back to around 87.5 bid, 89 offered.

A trader at another desk, who saw the bonds going home somewhere in the mid-80s, said Elan "just keeps getting tighter."

And trader noticed gains in Levi Strauss bonds, with the blue jeans maker's 11 5/8% notes due 2008 firming to 86 bid, up a point-and-a-half on the session, while its 12¼% notes due 2012 closed firmer at 81.5 bid, 83.5 offered.

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