Crown Media prices, jumps, National CineMedia debuts also; secondary sees better tone

By Paul Deckelman and Paul A. Harris

New York, June 29 - Media, communications and information took center stage on Wednesday in Junkbondland, as a pair of entertainment content providers priced new bond deals.

Crown Media Holdings, Inc. was heard by high yield syndicate sources to have come to market with a $300 million offering of eight-year notes. Secondary market traders said that the cable network operator's new deal firmed smartly when the bonds went into the aftermarket.

Also pricing during the session was a $200 million tranche of 10-year notes from National CineMedia, LLC, which digitally distributes advertising and other content to more than 1,400 movie theaters in the U.S. However, unlike Crown Media's deal, which priced fairly early in the day and got stronger as the session wore on, NationalCineMedia's offering was heard to have priced late in the day.

An anticipated new deal from another information content provider - Lawson Software, Inc., which is bringing a $560 million eight-year deal along with fellow software manufacturer SoftBrands, Inc. to help fund its own acquisition by SoftBrands' corporate parent - did not price as expected by Wednesday's close, though it remained on the forward calendar.

From out of the north came word that Husky Injection Molding Systems Ltd., a Canadian company that makes machinery used by the plastic packaging industry, priced a $570 million offering of eight-year payment-in-kind toggle notes.

Secondary traders reported a better overall market tone, helped along by a rise in equities that was driven in part by the news that Greek lawmakers had passed a controversial austerity plan, seen as a key step in securing a $17 billion stopgap rescue package from international lenders in order to avoid a possible debt default by Athens.

Statistical indicators of market performance were seen better on the day.

The better tone even helped the recently hard-hit bonds of NewPage Corp., which faces a Thursday deadline for making a $100 million coupon payment on one of its bond series; the paper company's paper rose even though the company had still not revealed by the close of trading whether it plans to make the interest payment or not.

Crown prices at talk

Two junk issuers, each bringing a single tranche of notes, raised $500 million during Wednesday's session, as the primary market sparked to life.

Crown Media priced a $300 million issue of eight-year senior notes (B3/B-) at par to yield 10½%, on top of price talk.

J.P. Morgan ran the books for the debt refinancing deal.

The new Crown Media 10½% notes due 2019 rocketed up 3 points in the secondary market as seasoned players took advantage of the new issue premiums now being extracted from issuers daring to bring deals into the volatile junk market, sources said.

National Cine prices mid-talk

National CineMedia priced a $200 million issue of 10-year senior notes (B2/B) at par to yield 7 7/8% late Wednesday afternoon.

The yield printed in the middle of the 7¾% to 8% price talk which had been set earlier on Wednesday.

J.P. Morgan Securities LLC, Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Macquarie Capital (USA) Inc. and Morgan Stanley & Co. LLC were the joint bookrunners for the debt refinancing deal.

Husky PIK toggle deal

In a deal that market sources characterized as a mezzanine transaction, Husky Injection Molding Systems priced $570 million of eight-year PIK toggle notes at par to yield 10½%.

The coupon increases to 12½% if the PIK option is exercised.

Goldman Sachs & Co. was manager for the deal, which will be used to help fund a leveraged buyout of the company.

Sources throughout the market expressed the belief that a Goldman Sachs mezzanine fund, along with four or five other investors, took the deal down.

Lawson bond and bank deals

Lawson Software's $560 million offering of eight-year senior notes (Caa1/B-), talked on Tuesday with an 11¼% to 11½% yield, was expected to price on Wednesday.

However well after the close no terms were available, market sources said.

Bond investors may be playing a "wait-and-see" game with respect to Lawson's term loan, sources said.

Lawson's $1.04 billion term loan generated about $600 million of interest among leveraged loan investors, according to a mutual fund manager who invests in both loans and bonds.

As a result, dealers took the remaining $440 million off the table, and it is subject to a lock-up period. It also comes with so-called "most-favored-nation" status under which investors in the syndicated $600 million term loan will be made whole should the remaining $440 million be sold subsequent to the lock-up period at a price below the original issue discount.

Bond investors were not pleased by this news, the investor explained, adding that there is a perception among bond investors that the majority of the bank loan players who elected to participate in the $600 million of term loan debt presently in the market got in on the private side of the deal.

The private investors gained access to information - such as projections - to which investors on the public side of the deal do not have access, the mutual fund manager explained.

"The bond crowd is wondering whether the loan investors on the private side saw something they didn't like," the manager said.

"So the bond investors would like to see that bank loan price and allocate before committing to the bonds."

The manager went on to surmise that it is possible that bank loan investors may be just as keen to see the bonds placed before they make their move, giving way to something of a showdown over the two tranches.

Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley & Co. Inc. and RBC Capital Markets are the joint bookrunners for the Lawson bonds.

Quiet in Europe

Although the primary market in the United States sparked to life on Wednesday, the European primary has yet to shake its torpor, according to a debt capital markets banker in London.

News surfaced Wednesday on a split-rated deal.

Germany's Brenntag plans to start a roadshow on Friday in Frankfurt for a to-be-determined amount of euro-denominated notes (Ba1/BBB-).

Bank of America Merrill Lynch, German Bank, Goldman Sachs International and UniCredit are the bookrunners.

The roadshow is expected to run well into the week ahead, the sell-sider said.

The deal will receive an investment grade-style execution, and its following among high-yield players will be limited at best.

Meanwhile French mechanical engineering firm SPIE is expected to launch €300 million to €400 million of high-yield notes in the early-to-mid July time frame.

Morgan Stanley is expected to lead the bonds, among a syndicate of banks which includes HSBC, SG CIB, Credit Agricole CIB and Deutsche Bank.

Proceeds, along with funding from approximately €1 billion of bank debt will be used to help finance the €2.1 billion buyout of the company by Clayton Dubilier & Rice, Axa Private Equity and Caisse de Depot et Placement du Quebec from PAI Partners.

The SPIE deal is a committed financing, the sell-side source said, and added that unlike their counterparts in the United States the European banks are not extensively syndicating bridge loans, and hence are believed to have more skin in the "committed financing" game than has lately been the case with the high-yield syndicate banks in the United States.

Crown bonds king of the hill

When Crown Media Holdings' new eight-year deal was freed for secondary dealings, traders saw those bonds up solidly from their par issue price.

One trader saw the bonds - which priced early in the session and which then broke for trading during the late-morning, around 101½ bid, 102 offered - get even better as the day wore on.

He finally quoted the Studio City, Calif.-based cable network operator's deal going home at a bid level around 103-103 1/8.

"It traded a few times up at 103," he said.

A second trader saw the bonds ending at 103 bid, 103½ offered.

"That was kind of it on the action" for the day out of the primary sphere, the first trader opined.

Chrysler up on sales forecasts

Elsewhere among recently priced bonds, Chrysler Group LLC's 8% senior secured notes due 2019 - which priced at par back on May 19, then proceeded to slide over the next few sessions to levels as low as under 95, bid, traders said - looked to be back in the fast lane on Wednesday, helped by analysts' bullish expectations for the Number-Three domestic car manufacturer's June sales figures.

A market source saw the Auburn Hills, Mich.-based company's 8% paper at 97 3/8 bid, up nearly 2 points on the session.

At another desk, a source called the 8s up 1 7/8 points at that 97 3/8% closing level, with over $4 million of the bonds having changed hands Wednesday in big-block transactions. Chrysler sold $1.5 billion of the bonds in May.

There was not much trading going on in the other half of the company's $3.2 billion two-part bond deal, the $1.7 billion of 8¼% senior secured notes due 2021, which had also priced at par on May 19, nosedived to around the same levels the 8s were trading at - and which were being quoted Wednesday trading in a 97-99 context, though on considerably thinner volume than the 8s did.

The latter bonds were seen getting a boost after Edmunds.com, a widely respected distributor of automotive industry information, predicted that Chrysler's June sales figures, due to be released at the beginning of July, would show a sizzling 26% jump from its admittedly low year-earlier sales volume for the month. Edmunds sees June sales gains of 17% and 11% for Chrysler domestic rivals General Motors Co. and Ford Motor Co., respectively.

Market measures move up

Away from the new-deal arena, statistical measures of market performance, mixed on Monday and Tuesday, broke out of their rut and moved markedly to the upside during Wednesday's dealings.

A trader saw the CDX North American Series 16 HY Index gain ¾ point on Wednesday to end at 100 5/8 bid, 100 7/8 offered, after having gained ¼ point on Tuesday.

The KDP High Yield Daily Index jumped by 17 basis points on Wednesday to finish at 74.80, after having edged downward by 1 bp on Tuesday. Its yield fell by 7 bps to 6.96%, after having risen by 1 bp on Tuesday.

And the Merrill Lynch High Yield Master II Index posted its first gain on Wednesday after four straight sessions on the downside. It zoomed by 0.275% - the biggest one-day gain seen so far this year - versus Tuesday's 0.007% loss.

That big gain lifted its year-to-date return to 4.507%, the best it has been since June 16, versus Tuesday's 4.22% cumulative return. However, with the index battered by weeks of steady losses, the latest year-to-date figure remains well down from peak level of 6.071%, which was reached on May 20.

'Buying hats on'

A trader said that in the overall market on Wednesday, "in general, everybody seems to have put their buying hat on today."

He said of the market "I don't want to say it was fantastically bid for, but it had kind of a firm feeling to it," although he saw little solidly higher activity on decent volume like he saw with the Crown Media Holdings deal.

A second trader agreed that "in general, the market was definitely better today."

He estimated that it was probably up by ¼ to ½ point pretty much across the board on the day.

"It definitely had a good feel to it," he declared. "I'd say it was the best [levels seen] in quite a few days."

Chiming in with the more bullish narrative, a trader said that high yield mutual funds recorded a $40 million net inflow on the day - the first such net cash injection since June 2. He said that could bode well for the weekly junk bond mutual fund-flow numbers, a key gauge of overall market liquidity trends, which are expected to be released on Thursday.

Last week, the market saw a massive $3.43 billion outflow from the funds in the week ended June 22 - the biggest one-week hemorrhage ever seen. Over the last four weeks, according to market participants who watch the weekly data compiled by Lipper/AMG, those weekly-reporting funds have seen a breathtaking total of nearly $6 billion more leave them in that time frame and came into them, a sign nervous investors are pulling money out of an over-valued and relatively risky junk market in favor of safer investments elsewhere.

NewPage up as coupon due

Among specific issues, a trader said that NewPage's bonds were better on Wednesday, although he opined that this seemed to be more of a function of a generally brighter tone in the overall junk bond market than any increase in investor confidence in the Miamisburg, Ohio-based coated-paper manufacturer, which faces a Thursday deadline for making a $100 million interest payment on its first-lien bonds and which as of the close of trading on Wednesday had given the market no hints one way or another on what it plans to do.

"Everything seemed to be up slightly today," he said, in quoting the company's 11 3/8% first-lien senior secured bonds due 2014 - the issue on which the coupon payment is due - up three-eighths of a point at around the 92 1/8 bid level, while seeing its 10% second-lien senior secured notes due 2012 up by a full point at 27¾ bid.

"So they're slowly creeping up," he said, although he added that the overall market was also better.

Despite the drubbing which NewPage's bonds have taken over the last two or three weeks, frequently on very busy volume which has landed the credits at or near the top of the high yield most-actives list on many of those days, NewPage had, by Wednesday night, given no indication at all whether it will pay the coupon, and if so, how it will fund that payment, or whether it would, alternatively, not make the payment and invoke the standard 30-day grace period while negotiating with its bondholders and lenders on restructuring its debt. NewPage had not returned phone calls or e-mails from Prospect News over several days seeking a clarification of the company's status.

The trader theorized that "we probably won't hear anything until either Friday, when everyone realizes [the coupon] wasn't paid or sometime Thursday, when it gets paid. So that will be interesting."

General Maritime moves up

Elsewhere, a market source saw General Maritime Corp.'s 12% notes due 2017 up by 2½ points on the day, ending at 81 bid.

As was the case with NewPage, this is likely more of a case of the bonds being lifted along with the overall market.

The New York-based international petroleum tanker firm's bonds had traded around the lower 80s last week, but had fallen by about 3 or points on Monday, though there was no firm news out on either Monday or Wednesday to explain the issue's recent gyrations. The company's New York Stock Exchange-traded shares hit a new 52-week low of $1.35 in intra-day trading, and closed down 2 cents, or 1.43%, at $1.38, a new 52-week low close.

OPTI up as oil gains

From deep in the distressed-debt precincts, a market source saw OPTI Canada Inc.'s 7 7/8% senior secured notes due 2014 up by 1 5/8 points on the session Wednesday to end at 41 1/8 bid, possibly given a lift by the continued rise in world crude oil prices.

There was no fresh news out about the Calgary, Alta.-based oil-sands energy company, which earlier this month announced that it had not made a total of $71 million in interest payments due on June 15 on its $750 million of 7 7/8% notes and $1 billion of 8¼% senior secured notes due 2014.

OPTI Canada said at that time that it was invoking the standard 30-day grace period stipulated in the bonds' indenture, and would work with advisors Lazard Freres & Co. LLC, Scotia Waterous Inc. and TD Securities Inc., "to review strategic alternatives available for the company to address its overall leverage position," options which might include a capital structure adjustment, which the company said may include debt-for-equity exchanges or conversions, possibly combined with raising additional capital. Other options which may be under consideration, it said, could include capital market opportunities, asset divestitures and/or a corporate sale, merger or other business combination.

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