Dole, Denbury price upsized deals; Fleming, Calpine better

By Paul Deckelman and Paul A. Harris

New York, March 17 - There was plenty of green to go around the junk bond market Monday - and not all of it was green neckties, plastic derbies, bagels, beer and other St. Patrick's Day novelties. Both Dole Food Co. Inc. and Denbury Resources priced upsized deals of $475 million and $225 million, respectively, while General Maritime Corp. also dropped anchor with a $250 million pricing.

And Dan River Corp., taking advantage of a market flush with cash after recent junk bond mutual fund inflows, was heard to be preparing to take a $150 million six-year deal on the road later in the week.

In the secondary arena, things were largely placid, the market having a firmer tone to it, but not really riding on the coattails of the sizeable equity market "war rally" - a surge that most analysts attributed to stock players' sense of relief that - at last - the uncertainty of recent weeks over whether or not the U.S. would fight Iraq and if so, when, seemed to be over, with President Bush declaring that the time for further new diplomatic maneuvering was past. Upside movement was seen in the bonds of Fleming Companies Inc. and Calpine Corp.

Monday's primary market session saw robust activity, with the three offerings pricing and three new deals surfacing: two of them drive-bys and one to come after a full roadshow.

In a deal that one source said "blew the doors off," Dole Food's upsized $475 million of eight-year senior notes (B2/B+) priced Monday at par to yield 8 7/8%, at the tight end of 9% area price talk via Deutsche Bank Securities and Banc of America Securities.

The Dole LBO financing - which was restructured, sources said, because of demand - originally had a $75 million PIK piece, which was jettisoned, along with $25 million of the term loan B, when the cash-pay senior note issue was fattened from the original size of $375 million Friday.

Also pricing Monday was an upsized deal from Denbury Resources, of Plano, Tex. The company increased to $225 million from $200 million its 7½% 10-year senior subordinated notes (B3/B) and priced them at 99.135 to yield 7 5/8%. It came in the middle of the 7½%-7¾% price talk via bookrunner Credit Suisse First Boston.

And General Maritime landed $250 million from investors with its 10% senior subordinated notes due March 15, 2013 (B1/B+). The New York City crude oil transporter's new notes priced Monday at 98.463, to yield 10¼%, wide of the 9¾%-10% price talk. JP Morgan was the bookrunner.

In the wake of Monday's three transactions, three other offerings weighed anchor during the session.

ConAgra Foods Inc. is expected to sell $150 million of 12½% senior subordinated notes due Jan. 1, 2010 (B2 expected/B) issued by Swift & Co. on Tuesday, via Salomon Smith Barney and JP Morgan.

The deal will not provide Swift with any new proceeds as the notes were originally issued to ConAgra Foods Inc. on Sept. 19, 2002 as part payment for ConAgra's beef and pork business.

The roadshow starts Wednesday for Dan River's $150 million of six-year senior notes (B-), via Deutsche Bank Securities, with other syndicate members expected to emerge.

The issuer, a Danville, Va.-based fabric maker, will use proceeds to help refinance its existing credit facility and redeem its 10 1/8% senior subordinated notes due 2003.

And price talk of 11½%-11¾% emerged Monday on a quick-to-market offering from Nexstar Finance of $50 million (proceeds) of 10-year senior discount notes (expected: Caa1/B-), scheduled to price Tuesday via Banc of America Securities and Bear Stearns & Co.

Price talk was also heard Monday on the eurobond deal from Norwegian pharmaceutical firm Nycomed. Talk is 11%-11¼% on Nyco Holdings' €225 million of 10-year senior notes (B3/B-), which are expected to price Tuesday via Credit Suisse First Boston.

In the most recent edition of the Deutsche Bank High Yield Weekly report, David Bitterman and Andy Van Houten, that institution's co-heads of high yield research, wondered in light of the past three weeks of massive inflows to the high yield mutual funds, whether cash is being fed to high yield faster than the market can chew.

"Strong inflows continued into mutual funds with $639 million added during the week (ended March 12)," Bitterman and Van Houten noted in the report published on March 14. "It is surprising to note, however, that the last three inflows have not moved the market as much as one would expect," they added. "...Although this can be partially attributed to the strong rally during the first two months of this year we think the market is also reaching a saturation point where additional funds will have a harder time moving prices, at least in the short term."

Back in the secondary market, the new Dole 8 7/8% notes due 2011, which priced earlier in the session at par, were quoted by traders to have traded as high as 102.75 bid, before coming off that peak level to end around 102-102.25 bid, "not a bad little break," a trader observed.

The Denbury notes, which priced somewhat below par, were heard to have gained a point to end at par bids/100.25 offered. The General Maritime bonds appeared too late in the session to do much secondary trading.

Peabody Energy Corp.'s new 6 7/8% senior notes due 2013, which had priced at par on Friday and then firmed to bid levels around 100.875-101, were seen remaining around those levels Monday.

Back among the already established issues, a trader said "a lot of stuff was better, before the first shot is fired," alluding to the winding down of the diplomatic dance that has monopolized the attention of the financial markets since last fall.

Chief beneficiary, he said, was Fleming, whose battered bonds had begun moving up at the tail end of last week, and kept right on going Monday.

Fleming's 10 1/8% senior notes due 2008 pushed up to 44 bid/46 offered by day's end, up about two to three points, while its 9¼% seniors due 2010 closed at 44 bid/48 offered. Among the subordinated bonds, Fleming's 10 5/8% notes - which had bounced steadily back last week to around the mid-teens from their recent lows around 10 bid - were quoted at 18.5 bid/21.5 offered, while its 9 7/8% subs due 2012 were at 16.75 bid/18 offered. Fleming's New York Stock Exchange-traded shares were up nine cents (7.38%) Monday to $1.31 on volume of 3.1 million shares, about double the average turnover.

Fleming was reported by the Reuters news service late Friday to have hired Gleacher & Co., a boutique investment bank, to help it deal with creditors in the hope of avoiding filing for bankruptcy protection.

The news service attributed its report to people "familiar with the matter," and said that the Lewisville, Tex.-based top U.S. grocery wholesaler was also in talks to hire a crisis management firm.

Fleming's shares and bonds have been beaten down in recent weeks and months as the company has struggled with a hefty debt load, revelations of accounting irregularities, an investigations by the Securities and Exchange Commission and the drag on its earnings from its money-losing retail supermarket operation, which is in the process of slowly being sold.

Fleming has also been adversely affected by the bankruptcy of its largest customer, Kmart Corp; the two companies last month mutually terminated a multi-billion-dollar contract for Fleming to supply Kmart stores with product and Fleming has since been trying to diversify its client base.

Troy, Mich.-based discount retailer Kmart on Monday was reported to have filed objections with the bankruptcy court overseeing its reorganization to a $1.4 billion pre-petition claim filed against the company by Fleming.

Elsewhere in the supermarket sector that Fleming supplies product to and plays in itself as an operator, a trader saw Marsh Supermarkets' 8 7/8% notes due 2007 having firmed to 90 bid/92 offered, while Winn Dixie Stores' 8 7.8% notes due 2008 were at 104 bid/105 offered.

He suggested that Marsh was being propelled upward by some market players having swapped out of the fully-priced Winn Dixie notes and into the Marsh bonds, in order to reach for yield.

Meantime, he said, trading in troubled Royal Ahold NV "was dead," with the Dutch based international supermarket operator's 8¼% notes due 2010 holding steady at an offered level around 85, and its 6 7/8% bonds due 2029 offered at 74. "There were just offered levels for Ahold, but no bids and no trading."

The company - which operates the Stop & Shop, Bi-Lo and Giant supermarket chains in the U.S. in addition to its international operations - was hard hit several weeks ago by revelations of accounting problems at its U.S. Foodservice unit, and the subsequent resignations on its chief executive officer and chief financial officer, but of late, it appears to have turned the corner on that problem, and its bonds and shares have been recovering from their lows.

Outside of the retailing and supermarket sectors, Calpine Corp.'s bonds were somewhat stronger, a distressed-debt trader said, while fellow merchant energy operator Mirant Corp. was weaker. Calpine's 8½% notes due 2011 firmed to 51 bid/55 offered, compared with Friday's price of 48.5 bid/49.5 offered.

At another desk, the San Jose, Calif.-based power producer's 8¾% notes due 2007 were seen having pushed up to 51 bid from 48, while its 7 7/8% notes due 2008 were likewise a couple of points higher, at 48.5.

Houston-based Mirant's 7 5/8% notes due 2006 at were seen at 54.5 bid/53.5 offered, down from 56.5 bid/57.5 offered Friday.

And even though it appears that war has come a big step closer - something seen as an unfavorable development for the nation's air carriers - a trader quoted Delta Airlines' 7.70% notes due 2005 as having tightened to 57.25 bid/58.5 offered, a move he termed "bizarre," given the potential ramifications war might have on the airline industry in terms of possible terrorist attacks, higher fuel prices and reduced leisure and travel spending by the public.

At another desk, Continental Airlines' 8% notes due 2005 were also up, closing two points better, at 42.

(Carlise Newman contributed to this report.)

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