Calpine continues gain on numbers; Tekni-Plex dips; KCS de Mexico prices

By Paul Deckelman and Paul A. Harris

New York, Nov. 13- Calpine Corp.'s bonds continued to push upward for a second straight session Monday, traders said, gliding on the momentum seen Friday after the bankrupt San Jose, Calif.-based power generating company posted its first quarterly profit in two years.

Also on the earnings front, Tekni-Plex Inc.'s bonds were seen lower after the Somerville, N.J.-based packaging and garden hose maker issued its third-quarter results - even though it showed a smaller net loss for the quarter than a year ago.

Things were otherwise relatively quiet on the secondary side, traders said - and also in the primary market, as the new-dealers continued to catch their collective breath after a busy week that saw approximately $11 billion of new bonds price, including gigantic mega-deals worth several billion dollars apiece for HCA Inc. and, on Friday, for Bombardier Capital Funding LP (Bombardier Inc.).

However Kansas City Southern de Mexico, SA de CV priced an upsized $175 million issue in a quick-to-market transaction.

Participants also heard price talk emerge on a pair of issues - vitamin retailer GNC Corp.'s $325 million of five year floating-rate PIK notes and, out of Europe, on Spanish baker Panrico's €225 million of 10-year PIK floaters.

Recent issues mostly rangebound

Among recently priced issues, a trader saw Bombardier's new dollar-denominated 8% notes due 2014 at 100.875 bid, 101.25 offered - down a bit from the 101.5 bid, 102.25 offered level at which those bonds had traded on Friday, after having priced at par earlier in the session.

He did not see the Montreal-based aerospace and railroad transportation equipment maker's two euro-denominated issues - the floating-rate notes due 2013 and the 7¼% notes due 2016. Both of those issues had traded up to 100.375 bid, 100.75 offered Friday after pricing at par.

The trader also saw both tranches of Sally Holdings LLC's new bonds - its 9¼% senior notes due 2014 and its 10½% senior subordinated notes due 2016 - at 101.25 bid, 101.5 offered, down perhaps 1/8 point from the levels at which the Melrose Park, Ill.-based beauty supplies distributor's new bonds had closed Friday, after pricing at par.

And he saw Griffin Coal Mining Co.'s new 9½% notes due 2016 at 100.25 bid, 100.5 offered, about ¼ point lower than where the Australian coal mining company's bonds had finished Friday after their earlier pricing at par.

Among bonds which had priced earlier last week, the trader saw NCO Group Inc.'s new senior floating-rate notes due 2013 and senior subordinated notes due 2016 offered at 100.5, but said he had not seen a bid on them. Those bonds priced last Wednesday

And he saw HCA's gigantic new three-part issue mostly trade off slightly from the levels to which they had moved up on Friday, following Thursday's pricing. He saw the company's new 9 1/8% notes due 2014 and new 9¼% notes due 2016 each at 103.25 bid, 103.5 offered, down about 1/8 to ¼ point from Friday's close, which had seen the bonds move up a bit from the levels they achieved after Thursday's par pricing.

But the Nashville, Tenn.-based hospital industry giant's new 9 5/8% toggle notes due 2016, which had ended Friday at 103.25 bid, 103.75 offered, little changed from Thursday's big aftermarket rise after having priced at par, were actually better on Monday, bucking the trend. He saw those bonds, whose first five years of interest could be either cash-pay or PIK, firming a little to 103.625 bid, 103.875 offered. Another trader quoted the latter bonds ½ point better on the day at 103.5 bid, 104.5 offered.

That trader also saw GNC's existing 8½% notes up a point at 102.25 bid, 102.75 offered, saying that talk of the Pittsburgh-based company's new deal "seems to be gaining [a] good reception."

Tekni-Plex lower despite smaller loss

The trader said that Tekni-Plex was out with its earnings, and while there was "nothing trading," the bonds were quoted about a point lower on the session, with its 12¾% notes due 2010 at 92 bid, 93 offered and its 8¾% notes due 2013 at 96 bid, 97 offered.,

The company reported a third-quarter net loss of $14.872 million - down from the year-earlier red ink of $24.299 million.

The company said that it expects to be able to pass along expected higher raw material costs to its garden hose customers during fiscal 2007 and consequently, cash generated from operations plus funds available under its asset-backed credit facility "will be sufficient to meet our needs and to provide us with the flexibility to make capital expenditures and other investments which we believe are prudent."

It added, however, that "we cannot assure you that sufficient funds will be available from operations or borrowings under our credit facility to meet all of our future cash needs."

Calpine continues to gain

Calpine bonds were seen firmer for a second straight session, riding the crest of Friday's momentum, generated after the company's report of its first quarterly profit in two years.

A trader saw its 8½% notes due 2011 up a point at 55.5 bid, 56.5 offered, while its 10½% notes that were to have come due this year at 78 bid, 79 offered, up a point on the day.

Calpine "was up pretty good," another trader observed, pegging its 8½% notes due 2008 - which rose 3 points on Friday to 69 bid, 71 offered - up another 3 points at 72 bid, 74 offered, while its 7¾% notes due 2009, which were up 2 points Friday at 75 bid, 77 offered, up another 4 points on Monday to 79 bid, 81 offered.

Calpine, which sought Chapter 11 protection last year, reported third-quarter net income of $1.7 million, or nil per share, compared with a net loss of $216.7 million, or 45 cents per share, a year ago. Calpine cited spark-spread improvement in the face of unseasonably warmer temperatures, which spurred demand for power to run air conditioners.

GM bonds better on secured loan news

The announcement that General Motors Corp. will bolster its liquidity via a $1.5 billion secured loan before the year-end gave a boost to the Detroit giant's bonds, a trader said.

He saw the leading carmaker's benchmark 8 3/8% notes due 2033 at 90.625 bid, 91 offered, up 5/8 point on the day.

GM said that it is doing the loan now partly because changes to U.S. pension and retiree health care accounting rules would make such an arrangement unlikely next year.

The company said that those changes in the way pensions and other post-employment benefits are accounted for could cause shareholders' equity in GM's year-end 2006 financial statements to be negative, which could affect its ability to pledge assets for a loan.

KCS de Mexico prices

The Monday primary market session produced news of a single junk deal.

Kansas City Southern de Mexico priced an upsized $175 million issue of seven-year senior notes (B3/expected B-) at par to yield 7 5/8% in a quick-to-market transaction.

The yield came tight to the 7¾% area price talk.

Morgan Stanley and Banc of America Securities LLC were joint bookrunners for the issue which was priced via Rule 144A with registration rights and Regulation S. The co-managers were BBVA Securities, BMO Capital Markets and Scotia Capital.

The debt refinancing deal was upsized from $150 million.

The issuer is a wholly owned subsidiary of Kansas City Southern, a Kansas City, Mo., transportation holding company with railroad investments in the United States, Mexico and Panama.

GNC talks floater

GNC Corp./GNC Parent Corp. talked its $325 million offering of five-year floating-rate notes (Caa1/CCC+) at Libor plus 675 basis points at a dollar price of 99.00.

JP Morgan and Goldman Sachs & Co. are joint bookrunners for the deal which is expected to price on Wednesday.

GNC now leads an $8 billion-plus parade of deals which are expected to price before the Friday close.

They include:

• Firestone Acquisition Corp. (Freescale Semiconductor Inc.) with $5.95 billion equivalent via Credit Suisse, Citigroup, JP Morgan, UBS Investment Bank and Lehman Brothers;

• The Mosaic Co., with its $950 million two-part offering (B1/BB+) via JP Morgan and Merrill Lynch;

• Rental Services Corp. with a $620 million offering of eight-year senior notes via Deutsche Bank Securities and Citigroup;

• AmeriCast Technologies, Inc. with $100 million of eight-year senior notes (B3/B-) via Jefferies & Co.; and

• Elan Finance Corp. with a $500 million offering of seven-year notes (B3/B) via Goldman Sachs.

All are expected as late-week business.

The Elan deal could come late this week or early next week, sources say.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.