Huntsman, Fairfax lead new-deal parade; Amkor up on favorable court ruling

By Paul Deckelman and Paul A. Harris

New York, Dec. 3 - Huntsman International LLC brought a sizable dual currency offering to the high-yield market Friday, one of half a dozen new deals - most of them opportunistically priced drive-bys - that were heard to have priced as companies try to lock in their financing needs before the primary locks down for the year. Other deals seen Friday included Fairfax Financial Holdings Ltd., which priced an add-on issue to its outstanding 7¾% notes due 2012, and Chesapeake Corp. and Peri-Werk Artur, which completed euro-denominated offerings.

In secondary action, Amkor Technology Inc. bonds were seen up about two points on the session, in tandem with a solid rise in the West Chester, Pa.-based semiconductor packaging and test services provider's shares, following a favorable ruling in a court case in which it was a defendant.

The feathers settled on the post-Thanksgiving week in the high-yield primary market with a dozen dollar-denominated tranches pricing for a total of just under $3 billion over the course of the five sessions.

Friday's business included nine tranches - five dollar-denominated and four euro-denominated - for $515 million and €885 million.

Huntsman leads dollar business

The session's largest dollar-denominated offering came from Salt Lake City-based petrochemical company Huntsman International LLC, which priced $355 million equivalent of senior subordinated notes due Jan. 1, 2015 (Caa1/CCC+) in dollar and euro tranches.

The deal included a $175 million issue that priced at par to yield 7 3/8%, at the wide end of the 7¼% area price talk, and a €135 million issue that also priced at par to yield 7½%, also coming at the wide end of the 7¼% to 7½% price talk.

Deutsche Bank Securities and Credit Suisse First Boston were joint bookrunners for the quick-to-market debt refinancing deal.

A market source told Prospect News that although both Huntsman tranches priced at the wide end of price talk, the dollar denominated notes came out of the chute with something of a pop when they were released for trading, being seen at 100.25 bid, 100.50 offered.

Elsewhere in the dollar-denominated market MAAX Holdings, Inc. sold $170.69 million of eight-year senior discount notes (Caa1/CCC+) at 64.445 to yield 11¼%. The notes, which will have a zero coupon for the first four years, came right on top of the 11¼% area price talk. The sale generated $110 million of proceeds.

Merrill Lynch & Co. ran the books for the stock repurchasing deal from the Quebecois bathroom fixtures company.

Fairfax, Haights Cross tap existing bonds

Friday's session saw a pair of add-on deals get done.

Fairfax Financial Holdings Ltd. priced an upsized $200 million add-on to its 7¾% senior notes due April 26, 2012 (Ba3/BB) at 99.00, resulting in a 7.929% yield to worst and yield to maturity.

Bank of America Securities ran the books for the debt refinancing and general corporate purposes deal which came wide of the 99.50 area price talk. It was increased from $150 million.

The original $204.6 million issue was priced on April 29, 2004 as part of a debt exchange offer. Subsequently the company priced a $95 million add-on at 97.25 on Aug. 24, 2004 to yield 8.238%.

Hence Toronto-based Fairfax Financial went away Friday with a rate that was lower than that of the add-on it priced in August.

Haights Cross Operating Co., the White Plains, N.Y.-based educational publisher, also did a tap Friday.

The company priced an upsized $30 million add-on to its 11¾% senior notes due Aug. 15, 2011 (Caa1/CCC) at 110.50, resulting in a 9.323% yield to worst. The deal was raised from $20 million.

Bear Stearns & Co. ran the books.

The original $140 million issue priced at par on Aug. 7, 2003, so Haights Cross realized a substantial savings in interest with the Friday deal.

€885 million of euro issuance

In addition to the Huntsman International euro tranche, the junk market saw €775 million of other euro business price on Friday, bringing the day's total to €885 million.

Kabel Deutschland (holding company) completed the largest euro deal, pricing €400 million in a single tranche of 10-year senior floating-rate PIK notes at 99.00, with a coupon of Euribor plus 850 basis points.

Goldman Sachs & Co. and Deutsche Bank Securities ran the books for the German cable TV and internet service company's dividend-funding deal that had been much remarked upon by a variety of sources who spoke to Prospect News on Thursday and Friday owing to its novel call structure.

Also from Germany, construction company Peri GmbH priced an upsized $250 million of notes (Ba3/BB) in two bullet tranches. The deal was increased from €225 million.

The company sold €100 million of five-year senior floating-rate notes at par to yield six-month Euribor plus 175 basis points, at the tight end of the Euribor plus 175-200 basis points price talk.

The company also sold €150 million of seven-year senior fixed-rate notes at par to yield 5 5/8%, at the tight end of the 5 5/8% to 5 7/8% price talk.

Deutsche Bank Securities and Goldman Sachs & Co. ran the books for the debt refinancing and general corporate purposed deal from the Weisenhorn, Germany-based company.

Finally, Richmond, Va.-based international supplier of plastic packaging products Chesapeake Corp. sold €100 million of 10-year senior subordinated notes (B2/B+) at par on Friday to yield 7%, at the tight end of the 7 1/8% area price talk.

Citigroup and Banc of America Securities ran the books for the debt refinancing/general corporate purposes deal.

The run to Christmas

Meanwhile on Friday the forward calendar continued to take shape.

A roadshow starts Monday for Reliant Energy, Inc.'s $1.1 billion offering of senior secured notes (expected ratings B1/B+), which is seen pricing during the first half of the Dec. 13 week.

Goldman Sachs, Banc of America Securities, Barclays Capital, Deutsche Bank Securities and Merrill Lynch & Co. are joint bookrunners for the debt refinancing deal.

The company will sell 10-year non-call-five fixed-rate notes and six-year non-call-two floating-rate notes, with tranche sizes to be determined.

The company will also obtain a new credit facility and sell fixed-rate tax-exempt bonds.

Elsewhere the roadshow starts Tuesday for Goodman Global Holdings, Inc.'s $650 million two-part bond offering, which is expected to price by the middle of the Dec. 13 week.

The Houston-based commercial heating and air conditioning products company plans to sell 7.5-year non-call-two senior floating-rate notes and eight-year non-call-four senior subordinated fixed-rate notes, with tranche sizes remaining to be determined.

UBS Investment Bank, JP Morgan and Credit Suisse First Boston have the books on the acquisition deal.

Finally Landry's Restaurants, Inc. will start a roadshow Monday for $450 million of 10-year non-call-five senior notes, expected mid-week during the week of Dec. 13.

Wachovia Capital Markets, Banc of America Securities and Deutsche Bank Securities will run the books for the debt refinancing and general corporate purposes deal from the Houston-based restaurant chain operator.

Right up 'til Christmas

As the post-Thanksgiving week came to a close, one sell-side source remarked that an already busy pre-Christmas new deal calendar appears to be continuing to build.

The Prospect News High Yield Daily forward calendar presently holds just over $8.25 billion of business that is thought to be in the market and expected to price before the end of 2004.

And sources are counseling that more deals are likely to appear in the run-up to the Yuletide break, as Christmas day falls on a Saturday this year, leaving open the possibility that the market could operate purposefully throughout most of the Dec. 20 week.

Huntsman up in trading

When the new dollar-denominated Huntsman International 7 3/8% senior subordinated notes due 2014 were freed for secondary dealings, they were seen by several traders as having moved up to 100.75 bid from their par issue price earlier. The Huntsman euro-denominated 7½% notes due 2014 got as good as 101 bid, 101.5 offered, also up from a par issue price.

A trader saw the new Fairfax Financial 7¾% 2012 add-on notes at 99.75 bid, 100.25 offered, up from the notes' issue price at 99 earlier in the session, "so that went well," he opined.

And a trader saw the new Universal City Florida Holding Co. floating-rate notes due 2010 that priced Thursday at 102.75 bid, 103.25 offered.

Amkor gains

Among the existing issues, Amkor Technology's 7¾% notes due 2013 were heard to have firmed to 92.75 bid, up two points, while its 9¼% notes due 2008 were also up a deuce at 101.5.

At another desk, the 73/4s were pegged even higher, at 93.5, which a source called up 2½ points on the session, while its 10½% notes due 2009 were seen up a point at 97.

Amkor's Nasdaq-traded shares meantime finished up 81 cents (13.75%) at $6.70 on volume of 5.5 million shares, about 2½ times the norm.

The proximate cause for the jump in the shares and the solid rise in the bonds seemed to be the news that Amkor was looking for - and received - a favorable verdict in a lawsuit brought against the company and Sumitomo Bakelite by Royal Philips Electronics, which went to court seeking redress after some computer chips sold by Philips to Maxtor Corp. proved to be defective. Amkor had approved the mold compounds made by Sumitomo and used in the Philips chips. Amkor contended that it had followed standard industry practices and was not to blame.

The case took six weeks to play out - but in the end it was worth the wait for Amkor, which was absolved of any liability under Philips' earlier settlement with Maxtor. Amkor said afterward that it felt "vindicated."

The positive jury verdict was the latest in a string of recent positives for Amkor. Last weekend, there was an item in Barron's touting the company's prospects. It mentioned, for instance that KDP Investment Advisors Inc. was rating the 10½% notes as a "buy," believing that the current slowdown in the tech cycle is "temporary" and that inventories will be worked down over the next several months.

The story quoted KDP analyst Barbara Cappaert as declaring that "the industry and the company is poised for a modest and sustainable rebound in mid-2005."

Barron's said that the analyst had deemed Amkor's liquidity "adequate" in the wake of its new $300 million bank facility and the anticipated refinancing of its next big maturity - the 2006 repayment of its 5¾% convertible subordinated notes.

Beyond that, Amkor has been seen by some investors as poised to take advantage of favorable trends in the semiconductor industry, including the likely strong popularity of consumer electronics devices - which run on computer chips - in the upcoming holiday season.

A typical poster on an investors' internet bulletin board - describing himself as long in the stock - said of Amkor that it would see "a big turn around in '05. Lots of debt off the books, share buy back, and share price going thru the roof. This is the company you want to be in, and will be one of the first semi stock's to lead the recovery for the semis. Don't miss the boat, it is about to leave the dock."

Level 3 up despite S&P action

Elsewhere, Standard & Poor's took a dim view of Level 3 Communications Inc.'s news Thursday that the Broomfield, Colo.-based telecommunications company had bought back $1.105 billion principal amount of four series of notes maturing in 2008 at a discount to their face value, calling it tantamount to a default and cutting its debt ratings; the corporate credit was lowered to SD (selective default) from CC, while the 2008s themselves were cut to D from C previously.

Be that as it may, bond investors apparently disagreed, feeling it much more a positive development that Level 3 had gotten rid of 46% of its debt scheduled to mature in 2008, and, after accounting for the new debt it issued to pay for the four-part tender, had cut its annual interest costs by $28 million and its total debt load by $30 million.

They took Level 3's flagship 9 1/8% notes due 2008 to 89 bid from 88.25 and lifted its 11% notes due 2008 to 91.5 bid from 91 and its 11¼% notes due 2010 to 81 bid, up a point on the session, a market source said.

"There was not too much trading in it," he added, "but it did look better, though."

News that Moody's Investors Service may decide to raise the ratings of AES Corp. - the senior implied rating is currently B1 - helped the bonds of the Arlington, Va.-based power generating company. A trader saw AES's 9 3/8% notes due 2010 up a point on the day, post-news, at 116.5 bid, 117.5 offered.

Pathmark Stores Inc.'s 8¾% notes due 2012, which had firmed about two points on the session Thursday after the underperforming Carteret, N.J.-based supermarket operator indicated that it might look to sell the company and had hired Dresdner Kleinwort Wasserstein to help it evaluate its "strategic alternatives", were seen having continued to firm Friday. However, the bonds were only up a much less dramatic one-quarter point, o 97.75 bid.

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