Levitz, IMCO, Omega Healthcare deals price; Pathmark gains on more takeover talk

By Paul Deckelman

New York, Oct. 29 - Levitz Home Furnishings Inc. successfully priced a restructured two-part issue of seven-year senior secured notes on Friday, with other deals being priced by IMCO Recycling Escrow Inc. and Omega Healthcare Investors Inc.

In the secondary market, IMCO's new bonds were seen doing well, and the Advertising Directory Solutions Holdings bonds that priced on Thursday were seen continuing to show particular strength in the aftermarket.

Back among the established issues, Pathmark Stores Inc. bonds continued to ride a wave of takeover talk that has lifted those notes into the 90s, up nearly 10 points from where they began the week, despite the Carteret, N.J.-based supermarket operator having cut its outlook for 2004 and having received a ratings cut from Standard & Poor's as its reward.

Levitz, a Woodbury, N.Y.-based home furnishings retailer, priced a restructured $130 million two-part offering of seven-year notes, plus equity warrants, via Jefferies & Co. That deal had been restructured from a single-tranche offering, and equity warrants were added to the smaller portion.

Levitz sold $100 million of senior secured class A notes due Nov. 1, 2011 at par to yield 12%, in line with pre-deal market price talk, and $30 million of 15% senior secured class B notes due Nov. 1 2011 as part of 30,000 units, each consisting of a $1,000 principal amount note and a warrant to purchase Levitz common stock. The class B notes are second in line in the event of a redemption.

Levitz plans to use the net proceeds from the deal, together with available cash, to repay existing debt.

The other scheduled calendar deal of the day was IMCO Recycling Escrow's $125 million issue of senior notes maturing on Nov. 15, 2014, which came to market via joint bookrunning managers Deutsche Bank Securities and Citigroup.

The bonds priced at par to yield 9%, at the tight end of pre-deal market price talk projecting a yield in the 9% to 9¼% range.

IMCO Recycling Escrow, a unit of Irving, Tex.-based zinc and aluminum recycler IMCO Recycling Inc., plans to use the proceeds of the offering to fund a tender offer for Commonwealth Industries Inc.'s 10¾% senior subordinated notes due 2006, as part of the pending merger between IMCO and Commonwealth, a Louisville, Ky.-based manufacturer of sheet aluminum.

Omega brings drive-by

With market watchers anticipating a generally dull session - in line with overall junk market expectations of subdued activity heading into the pre-election weekend, with players reluctant to go too far out on a limb in any direction, given the current political uncertainty - Omega Healthcare Investors, Inc. slipped in under the radar with a quickly shopped $60 million face amount drive-by offering of 7% senior notes due 2014, an add-on to the company's existing $200 million issue of those notes, sold back in mid-March.

The new bonds - like their predecessors - were brought to market by joint bookrunners Deutsche Bank Securities, UBS Investment Bank and Bank of America Securities.

The add-on-bonds bonds priced at 102.25, for proceeds of $61.35 million, and a yield-to-worst of 6.61%.

Omega, a Timonium, Md. -based real estate investment trust that invests in the long-term care industry, plans to use the proceeds from the new bond deal for general corporate purposes, including acquisitions.

Also on the primary front, price talk was issued for Integrated Alarm Services Group Inc.'s pending $125 million offering of seven-year senior notes, which is expected to price on Thursday, following the end Wednesday of its current roadshow.

Price talk on the notes is 10¼%- 10½%.

Integrated Alarm - an Albany, N.Y.-based provider of monitoring, financing and business support services to independent security alarm dealers in the U.S. - plans to use the proceeds of the new deal to retire high-coupon debt, and to acquire National Alarm Computer Center from Tyco International Ltd.

The deal is being brought to market by bookrunner Morgan Joseph & Co.

IMCO up in trading

When the new IMCO Recycling Escrow notes were freed for secondary dealings, traders saw the bonds firm smartly to 102.75 bid 103.75 offered, well up from their par issue price earlier in the session.

And doing even better in the aftermarket were the 9¼% senior notes due 2012 issued by Advertising Directory Solutions Holdings (SuperPages Canada), which priced Thursday at par and then proceeded to move up to 103.25 bid, 103.75 offered. Those bonds got even better still Friday, firming to 104.5 bid, 105 offered.

Pathmark rises again

Among the established secondary issue, Pathmark's 8¾% bonds due 2012 were selling as if buyers were being given green stamps and double coupons with them, pushing up to 94 bid from prior levels at 91 - and the bonds had risen to those levels earlier in the week from around an 86-87 context to which they had fallen after the company warned that its EBITDA expectations would be lowered to $140 million to $146 million from the $154 million to $165 million range it had forecast previously, due to lower-than-expected sales. That warning in turn prompted S&P to cut its ratings a notch, dropping Pathmark's bonds to CCC+.

But buyout buzz, which has been percolating at lease since early October, proved to be more than a match for EBITDA angst, pushing the bonds up several points on Tuesday and several additional points on Friday.

The Daily Deal investment news service reported this week that the supermarket chain has hired Dresdner Kleinwort Wasserstein and has begun talking to potential sponsors and competitors about a possible sale of the company. It said that Pathmark could sell for as much as $900 million.

Among the names which the publication said might be candidates to purchase the 140-store chain are such players as Apollo Advisors, Cerberus Capital, Kohlberg, Kravis, Roberts & Co. and Yucaipa Cos., given their familiarity with Pathmark and their history in the supermarket sector.

Pathmark's strength was seen also pushing other supermarket names higher Friday, among them Great Atlantic & Pacific Tea Co. - the Montvale, N.J.-based operator of A&P. Its 9 1/8% notes due 2011 were rising to 85 bid and its 7¾% notes due 2007 were at 95.5, both up a point.

And Jacksonville, Fla.-based supermarket operator Winn-Dixie Stores Inc.'s 8 7/8% notes due 2008 were also a point better, at 87.5 bid, 88.5 offered.

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