Refco, Loews, Fisher price deals, EchoStar scrubbed; Goodyear easier; funds see $196 million inflow

By Paul Deckelman and Paul A. Harris

New York, July 22- Refco Financial Holdings, Loews Cineplex Theaters and Fisher Scientific International were heard by high-yield syndicate sources Thursday to have successfully priced new deals - although Loews was downsized from the $415 million originally shopped around the market. New-dealers meanwhile heard that EchoStar Communications Corp. had postponed its $1 billion quickie offering of 10-year bonds, which had been scheduled to price Wednesday, in the wake of the surprise announcement Wednesday that chief financial officer Michael McDonnell is resigning for personal reasons.

In the secondary market, Goodyear Tire & Rubber Co. bonds were heard easier, even though the Akron, Ohio-based tiremaking giant had on Wednesday released bullish guidance ahead of its release next month of second-quarter results. Playtex Products Inc. bonds were meanwhile better after the Westport, Conn.-based consumer products company reported favorable numbers.

And after trading had finished for the day, market participants familiar with the weekly high yield mutual fund flow numbers compiled by AMG Data Services of Arcata, Calif. told Prospect News that the funds had a net inflow of $196 million in the week ended Wednesday.

It was the third consecutive sizable inflow, following the $339.6 million gain in the week ended July 14 and the $439.7 million inflow seen in the week ended July 7. Counting a small inflow seen the week before that, some $977 million more has come into the funds than has left them over that four-week span, according to a Prospect News analysis of the AMG figures.

Even though mutual funds account for but a relatively small percentage of the total capital in the high yield universe, market-watchers consider their movements a generally reliable barometer of overall junk bond market liquidity trends.

The strong showings over the last few weeks have put a dent into the huge cumulative net outflow racked up in the first half of the year - but only a relatively modest one. Outflows have still been seen in 16 of the 29 weeks since the start of the year, and the year-to-date outflow is still a daunting $4.421 billion - although that is down from $4.617 billion last week and the peak cumulative outflow for the year of $5.707 billion, according to the Prospect News analysis.

Of the two high yield syndicate officials who spoke to Prospect News well after the market closed Thursday - having traded off during the session, according to one - neither seemed particularly sanguine about the inflow news.

"The market is going to come under some pressure here," one investment banker commented when Prospect News extended an invitation to cheer the inflow news.

The official cited a forward calendar that is conspicuously crowded, considering that the market is entering the waning days of summer.

"There's a lot of issuance and some of these deals are pretty big," the source continued.

"Of course you have to keep in mind that some of these issuers are calling out old bonds, which helps to alleviate the glut," the banker added.

Meanwhile another sell-sider, who did manage a brief cheer at that inflow news, also seemed to think that it did not exactly imply that the market is hot.

"This is a nice market," said the investment banker, "not crazy like it was early in the year, but certainly not dead either.

"But the stock market has been giving up ground this week and high yield tends to move with the stock market.

"The 10-year Treasury closed at 4.45%, which is 10 [basis] points wider than it was last Friday.

"And people expect the Federal Reserve to boost interest rates in August and again in September," the official continued, adding that a short term interest rate of 2½%, from the present 1¼%, could easily be in place before the year 2005 is very old.

"No matter how you cut it, rising interest rates are bad for bonds," the sell-sider said.

$1.215 billion in three deals

Three issues priced Thursday, totaling $1.215 billion.

The biggest came from Refco Finance Holdings which sold $600 million of eight-year senior subordinated notes (B3/B) at par to yield 9%.

The New York-based financial services company' acquisition financing deal, lead by Credit Suisse First Boston, Banc of America Securities and Deutsche Bank Securities, came at the tight end of the 9%-9¼% price talk.

Meanwhile Loews Cineplex Theatres priced a downsized $315 million issue of 10-year senior subordinated notes (B3/CCC+) at par on Thursday to yield 9%, at the wide end of the 8¾%-9% price talk.

Credit Suisse First Boston and Citigroup ran the books for the acquisition financing deal from the New York City motion picture exhibitor.

The company had previously planned to issue $415 million of bonds, but shifted $100 million to its seven-year term loan B, which increased to $630 million from $530 million.

And in drive-by action, Fisher Scientific International priced an upsized $300 million of 10-year senior subordinated notes (Ba3/BB+) at par to yield 6¾%, right on top of the 6¾% area talk. The deal was increased from the $250 million announced late Wednesday.

The Hampton, N.H. scientific products company's debt refinancing deal was led by Banc of America Securities and Goldman Sachs & Co.

EchoStar pulls $1 billion deal

In the wake of Wednesday's surprise announcement that EchoStar DBS Corp. CFO Michael McDonnell would resign, effective Aug. 13, the Englewood, Colo. direct broadcast satellite subscription television service provider pulled its $1 billion offering of 10-year senior notes (existing ratings Ba3/BB-) without comment on Thursday.

Proceeds from the sale were slated to be used to repurchase or redeem all of the company's 10 3/8% senior notes due 2007.

One deal for Friday

Regarding the sole announced transaction left to be completed during the July 19 week, price talk of 9½%-9¾% emerged Thursday on Duane Reade Inc.'s planned $195 million offering of seven-year senior subordinated notes (B3), expected to price on Friday via Banc of America Securities, Citigroup and Credit Suisse First Boston.

Three roadshow starts

Meanwhile the market heard news of three roadshow starts for the week to come.

The roadshow starts Monday for a two-part $575 million high-yield bond deal from US Oncology Inc., which is expected to price during the week of Aug. 2.

The Houston cancer treatment services company plans to sell $200 million of eight-year non-call-four senior notes (B2/B-), and $375 million of 10-year non-call-four senior subordinated notes (B3/B-).

Citigroup, JP Morgan and Wachovia Securities are joint bookrunners for the acquisition financing.

Meanwhile the roadshow is expected to get underway during the week of July 26 for United Refining Co.'s $200 million of 10-year senior notes, via Citigroup.

The Warren, Pa. refiner will use the proceeds to redeem old notes and fund a dividend payment.

And the roadshow starts Monday for a $190 million offering of 10-year senior subordinated notes from Innophos Inc.

The Cranbury, N.J. producer of phosphoric acid and phosphates for use in specialty applications expects to price the acquisition financing deal on Aug. 2 or 3, via Bear Stearns & Co. and UBS Investment Bank.

Fisher edges up in trading

When the new Fisher Scientific 6¾% notes due 2014 were freed for secondary trading, a trader saw them firm a bit to 100.375 bid from their par issue price, although later in the session, another trader saw the bonds going out at 100.25 bid, 100.5 offered.

He saw the new Refco 9% notes due 2012 at par bid, 100.5 offered, little moved from their par issue price.

"These were not exciting breaks," he said with no small degree of understatement.

The trader saw Freescale Semiconductor Inc.'s two issues of coupon bonds - its 6 7/8% senior notes due 2011 and 7¼% senior subordinated notes due 2014 - continuing to hang in at around 101 bid, 101.5 offered, up from their issue price last Friday at par, while the Austin, Tex.-based microchip maker's floating rate notes due 2009 remained above 102 bid.

And he saw Canadian drugstore operator's Jean Coutu Group's 7 5/8% senior notes due 2012 at 101.25 bid, 101.5 offered, up perhaps a quarter point from Wednesday and up from Tuesday's par issue price, while the company's 8½% senior subordinated notes due 2014, which had also priced Tuesday at par, and eased from that issue price Wednesday, eased another quarter point Thursday to 99.5 bid, 99.75 offered.

EchoStar's bonds "had a sloppy beginning," the trader said, quoting the Englewood, Colo.-based satellite television programming company's 6 3/8% notes as having initially eased to 99.25 bid, 99.5 offered from Wednesday's levels at 100.75 bid, as investors tried to gauge the impact of its CFO's resignation and word circulated that the new bond deal - whose proceeds would have been used to retire some existing higher interest rate debt - had been scrubbed. However, by the end of the day, he saw those bonds have firmed off their lows to 99.75 bid, 100.25 offered, down just a point on the session.

Goodyear lower

Back among the established bonds, Goodyear Tire & Rubber's bonds "were down a couple of points," a trader said, especially its benchmark 7.857% notes due 2011. He quoted them at 93 bid, 93.75 offered, well down from 95.25 bid, 95.75 offered just two days earlier.

The company's other bonds, he said, "were maybe a little weaker - but not as much as the '11s. The shorter stuff hung in there."

Another trader agreed that Goodyear was "a little weaker," quoting the 7.857s at 93 bid, 93.5 offered, although he'd seen the bonds at 93.5 bid, 94.5 offered Wednesday and at 94.5 bid, 95 offered on Tuesday.

After the market closed Wednesday, Goodyear updated the financial community in advance of the scheduled release of its second-quarter earnings data on Aug. 5. The tiremaker projected that sales for the quarter will have risen some 18% to $4.5 billion - better than the $4.13 billion that Wall Street has been expecting and well up from $3.8 billion a year ago. The company attributes the anticipated sales gains to higher volume, improved prices and a better product mix. The gains come across the board, with all seven of Goodyear's businesses, including its core North American Tire unit, expected to report positive segment operating income for the quarter.

Goodyear said that several of its segments will show strong double-digit percentage gains in earnings, including the company's two European business units, up more than 25%, and its Latin America, Engineered Products and Chemical units, each of which will be up at least 50% from year-ago results.

Because of those strong segment earnings, the also said that it is no longer looking to sell its chemical business. Its corporate mind was also changed by the cash flow the chemical segment produces for the overall company.

A trader cited the fact that the chemical unit will now not be sold - the proceeds would likely have been used to take out debt - as the reason for the Goodyear bonds' softness in the wake of otherwise positive news that the company put out.

Goodyear also said that on the debt front it expects to complete next month the refinancing of its $680 million credit facility slated to mature next April; that senior secured revolver will be replaced with a new $500 million facility due 2007 and secured by the same collateral.

Playtex jumps higher on earnings

Elsewhere, a market observer pegged Playtex's 9 3/8% notes at 101 bid, well up from prior levels at 99.75, following the release of the earnings data, although he saw its 8% notes unchanged at 104.

At another desk, the 9 3/8s were quoted as high as 102, although that was seen as only up around a point from previous levels.

Playtex posted a profit of $8.3 million (13 cents a share), up from $4.7 million, (eight cents a share) a year earlier. Wall Street had been expecting earnings of about eight cents a share for the current quarter as well.

Buoyed by the favorable second-quarter results, Playtex raised its full year guidance to 31 cents to 34 cents a share, about four cents a share above the projections it issued in April. The revised guidance includes including 11 cents a share in costs from debt retirement and restructuring and a four cent a share boost from a tax settlement.

Of more significance to debt investors: EBDIT rose 27% year-over year in the quarter to $31.2 million, and was up 9% for the first half of the year, to $65 million.

Dex unchanged on IPO

Dex Media Inc. bonds were virtually unchanged - even as Englewood, Colo.-based Dex, the former directory publishing subsidiary of Qwest Communications International Inc. before its 2002 spin-off, became the latest in a string of companies whose IPOs produced considerably less in the way of proceeds for the company than originally expected. That list includes at least two high-yield issuers - Domino's Pizza Inc. and Freescale Semiconductor Inc., both of whom ended up pricing their IPOs at lower levels last week.

Dex's 53.06 million-share offering included 15.3 million shares sold by the company itself and the remaining 37.8 million sold by existing shareholders. While the company had hoped to price the new shares in the $23 to $26 range, they ended up pricing at $19, for total gross proceeds to the company from its portion of the shares, before fees and other expenses, of $290.7 million.

But a trader said "I did not see a single thing" in Dex, and a market source elsewhere agreed, estimating its zero-coupon notes due 2013 at 68.5 bid and its 12 1/8% notes due 2012 at 118.75, both unchanged.

Charter drops

A trader quoted Charter Communications Holdings' bonds down about two to three points on the session, with the St. Louis-based cable operator's 10% notes due 2009 down three points at 80.5 bid, and its zero-coupon notes due 2010 likewise off a trey at 77.5. He saw Charter's 11 1/8% notes due 2011 down two points at 82 bid, and its zeros due 2011 off about three-quarters of a point at 70.25 bid, all despite the apparent lack of fresh news about the company that would explain such a movement.

However, at another desk, Charter's 10¼% notes due 2010 were seen just a point lower at par bid, and its 8 5/8% notes due 2009 were also a point down, at 78 bid.

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