Hexion bonds gyrate; Community Health remains topical, notes unchanged; Dollar General slips

By Stephanie N. Rotondo and Paul A. Harris

Portland, Ore., April 25 - The secondary high-yield market got off to a slow start Monday as a closed European market and the recent Easter holiday left many desks still empty.

Nonetheless, traders seemed astonished that total trading in the secondary space was over $1 billion.

"It felt like there should have been more happening," a trader said.

Bonds linked to Hexion Specialty Chemicals Inc., which merged with Momentive Performance in September, were seen fluctuating throughout the session, eventually ending unchanged to up just slightly. The gyrations came on the back of news of an initial public offering, though a trader was not sure that was the catalyst.

Meanwhile, Community Health Systems Inc. continued to trade actively. However, the bonds have settled in around the 101 mark.

Also busy was Dollar General Corp. on no news.

NewPage Corp. debt was still trending upward, as investors attempted to figure out what a potential restructuring might look like. And, DirectBuy Holdings Inc. was steady as Standard & Poor's assigned a rating to the debt.

Indexes turn negative

Market indicators started the week off softer, according to market sources.

A trader said the CDX North American High Yield index was off an eighth at 102 3/8 bid, 102 5/8 offered.

The KDP High Yield index meantime finished at 75.91, yielding 6.54%, versus Thursday's reading of 75.93, with a 6.53% yield.

There were no new issues that priced Monday.

Univision drives by

One issue priced on Monday. Univision Communications Inc. stepped in with a $600 million issue of eight-year senior secured notes (B2/B) at par to yield 6 7/8%, on top of the price talk.

Deutsche Bank Securities Inc., Merrill Lynch, Barclays Capital Inc.. Credit Suisse (USA) Securities LLC, Morgan Stanely & Co. Inc. and Wells Fargo Securities LLC were the joint bookrunners for the quick-to-market deal.

Proceeds will be used to fund the tender offer $545 million of the company's 12% senior secured notes due 2014.

Lee rejiggers deal

Elsewhere, Lee Enterprises, Inc. announced revisions and price talk to its slightly upsized $1.055 billion two-part offering of senior secured notes on Monday.

A slightly upsized $680 million tranche of six-year first-lien notes (B3/B) is talked at a par price to yield 11%.

The tranche was upsized from $675 million.

The deal also includes $375 million of seven-year second-lien notes (Caa2/CCC+), which are talked to price at 95 with a 9% cash coupon and a 6% PIK coupon.

Previously the deal had been in the market with a cash-only coupon.

Accompanying the second-lien notes is a private placement of common shares. Note buyers will have the option to purchase 23.8 shares of common stock per note at a strike price of a penny. The private placement replaces the previously contemplated notes and warrants structure.

Credit Suisse (USA) Securities Inc. and Deutsche Bank Securities Inc. are the joint bookrunners.

The overall deal size was increased by $5 million, upping the amount to $1.055 billion from $1.05 billion.

Iasis starts roadshow

The ranks of market participants ended up thinned by post-holiday vacations and school breaks, sources said.

Nevertheless, the high-yield primary market generated a hefty news volume.

Iasis Healthcare LLC and Iasis Healthcare Corp. began a brief roadshow on Monday for a $935 million offering of eight-year senior notes (Caa1/expected CCC+).

Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC are the joint bookrunners.

Proceeds will be used to refinance bank debt, fund a tender offer for the 8¾% senior subordinated notes, repay senior PIK loans and for general corporate purposes, including the proposed acquisition of St. Joseph Medical Center, future acquisitions and strategic growth initiatives, as well as potential distributions to equity holders.

Cumulus eight-year deal

Elsehwhere Cumulus Media Inc. began a roadshow on Monday for a $610 million offering of eight-year senior notes.

J.P. Morgan Securities LLC, UBS Investment Bank, Macquarie Capital and RBC Capital Markets are the joint bookrunners.

The Atlanta-based radio broadcaster plans to use the proceeds to repay in full all outstanding amounts under its term loan, with any remaining proceeds to be used for general corporate purposes.

RadioShack starts Tuesday

Meanwhile, RadioShack Corp. will start a roadshow on Tuesday for its $300 million offering of non-callable eight-year senior notes.

A global investor call is set for Wednesday.

Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC and Wells Fargo Securities are the joint bookrunners.

Proceeds will be used for general corporate purposes, including the repurchase of stock.

Speedy offers $230 million

Speedy Cash will start a roadshow on Tuesday for is $230 million offering of seven-year senior secured notes.

The roadshow is set to wrap up on May 4.

Jefferies & Co. and UBS Investment Bank are the joint bookrunners.

Proceeds will be used to repay debt, finance the acquisition of Cash Money Group and to redeem preferred stock.

Xinergy launches $200 million

Finally, Xinergy Ltd. began a roadshow on Monady for its $200 million offering of eight-year senior secured notes.

UBS Investment Bank is the left lead bookrunner. Griffiths McBurney Corp. is the joint bookrunner.

The Knoxville, Tenn.-based coal producer plans to use the proceeds to fund capital expenditures and repay its existing notes.

Hexion debt fluctuates

Hexion Specialty Chemicals' debt gyrated through Monday trading as Momentive - the company created by Apollo Management when it merged Hexion with Momentive Performance in September - announced that it had filed for an initial public offering valued at $862.5 million.

A trader said that the 8 7/8% notes due 2018 "went up 2 points, then went right back to where it started." He quoted the paper at 107½ bid, 109 offered.

"I don't know if someone thought they knew something and then decided they didn't or what," he said. He also remarked that the news of the IPO should not have caused the gyrations, at least not without any perceptible price movement.

About $30 million to $40 million of the paper traded, he added.

Another trader said the 8 7/8% notes were "active" at 1081/2, "maybe up a half." The 9% notes due 2020 were pegged around 108, compared to 105½ last week.

Community Health active

Community Health Systems' bonds remained active but about unchanged from last week's levels, traders reported.

One trader saw the 8 7/8% notes due 2015 at 101½ bid, 102 offered on $25 million "or probably more" traded.

Another trader said the notes were trading in the "upper-101s, maybe off a little."

Community Health recently came under fire when takeover-target Tenet Healthcare Corp. filed a lawsuit alleging improper billing practices. It was soon revealed that the U.S. government was investigating the matter.

Last Monday, Community Health persisted in its hostile bid for Tenet, sweetening its offer to mostly cash bid.

Community Health had originally proposed a buyout at $6 per share. The company is now offering $1 of Community Health stock and $5 in cash.

"Converting our offer to all cash underscores our commitment to completing this transaction and renders Tenet's irresponsible and inaccurate lawsuit irrelevant to our offer," said Wayne T. Smith, chairman, president and chief executive officer of Community Health, in a prepared statement.

"We are confident that our business practices are appropriate and we will respond in detail to Tenet's claims in due course.

"Tenet shareholders should be outraged by the billions of dollars in shareholder value that the Tenet board has destroyed for its own shareholders and the industry at large as a result of its reckless and self-serving allegations," Smith continued.

"We are confident that Tenet shareholders will hold the entrenched Tenet board accountable for this scorched earth response to our acquisition proposal."

Community Health is a Brentwood, Tenn.-based operator of acute care hospitals in non-urban markets located throughout the United States.

Dollar General dips

A trader said Dollar General's 11 7/8% notes due 2017 were somewhat active, with about "$20-odd million" of the paper changing hands.

He placed the issue at 114 7/8.

Another trader said the debt was off by half a point at 1143/4.

Dollar General is a Goodlettsville, Tenn.-based discount retailer.

NewPage inches up

NewPage's bonds continued to be actively traded as investors reacted to recent news of a management exit and the hiring of restructuring advisors.

One trader said that NewPage's 10% notes due 2012 were "one of the few active things" of the day, calling the notes "up a little bit more" at 591/2.

Another trader also deemed the debt unchanged at 59½ bid, 60 offered.

A third trader said the 0% notes due 2012 were also unchanged around 53.

The Miamisburg, Ohio-based coated papermaker recently announced that its chief financial officer, David Prystash, had decided to leave the company to pursue other opportunities. In the wake of that news, the company then said that it had hired Lazard Ltd. as a financial advisor to help come up with a restructuring plan.

In a note to clients, Gimme Credit LLC analyst Kim Noland said that while NewPage's fundamentals have showed improvement, "it remains very overleveraged and its clear that [NewPage owner] Cerberus' equity may be in jeopardy with the second-lien notes trading under 60% of par.

"Well-known distressed investors have reportedly accumulated sizeable holdings, which could indicate a bond exchange of principal haircut on those notes in exchange for equity," Noland wrote.

DirectBuy rated B

DirectBuy Holdings' bonds were treading water in the mid-50s, traders said, as Standard & Poor's gave the company - and the debt - a B rating.

One trader said he saw a 53 bid for the 12% notes due 2017, noting that they had been in the 70s before last week.

Another trader said the debt was still in the mid-50s, 55-58ish.

S&P said the outlook was negative given that the home furnishings club was recently slapped with a 36-state class action lawsuit alleging improper sales practices. Plaintiffs in that case have already rejected a settlement that would have allowed for $55 million of free memberships.

The ratings agency said that if the outcome of a May settlement hearing is adverse, the Merrittville, Ind.-based company's credit profile could decline.

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