Petroplus mega-deal leads primary parade; K2 jumps on Jarden acquisition bid

By Paul Deckelman and Paul A. Harris

New York, April 25- Petroplus Finance Ltd. came to market Wednesday with its $1.2 billion two-part senior notes issue, high yield syndicate sources confirmed. When the new bonds were freed for secondary dealings, both tranches moved up a point or more, trader said.

Elsewhere in the new-deal arena, pricings were seen for Mariner Energy, Inc.'s upsized $300 million offering of 10-year notes, as well as for Nexans' euro-denominated bond sale.

Aside from new-deal pricings, traders heard price talk emerging on the upcoming offering from Countrywide plc.

The primary market sources also heard that OSI Restaurant Partners LLC - the people behind the successful Outback Steakhouse chain - will likely order a smaller helping of junk debt, preferring instead to upsize its term loan and go with a $550 million bond issue rather than the originally envisioned $700 million.

In the secondary market, apart from the firmness of the new bonds seen in the Petroplus deal, the news that New York-based sporting goods and camping equipment maker Jarden Corp. has agreed to buy K2 Inc. for $1.2 billion in cash and stock sent the K2 bonds up solidly - while Jarden's own bonds were seen somewhat easier. There was further ripple effect from the news on Salton Inc.'s paper, since there had been some market buzz that Jarden might instead make a move to buy Salton instead of K2.

Another big mover was bankrupt soft-drink distributor Le Nature's Inc., whose bonds jumped on news that its creditors had formally submitted a plan for the company's liquidation.

Lear Corp. and Unisys Corp. each moved up on better-than-expected numbers.

On the downside, Eastman Kodak bonds lost ground on leveraged buyout fears.

A sell-side source who noted that the Dow Jones Industrial Average shot up more than 1% on Wednesday, into record territory, marked the broad junk market higher.

Meanwhile the primary market saw two issuers combine to price three dollar-denominated tranches totaling $1.5 billion.

Petroplus prices $1.2 billion

Petroplus Finance priced the biggest deal in the market on Wednesday, a $1.20 billion two-part offering of senior notes (BB-).

The Switzerland-based oil refiner priced a $600 million tranche of eight-year notes at par to yield 6¾%, on the tight end of the 6¾% to 7% price talk.

In addition Petroplus priced a $600 million tranche of 10-year notes at par to yield 7%, within talk that had the 10-year notes pricing an eighth of a point to a quarter of a point behind the seven-year notes.

Morgan Stanley was the left bookrunner for the acquisition financing and debt refinancing. Credit Suisse, UBS Investment Bank and Barclays Capital were joint bookruners.

Mariner upsizes

Whereas the Petroplus deal had been marketed via an investor roadshow, Mariner Energy sold bonds in a quick-to-market transaction.

The Houston based oil and gas exploration and production company priced an upsized $300 million issue of 10-year senior notes (B3/B-) at par to yield 8%.

The yield came at the tight end of the 8% to 8 1/8% price talk, which had been released earlier in the Wednesday session.

JP Morgan ran the books for the debt refinancing deal, which had launched on Tuesday.

Nexans significantly oversubscribed

Elsewhere Paris-based Nexans priced an upsized €350 million issue of 5¾% 10-year senior notes (BB) at a 140 basis points spread to mid-swaps, at the tight end of the 140 to 145 bps price talk.

The issue, upsized from €300 million, came at an original issue discount of 99.266.

BNP Paribas, SG Corporate & Investment Banking and UBS Investment Bank were joint lead managers.

According to a company press release, the issue was significantly oversubscribed with an order book totaling €4.3 billion and 240 investors.

The issue was allocated to a wide range of European investors of which 35% in France and 34% in the United Kingdom, the press release added.

Nexans is a manufacturer of telecommunications cable and a provider of related services.

Countrywide talks £640 million

Countrywide plc (Castle Holdco 4, Ltd.) set price talk for its £640 million three-part notes offer on Wednesday.

The London-based estate agent talked its £370 million tranche of seven-year senior secured cash-pay notes (B2/B) at three-month sterling Libor plus 275 to 300 bps.

Meanwhile Countrywide talked its £100 million tranche of seven-year senior secured toggle notes (B2/B) to price 25 to 50 bps behind the cash-pay notes.

The company also talked its £170 million tranche of eight-year senior unsecured notes (Caa1/CCC+) at the 10% area.

Credit Suisse, Deutsche Bank Securities and Goldman Sachs & Co. are joint bookrunners for the acquisition deal.

A sell-side source not in the deal, but who has nevertheless been keeping an eye on the Countrywide transaction, said that it should go fine.

The source added that it has been playing well to the European accounts, which have seen a dearth of supply.

OSI downsizes bond offer

OSI Restaurant Partners downsized to $550 million from $700 million its offering of eight-year senior notes (Caa1/B-) on Wednesday, shifting $150 million of its LBO financing to its term loan.

Price talk remains 9 5/8% to 9 7/8%.

Banc of America Securities LLC and Deutsche Bank Securities are joint bookrunners for the LBO deal, which is expected to price on Thursday.

Petroplus powers upward

When the new Petroplus bonds were freed for secondary dealings, traders saw the bonds move up solidly - the latest in a line of new deals that have been well received in the aftermarket.

A trader saw the company's 6¾% notes due 2014 move up to 101 bid, 101.25 offered, while its 7% notes due 2017 rose to 101.25 bid, 101.5 offered, both up from their par issue price earlier in the session.

Another trader saw the bonds having appreciated a bit less, with the 63/4s at 100.75 bid, 101 offered and the 7s at 101 bid, 101.5 offered.

Quiet market seen

Apart from the strong upside move in Petroplus, one of the traders said, "nothing really traded. It was just awful. It's been quiet like that for a while."

He saw the widely followed CDX index of junk bond performance up just 1/16 point at 100 9/16-100 11/16.

Among the heavily traded benchmark issues, he said, General Motors Corp.'s 8 3/8% notes due 2033 were unchanged at 90.375 bid, 90.875 offered, while arch-rival Ford Motor Co.'s 7.45% notes due 2031 were off 1/8 point at 78.375 bid, 78.875 offered.

K2 climbs on acquisition deal

Elsewhere, a trader saw K2's 7 3/8% notes due 2014 jump some 5½ points to 105.5 bid, 106.5 offered on the news that it is to be acquired by Jarden. The reported $1.2 billion deal includes the assumption by Jarden of $391 million of K2 debt.

At another desk, a source pegged the K2 bonds up a more modest 2 points on the session at 102.5.

The first trader meantime saw Jarden's 7½% notes due 2017 down ½ point at 102 bid, 102.5 offered, pushed lower by its assumption of the K2 debt and a likely increase in leverage to fund the deal.

The announcement that Jarden will buy sporting goods maker K2 was seen throwing cold water on market talk that Jarden might instead seek to acquire the distressed Lake Forest, Ill.-based consumer goods manufacturer Salton - although one trader chalked that rumor up to "wishful thinking anyway."

Salton's bonds were little moved on the news, in any case. A trader quoted the 12¼% notes due 2008 around 95ish levels, but added that the bonds see "very weak trading."

Le Nature's plan boosts bonds

Another distressed name seen making news Wednesday was Le Nature's, whose bonds zoomed on the news that creditors, including its bondholders, have filed a revised liquidation plan for the company with the U.S. Bankruptcy Court in Pittsburgh.

A trader saw its 9% notes due 2013 having jumped to 48 bid, 50 offered from prior levels at 35 bid, 38 offered, after having "been dead for a while," but said he did not know what was going on with the bankrupt Latrobe, Pa.-based soft-drink producer.

While the bonds zoomed, he said the company's bank debt was only up a point at 64 bid, 68 offered.

Another trader saw the bonds at 48 bid, which he called a 10 point rise on the day. He said the gain was "based on news of the company's planned liquidation, with a recovery range on the bonds of 39 cents to 89 cents."

The company slid into bankruptcy last year after revelations of massive accounting irregularities, which later escalated into claims of fraud by the company's now-ousted former top management.

Under the new plan, distributions allocable to holders of senior subordinated notes will be shared with the lenders on account of any unsecured deficiency claims. This provision was not included in the company's original plan of reorganization.

The amended plan provides for the liquidation of estate assets, including the investigation and prosecution of estate causes of action, by a liquidation trust to be formed under the plan and a liquidation trust agreement.

In addition, the claims asserted by insiders, Wachovia, BDO Seidman, E&Y, and the pre-bankruptcy professionals will be deemed to be disputed claims, and any distributions otherwise allocable on account of those claims will be placed in disputed claims reserves pending ultimate resolution of causes of action against them.

Kodak clobbered on LBO fears

Back among the non-distressed issues, a trader saw Eastman Kodak's debt down anywhere from ¾ point to a full point, with its 7¼% notes due 2013 at 100.5 bid, 101.5 offered, while its shares meantime rose.

He cited speculation that the venerable Rochester, N.Y.-based photographic products giant might be bought out and taken private - good for the shareholders, he said, but "bad for the bondholders who would see a big increase in leverage" on such a development.

Better numbers boost Lear, Unisys

The trader also saw improvement in the bonds of Southfield, Mich.-based automotive components maker Lear and Blue Bell, Pa.-based information technology services provider Unisys, for the same reason - better than expected quarterly numbers.

He said that Lear's 5¾% notes due 2014 were a point better at 85.5 bid, 86.5 offered, while Unisys' 8½% notes due 2015 up a point at 103 bid, 104 offered.

Stephanie N. Rotondo and Caroline Salls contributed to this report.

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