Rite Aid jumps on credit facility news; D.R. Horton, four others price offerings

By Paul Deckelman and Paul A. Harris

New York, April 11 - Rite Aid Corp. bonds and shares firmed smartly Friday as the Camp Hill, Pa.-based drugstore chain operator launched a new $2 billion secured credit facility.

In the primary market, homebuilder D.R. Horton Inc. came to market with an upsized $200 million bond offering - one of a quintet of deals to price in a market floating on an easy cushion of ample liquidity.

D.R. Horton and Senior Housing Properties Trust both priced quick-to-market deals, and both transactions were upsized, to $200 million of 10-year notes for D.R. Horton and $150 million of 12-year notes for Senior Housing.

Also in the drive-by category, AmeriGas Partners, LP priced a $32 million add-on to its 8 7/8% senior notes due May 20, 2011.

One of the transactions completed on Friday had been marketed with a roadshow. Brake Bros. priced two tranches of eight-year notes amounting to the equivalent of £175 million equivalent.

And Indonesian issuer PT Bank Mandiri priced an upsized $300 million of five-year senior unsecured bonds.

D.R. Horton increased its drive-by sale to $200 million from a planned size of $150 million and priced the 10-year senior notes (Ba1/BB) Friday at par to yield 6 7/8%, spot on to the 6 7/8% price talk.

Citigroup and Banc of America Securities were joint bookrunners on the deal from the Arlington, Tex.-based homebuilder.

In a press release earlier in the week the company announced that its second-quarter total sales orders rose 33% to $2.4 billion from $1.8 billion, with the month of March bringing in the most quarterly orders in the 25-year history of the company. The total number of housing units ordered during the period rose to 10,548 from 8,617, the press release stated.

Senior Housing's upsized drive-by was raised to $150 million from $125 million. The Newton Mass. senior living properties REIT priced its 7 7/8% 12-year senior notes (Ba2/BB+) at 99.806 to yield 7.9%. Price talk on the UBS Warburg-run deal was for a yield in the 8% area.

The third of Friday's three drive-by deals came from King of Prussia, Pa.-based retail propane marketer AmeriGas Partners. Issuing jointly with its AP Eagle Finance Corp. subsidiary, it sold a $32 million add-on to its 8 7/8% senior notes due May 20, 2011 (B2/BB-) at 107 for a yield to worst of 7.42%. Credit Suisse First Boston was the bookrunner.

Lately sell-side sources have been advising Prospect News that quick-to-market transactions, such as those from D.R. Horton, Senior Housing and AmeriGas Partners, represent the preference among issuers, given the present cash-heavy, paper-hungry condition of the high yield accounts.

"These companies want to take advantage of the high degree of liquidity in the market right now," one sell-side official said on Friday.

"There is way too much cash right now. That's one of the reasons you are not seeing as many roadshows. None of these companies want to go on the road."

One of last Friday's transactions, however, did price at the conclusion of a full roadshow.

Brake Bros.' two tranche of £175 million equivalent eight-year senior notes (B3/B-) came via bookrunners Credit Suisse First Boston and JP Morgan.

The company sold £105 million at par to yield 12% and €105 million, also at par, to yield 11½%. Price talk had been for a yield of 11½%-11¾%.

Finally on Friday, Bank Mandiri announced in a press release that it sold an upsized $300 million of senior unsecured bonds due 2008 (B3/B-/B) via Credit Suisse First Boston and UBS Warburg. The Indonesian Bank increased its offering from $200 million and priced it with a 7% coupon at 425 basis points over Treasuries.

"When completed, this represents the largest bond offering out of Indonesia since the Asian crisis in 1997," E.C.W. Neloe, Bank Mandiri's president and CEO commented in the release. "The significant oversubscription for the bonds, with an order book of approximately $1 billion, demonstrates investors' strong vote of confidence for Bank Mandiri and establishes Bank Mandiri, in our view, as the issuer of choice from Indonesia.

"Several market observers were skeptical that we should be launching a bond at this time in light of the hostilities in Iraq and SARS problems. The result speaks for itself and I am extremely pleased about the pricing outcome."

With the ink drying on Friday's five high yield transactions the forward calendar for the week of April 14 contains three deals, according to one sell-sider.

Pricing is expected Tuesday for Ethyl Corp.'s $150 million of seven-year senior notes (B2/B) via Credit Suisse First Boston. Also on the calendar as business for the week is Alpharma Inc.'s offering of $200 million eight-year senior notes via Banc of America Securities. And there is a eurobond deal poised to go down as well: Fresenius AG is looking to price €300 million of six-year notes (BB+) via Deutsche Bank Securities.

However late in last Friday's session sources advised Prospect News that the week promises to hold a significant amount quick-to-market activity, such as the majority of business that priced during Friday's session.

"I think there is going to be a lot of stuff going on next week," said one source of the four-day run-up to Easter - the market will be closed on Good Friday.

"You would think it would be quiet because it's a holiday week. But we hear that people have stuff in their pipelines."

Another source said: "There are no blockbuster deals out there for next week. Maybe you'll see deals for $150 million or $200 million, or a $75 million add-on.

"That will be the major activity next week."

When the new D.R. Horton bonds were freed for secondary dealings, a trader said "they traded into a par bid several times" before closing at 99.75 bid/100.25 offered, slightly off their par issue price.

Another trader said the new Horton's initially "traded OK," firming slightly to 100.5 bid, but then the issue "crapped out," dropping back to the 99.75 level. "Not a great break" overall, he said, snorting with some derision at the unusually low coupon (6 7/8%) "and call that a high yield bond?"

None of the other new deals were seen trading around on Friday.

Back among established issues, the trader saw some positive movement on an otherwise pretty dull day in Rite Aid, after the drugstore chain announced its financing news.

Proceeds from the new facility, which matures in 2008, will be used to repay Rite Aid's existing $1.37 billion senior secured credit facility and its $107 million synthetic lease, both due in March 2005, and to replace the company's existing $500 million revolving credit facility.

The trader quoted Rite Aid's 7 5/8% notes due 2005 as having pushed up to 98.25 bid/98.75 offered from prior levels around 96 bid/97 offered, while its 11¼% notes due 2008 got as good as 104 bid/105 offered from prior levels around 100.5 bid/101.5 offered. All in all, he said, the company's bonds were up "about three to four points across the board." At another desk, a trader said that he had heard that there had been "a lot of activity" in the credit, although his particular shop was not involved.

The news was also a tonic for Rite Aid's shares, which gained 26 cents (10%) to $2.86 In New York Stock Exchange dealings on volume of 6.1 million, more than three times the usual.

Also on the financing front - maybe - was Calpine Corp., whose bonds had shot up to as high as the 70 area earlier in the month on speculation the San Jose, Calif.-based power producer might soon follow the lead of industry peers AES Corp., El Paso Corp., Reliant Resources Inc. and Dynegy Inc. and announce a refinancing deal. But when no deal materialized, the bonds were beaten back down to the low 60s throughout most of the past week in what one trader called "volatile" activity.

On Friday, however, Calpine's 8½% notes due 2011 were quoted up about a point or two at 62.5 bid/63.5 offered

Calpine "came back up," another trader said, quoting the bonds at that same 62.5 bid level. "Rumors of a possible bank deal have come back," although nothing had been seen as of Friday evening.

Calpine's 8½% notes due 2008 were seen at another desk up nearly two points, at 63.25 bid, while its 8 5/8% notes due 2010 were two points better, at 63 bid.

Elsewhere, Triton PCS' zero-coupon notes due 2011 were quoted as having firmed to 98.5 bid, a two point gain.

Also on the communications beat, American Tower Corp.'s 9 3/8% notes were seen unchanged at 91 bid/92 offered.

EchoStar debt, a trader said, "didn't move at all," apparently unaffected by the fallout surrounding News Corp.'s successful bid for EchoStar competitor DirecTV and the prospect - outlined in a lengthy New York Times article Friday - that with DirecTV finally getting a deep-pocketed new owner looking to increase its share of the satellite TV market, Englewood, Colo.-based EchoStar faces some challenging times ahead.

He quoted EchoStar's bonds as actually having come back up to around 110 bid/111 offered from 109.5 bid/110.5 offered.

Another trader quoted EchoStar's 10 3/8% notes as having traded into a 110 bid while its 9 3/8% bonds were at 107 "earlier in the morning and then they sort of flattened out for the rest of the afternoon," which other than that, he said was "pretty quiet, with not a lot going on."

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