Swift sells five-year notes; Dobson bonds firmer on asset sale plan

By Paul Deckelman and Paul A. Harris

New York, March 14 - The last week of winter 2005 got underway in the primary market with only one deal pricing: Nycomed A/S issued €400 million of PIK notes, with the indicative coupon coming wide of the price talk.

But there was plenty of news regarding the new issue pipeline as issuers showed up with plans for drive-by deals, including a $250 million floating-rate offering from US Oncology, Inc.

And DaVita Inc., which was winding up an extended roadshow, talked both tranches of its $1.35 billion offering that is expected to price Tuesday afternoon.

In the secondary realm, news that Dobson Communications Corp. had agreed to sell most of its cellular tower assets in a sale-leaseback arrangement pushed up the bonds of the Oklahoma City, Okla.-based rural telecommunications provider, and those of its American Cellular Corp. unit on what traders saw otherwise as a pretty lackluster session.

Nycomed wide of price talk

Monday's sole new issue came from Roskilde, Denmark pharmaceutical company Nycomed, which priced €400 million of senior PIK notes due Oct. 15, 2013 (8.5 years) at 99.00 to yield 11.94%.

The PIK for life notes have an indicative coupon of 11¾%, which is wide of the price talk, that had the notes coming with an indicative coupon of 11½% at a price of 99.00.

Credit Suisse First Boston and Goldman Sachs & Co. ran the books for the acquisition financing.

Drive-by deals

Two quick-to-market deals came into sight during the session.

US Oncology Holdings plans to price $250 million of 10-year non-call-two senior unsecured floating-rate notes late Tuesday or early Wednesday, via Wachovia Securities, JP Morgan and Citigroup.

An investor conference call is scheduled to take place at 10 a.m. ET Tuesday.

The prospective issuer, a holding company of US Oncology, Inc., a Houston, Tex., provider of medical oncology services, will use the proceeds to fund a dividend.

Elsewhere Vancouver, B.C., provider of helicopter services to the oil and gas industry, CHC Helicopter Corp., plans to price a $100 million add-on to its 7 3/8% senior subordinated notes due May 1, 2014 (existing ratings B2/B) on Wednesday via Merrill Lynch & Co.

An investor conference call will be held at 1 P.M. ET on Tuesday.

Proceeds will be used to repay bank debt and for general corporate purposes.

Roadshow starts

A trio of roadshow starts was announced Monday.

Marketing starts this week in Asia for Dacom Corp.'s $300 million offering of five-year notes (expected ratings Ba3/BB-), via Credit Suisse First Boston.

Dacom is a South Korea-based integrated service provider of telecommunications and internet related services.

News also surfaced on a pair of seven-year non-call-four senior secured notes offerings that will be led by Jefferies & Co.

155 East Tropicana LLC/Finance Corp. will start a roadshow Tuesday for its $125 million offering (B-).

The Las Vegas gaming and lodging company will use the proceeds to repay debt and fund the construction of Hooters Casino.

And Ameriqual will also start a roadshow Tuesday for a $105 million deal.

Proceeds will be used to purchase 50% of the Evansville, Ind., supplier of shelf stable food rations for U.S. Department of Defense not owned by Aries Capital.

Talk on the week's big deal

Price talk was issued Monday on Davita's $1.35 billion offering of high-yield notes in two tranches, with pricing expected on Tuesday afternoon.

Talk is 6½% area on a $500 million offering of eight-year non-call-four senior notes (B2/B). And talk is 7¼% area on an offering of 10-year non-call-five senior subordinated notes (B3/B).

JP Morgan has the books for the debt refinancing deal.

The company extended its roadshow into the present week after receiving a subpoena from the U.S. Justice Department.

To briefly recap, in a March 6 press release the company announced that it received a subpoena from the U.S. Department of Justice, United States Attorney's Office for the Eastern District of Missouri. The subpoena requires production of a wide range of documents relating to the operations of the company and its subsidiaries from Dec. 1, 1996 to the present.

A sell-side source, not connected with the mammoth bond offering from the El Segundo, Calif., kidney dialysis services provider, commented Monday that the extended roadshow appears not to have damaged DaVita's deal, and added that the price talk seems to indicate that issuers are still carrying the ball in high yield.

Revlon holds higher level

In the secondary market, Revlon Consumer Products Corp.'s new 9½% notes due 2011, which were priced Friday at par and then moved up to about 100.5 bid, 101.5 offered later that session, were seen unchanged at that level on Monday.

Fraser Papers Inc.'s new 8¾% notes due 2015 were being quoted around 99.25 bid, 99.625 offered. The bonds had priced at par last Thursday.

Dobson, American Cellular better

Back among the established issues, Dobson's bonds and those of its American Cellular subsidiary were being quoted higher on the asset-sale news.

A market source pegged Dobson's 8 7/8% notes due 2013 up half a point at 82.75, and its 10 7/8% notes due 2010 a quarter-point better at 92.25, although he saw Dobson's 12 ¼% notes due 2008 unchanged at 75 bid.

The source also saw American Cellular's 9½% notes due 2009 and 10% notes due 2011 both up half a point to 96.5.

Another trader, though, saw the Dobson 10 7/8s at 92 bid, 94 offered and American Cellular's 10s at 95.5 bid, 97 offered, both essentially unchanged on the day.

A market source at another desk quoted the Dobson 8 7/8s at 82.5 bid, up half a point, and saw even better gains in American Cellular's 10% notes, up 1¼ points on the day at 96.25.

Dobson announced that it had agreed to sell 563 cellular towers to Boca Raton, Fla.-based tower operator Global Tower Partners for $87.5 million.

The deal is a two-part arrangement, with one Dobson unit, Dobson Cellular Systems, to receive about $52.4 million for 359 cell towers located in Alaska, Kansas, Maryland, Michigan, Missouri, New York, Ohio, Oklahoma, Pennsylvania and Texas.

American Cellular will sell 204 cell towers located in Kentucky, Michigan, Minnesota, New York, Ohio, Oklahoma, Pennsylvania, West Virginia and Wisconsin to Global Tower Partners for $35.1 million.

Dobson, American Cellular and Global Tower Partners also signed 10-year lease agreements for Dobson and American Cellular to continue using the 563 towers, with three 5-year lease renewal options. Terms of the lease agreements were not disclosed

Completion of the sale is expected by the end of the year, at the latest.

Dobson Cellular will retain ownership of 43 towers not covered by the deal, and American Cellular will keep 16 towers.

Ardent moves up

Asset-sale news was also seen as the driver behind higher levels for Ardent Health Services' 10% notes due 2013, which a market-watcher at one shop was quoting at around the 119 bid level, well up from prior levels around 108.

A trader at another desk said he had not seen the Ardent bonds - last seen around the 108-109 level - trading around since the announcement this past Thursday night that Nashville, Tenn.-based hospital operator Ardent will sell its behavioral health division, consisting of 20 psychiatric hospitals, to Psychiatric Solutions Inc. for $560 million. Ardent also said at that time that in connection with the transaction, it will tender for the $225 million of 10% notes, with details of the offer to be set forth in tender offer documents to be furnished shortly to the noteholders.

The trader - noting that the bonds have a make-whole call at 50 basis points over Treasuries - estimated a takeout price of about 121, and said that other source's 119ish quote was in that ballpark, although he took pains to point out that no terms had been officially announced yet.

Besides using the proceeds for the tender offer, Ardent will also use the remaining net proceeds from the sale to repay other debt and for general corporate purposes, including building a new hospital on the north side of Tulsa, Okla., and to extend the company's cardiovascular services at its health systems in Albuquerque, N.M. and Tulsa.

Aquila edges higher on sale plan

Aquila Inc. announced plans Monday to put a number of its utility subsidiaries up for sale and used the proceeds to take out about $700 million of bond and term-loan debt, to strengthen the Kansas City, Mo.-based power generation company and utility operator's balance sheet so it can secure needed financing for capital improvements to the core utility operations that it is not selling (see related article elsewhere in this issue).

Aquila's 9.03% notes due this coming Dec. 1, its 6.70% notes due 2006 and 8.20% notes due 2007 - all slated to be taken out with the sale proceeds - were seen up at the most 1/16 to 1/8 point at 112.375, 102.625 and 105.625, respectively, although its 8% notes due 2023, also to be redeemed, were up ¾ point at 101. The company's 7 5/8% notes due 2009, not part of the debt reduction plan, were half a point better at 106.25.

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