Upsized Summit, Westmoreland price; Prestige up next; Chesapeake up on production changes

By Paul Deckelman and Paul A. Harris

New York, Jan. 23 - Summit Materials LLC/Summit Materials Finance Corp. were heard by high-yield syndicate sources on Monday to have priced an upsized offering of the building-supplies maker's eight-year notes.

Also coming to market during the session was Westmoreland Coal Co., which did an add-on to its existing 2018 bonds.

Both deals came to market fairly late in the session and were not seen trading around.

Friday's deal from Cable & Wireless Communications plc, which firmed smartly in initial aftermarket dealings, was seen by traders as gaining a little more ground.

However, Friday's offering from Taminco Global Chemical Corp., which also moved up solidly after its pricing, gave back some of those gains during Monday's session.

Away from the deals that actually priced, talk was heard on Prestige Brands Inc.'s $290 million bond offering, which is expected to price Tuesday.

Syndicate sources heard CEVA Group plc shopping an $825 million two-part offering, continuing the recent trend of active European borrowing in the dollar-junk market. Domestic issuer PBF Holding Co. LLC also is marketing a new deal with both offerings likely to price this week.

Away from the new-deal realm, Chesapeake Energy Corp.'s bonds rose solidly after the natural gas company announced changes in its production mix, trying to cope with recent weak gas prices.

And offshore energy operator ATP Oil & Gas Corp.'s bonds were actively traded, although no fresh news about the company was seen.

And another busy name was Sears Holdings Corp. with the retailer's bonds seen holding at their recent highs, although its shares slid after having soared on Friday.

Single-deal primary

The primary market saw two deals price on Monday.

Summit Materials, LLC and Summit Materials Finance Corp. priced an upsized $250 million issue of eight-year senior notes (B3/B) at par to yield 10½%.

The yield printed at the tight end of the 10½% to 10¾% price talk. The amount was increased from the original $220 million.

Prior to pricing the deal underwent changes in the restricted payments, permitted liens and permitted investments covenants.

Citigroup was the left bookrunner. Bank of America Merrill Lynch, UBS, Barclays, Credit Suisse and Deutsche Bank were the joint bookrunners.

The proceeds will be used to refinance debt.

The issuer is a Washington, D.C.-based company that acquires and grows heavy-side building materials companies in the aggregates, ready-mix concrete, cement, paving and construction industries.

Very late in the day, Westmoreland Coal priced a downsized $125 million issue of 10¾% senior secured notes due Feb. 1, 2018 (Caa2/CCC+) at 95.492 to yield 11.82% on Monday.

The re-offer price came in line with preliminary guidance of 95 to 96.

Gleacher & Co. Securities Inc. ran the books for the deal, which was downsized from $130 million.

The proceeds, together with cash on hand, are expected to be used to finance the acquisition of the Kemmerer Mine, to provide reclamation bonding collateral and to fund initial Kemmerer working capital.

Westmoreland is an Englewood, Colo.-based independent coal company.

CEVA brings $825 million

Netherlands-based CEVA Group plans to place $825 million of notes in a two-part transaction set to price during the present week.

The senior tranche is a $300 million add-on to CEVA's 8 3/8% senior secured notes due Dec., 1 2017.

Those notes become callable on Dec. 1, 2013 at 106.281 and feature 40% equity claw-back until Dec. 1, 2014. The original $450 million issue priced at par in December 2010.

The junior tranche is a $525 million offering of eight-year senior unsecured notes callable in three years at par plus three-quarters of the coupon, and featuring a three-year 40% equity clawback.

Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and UBS are the joint bookrunners.

The Hoofddorp, Netherlands-based supply chain management-services provider plans to use the proceeds to redeem or repay its 8½% senior notes due 2014, its senior unsecured loan due 2015, its 10% senior subordinated notes due 2016 and term loans maturing in 2013.

The deal also comes with an offer of sponsor equity. Contingent upon the proposed refinancing, Apollo has agreed to exchange €500 million of CEVA debt due in 2018, as well as €355 million of holding-company securities for new holding-company equity.

Apollo also is offering to make an exchange for CEVA securities due in 2014 and 2015 for new additional senior unsecured notes with the same terms as the new senior unsecured notes being offered.

PBF markets eight-year deal

PBF Holding Co. LLC plans to price a $675 million offering of eight-year senior secured notes (Ba3/BB+) during the present week.

Credit Suisse, Deutsche Bank, Morgan Stanley and UBS are the joint bookrunners.

The Parsippany, N.J.-based refiner plans to use the proceeds to repay its term loan and seller notes issued in connection with refinery acquisitions.

Harrah's roadshow for Tuesday

Harrah's Chester plans to start a full roadshow on Tuesday for its $315 million offering of eight-year senior secured notes.

The issuing entities are subsidiaries Chester Downs and Marina, LLC and Chester Downs Finance Corp.

Citigroup is the left bookrunner. Bank of America Merrill Lynch, Credit Suisse and J.P. Morgan are the joint bookrunners.

The proceeds will be used to repay existing credit facilities and repurchase the parent notes, working capital and general corporate purposes, including acquisitions.

New deals a pair of no shows

The new eight-year notes from Summit Materials came too late in Monday's session for any kind of aftermarket activity, traders said.

That was even more the case for Westmoreland Coal's new tranche of senior secured notes.

Cable & Wireless hops

But there was a fair amount of activity seen in the new 8¾% senior secured notes due 2020 that British telecommunications operator Cable & Wireless Communications brought to market on Friday.

That $400 million offering - upsized from the originally announced $350 million - was priced at par via the company's Sable International Finance unit and was reported by traders to have jumped to around the 103 bid level on the break later in Friday's session.

On Monday, a trader said Sable held up well, quoting the bonds as good as 103½ bid, 104¼ offered.

"They've slowly been creeping up today," he added.

A second trader also saw those bonds at the 103½ bid level.

But Taminco drops

The same could not be said for the other dollar-denominated deal that hit the market Friday from Belgium-based Taminco Global Chemical.

A trader saw its $400 million offering of 9¾% second-priority senior secured notes due 2020 trading Monday at 101 5/8 bid, 101 7/8 offered, while a second pegged the bonds at 101 5/8 bid, 102 1/8 offered.

While that was still well above the deal's par issue price, it was down from the initial aftermarket levels in the 102 to 102 3/8 area that was seen on Friday afternoon.

But one of the traders called it barely down, adding that the retreat was "not huge."

Other deals unseen

Traders reported little or no activity in any of the other deals that priced last week during a stretch dominated by European issuers.

For instance, one said that he had not seen any traces of Ardagh Packaging's two-part deal or the two-part offering from Polkomtel SA, both of which came to market only last Thursday.

Ardagh, a Dublin, Ireland-based producer of metal and glass packaging for consumer products, did a $420 million two-part deal, slightly upsized from the original $410 million.

It brought in $160 million of fungible 7 3/8% add-on notes due 2017, pricing them at 100.476 to yield 7¼%, as well as $260 million non-fungible 9 1/8% add-on notes due 2020, which priced at 96.356 to yield 9¾%.

Warsaw-based Polkomtel, Poland's second-largest wireless service provider, priced $500 million of dollar-denominated 11 5/8% notes due 2020 at 98.10 to yield 12%, along with $542.5 million of 11½% notes due 2020 that priced at 96.628 to yield 12.5%.

While there was little aftermarket seen in the Ardagh bonds since both were add-ons to existing issues, a trader said the new Polkomtel dollar bonds had moved up to above the par bid level Thursday and Friday, while the euro bonds firmed to 98¼ bid, 98½ offered.

Recent Charter bonds strong

However, a trader said that he did see some activity Monday in another relatively recent new deal - St. Louis-based cable operator Charter Communications Inc.'s 6 5/8% notes due 2022.

He saw that deal having moved up to the 103 bid level.

Charter priced that $750 million drive-by deal back on Jan. 11 via its CCO Holdings, LLC and CCO Holdings Capital Corp. units at 99.5, to yield 6.694%.

The new bonds initially edged up to around the par level, before dropping off the radar screen. They stealthily re-emerged Monday at a solidly higher level, the trader said.

At another shop, a trader saw Charter's established 7% notes due 2019, also from CCO Holdings, LLC/CCO Holdings Capital Corp., trading at 106 bid, 106¼ offered.

He noted that those bonds had been trading around 105½ on Friday and 104¾ on Thursday. "So they're moving up pretty nicely," he said.

There was no fresh news seen out on Charter on Monday.

Firming trend rolls on

Away from the new-deal arena, statistical measures of junk-market performance extended their gains again on Monday.

A trader saw the CDX North American Series 17 High Yield index rise by 9/16 point on Monday to end at 96 11/16 bid, 96 15/16 offered, after having gained 3/8 point for a second straight session on Friday.

The KDP High Yield Daily Index rose by 18 basis points Monday to close at 73.24, after it was little changed on the day Friday.

Its yield declined by 6 bps to 7.10%, after coming in by 1 bp on Friday.

And the Merrill Lynch High Yield Master II Index made it six in a row on Monday, adding 0.249% on top of Friday's 0.06% advance.

That latest gain raised the index's year-to-date return to 1.915% for the year, a new 2012 peak level. That was up from Friday's 1.662%, which had been the previous peak level for the year so far.

A trader said that the market was "up quite a bit."

A second said, "Stuff is trading. You just don't see a flurry of it going on."

Chesapeake churns on changes

A trader said that Chesapeake Energy's bonds have been active.

"Just with natural gas prices going down and the news that they're going to stop producing in certain areas, just because natural gas is getting so much lower and there's a glut of it," the trader said.

He called the Oklahoma City-based natural gas operator's bonds "up slightly today," estimating a rise of between 1 and 2 points.

"I guess their hedges ran out," a second trader said, speculating on the timing of the company's decision to change its production mix.

He saw Chesapeake's 6 1/8% notes due 2021 get as good as 99¾ bid - well up from Friday's levels around 97½ bid - before going out at 991/2, still up 2 points on the day.

Many of the transactions were "sales out of dealer inventory," he said.

Chesapeake's 9½% notes due 2015 were seen up ¾ point at 113 bid, while its 6½% notes due 2017 strengthened by more than 3 points on the day to go out at just under 106 bid.

With natural gas prices continuing to fall to weak levels well below $3 per thousand cubic feet, Chesapeake said that it would cut its current daily production by 8%.

The company said it would shift its production from dry-gas regions, which produce only natural gas, to more lucrative regions rich in oil and other liquids.

Chesapeake also reiterated its intention to continue its strategy of de-levering in order to meet its previously announced year-end net-debt target of $9.5 billion.

ATP is active

Also in the energy sphere, a trader said that ATP Oil & Gas was one of the busier issues on the session, with turnover of about $16 million in the Houston-based offshore energy company's 11 7/8% senior secured notes due 2015 trading at 70 1/8 bid, which he called a gain of 2 point on the day.

A second trader said that the bonds were up by 2 points on an intraday basis to a 70-71 region, although he quoted them going home trading between 69 and 70 bid, calling that a 1-point rise on the session, but off the highs.

There was no fresh news seen out on the company on Monday, a trader said.

Sears still in the spotlight

A trader said that Sears Holdings' 6 5/8% notes due 2018 were off by a half-point, trading at 84 bid.

However, a second trader said that the troubled Hoffman Estates, Ill.-based retailer's bonds "traded up some more" to go out around the 85 level.

"That one's obviously been topical," he added.

Another trader said that the 6 5/8s were going home on Monday at 85 bid, after "rallying over the last few days and hitting a new high today."

Sears bonds remained in their usual slot near the top of the high-yield most-actives list, with a market source seeing more than $14 million trading by late afternoon.

The same bonds and the company's Nasdaq-traded shares, have been on a tear over the last week or so, bouncing back after taking a beating in the immediate aftermath of the Dec. 27 news that Sears' and Kmart's same-store sales were down 5.2% from a year ago during the crucial two-month selling period heading into Christmas.

Sears then announced that it would close up to 125 underperforming Kmart or Sears stores.

The bonds are nearly all of the way back up to the mid- to high-80s, bouncing back from around 70 bid immediately after the news.

Sears has reportedly been meeting with lenders to give reassurances about the basic health of the company. It met with CIT Group Inc., a major lender to the middle-market companies that make up much of Sears' vendor base.

Earlier this month, it was reported that CIT would no longer extend credit to those companies to finance their deliveries of merchandise to Sears.

But last week, the news was that the New York-based financial firm decided to reverse that decision and once again supply credit to the vendors.

Meanwhile, Sears' shares have been Wall Street's hottest ticket of late, gaining more than 50% last week alone.

Much of the buying was spurred by speculation that majority owner Edward S. Lampert - who took advantage of the stock's drastically lower price to buy another $159 million - may take the company private.

But while the shares zoomed by more than 13% on Friday on over four times their normal volume, there was a pullback on Monday with the stock losing $1.61, or 3.29%, to end at $47.39, on volume of 8.4 million shares, almost five times the norm.

AMR improvement seen

A trader said that AMR Corp.'s paper "has been trending better" with the bankrupt Fort Worth, Texas-based airline carrier's 7½% notes finishing Monday at 81½ bid, 82 offered, versus levels of about 79 bid last week.

There was no fresh definitive news out on the stricken airline giant. The company and its main operating unit filed for Chapter 11 protection on Nov. 29 in order to address its uncompetitive cost structure.

There has been recent chatter that rival carriers Delta Air Lines Inc. and US Airways Group, Inc. have been considering making offers to acquire AMR, as has private equity firm TPG Capital Group.

The Wall Street Journal recently reported that Tempe, Ariz.-based US Airways hired Millstein & Co. to help it examine American. Atlanta-based Delta retained the Blackstone Group to advise it. None of those companies has confirmed or denied the reports.

Ironically, both Delta and US Air were among a number of large U.S.-flagship airline operators that preceded American into bankruptcy over the last several years using the Chapter 11 process to shed burdensome debt loads and unfavorable labor and airline leasing contracts so they could emerge leaner and more financially fit.

Until recently, American was one of just a handful of major carriers that did not crash land in Chapter 11.

Kodak firm amid advisor shift

A trader said that Eastman Kodak Co. paper "was not overly active" on Monday.

But he saw its 7¼% notes due 2013 and convertible 7% notes due 2017 were a little bit softer, around a 29-30 bid context.

He saw the bankrupt Rochester, N.Y.-based photographic products and printer company's secured paper - its 9¾% notes due 2018 and 10 5/8% notes due 2019 - still hanging in around the 88-89 level.

A second trader called the company's bonds unchanged from Friday, when they had firmed just a day after the not-totally-unexpected Chapter 11 filing by Kodak, once a proud symbol of American manufacturing greatness.

The company has been affected over the last few years by the abrupt shift in the photography world to digital, which rendered most of venerable Kodak's most profitable products obsolete.

The bonds rose on Friday as investors tried to hash out anticipated recovery values from the restructuring.

While the slide into bankruptcy was really no surprise, Kodak did make an unexpected move of sorts on Monday, when it announced the hiring of James A. Mesterharm of AlixPartners LLP as its chief restructuring officer, replacing Dominic DiNapoli of FTI Consulting Inc. That came less than a week after it announced DiNapoli's appointment.

Kodak said this allows it to leverage AlixPartners' knowledge of the company due to its pre-existing operational enhancement advisory engagement over the past several months.

However, FTI Consulting is expected to remain on board and continue to work on some post-bankruptcy matters alongside AlixPartners, Kodak said.

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