Upsized TPC, Rotech, Omega deals price; Manitowoc slates; Sears, Burger King, Ardagh to come

By Paul Deckelman and Paul A. Harris

New York, Sept. 29 - The high yield primary market was heard by syndicate sources to have churned out a trio of upsized new deals on Wednesday, generating about $800 million of proceeds for the borrowers.

Two of the pricings were in medical-related names, as Omega Healthcare Investors, Inc., a Hunt Valley, Md.-based real estate investment trust specializing in long-term care facilities, priced $225 million of 6¾% notes due 2022, while Rotech Healthcare, Inc., an Orlando, Fla.-based provider of home medical equipment and related products and services., came to market with $230 million of 10¾% senior secured notes due 2015. Both deals priced at a discount to par and traders said they moved up in the aftermarket.

The other pricing seen Wednesday - $350 million of 8¼% senior secured notes due 2017 from Houston petrochemical company TPC Group LLC - came too late in the day for aftermarket action.

Those deals followed by a day another healthcare name - rehabilitative hospital and clinic operator HealthSouth Corp., which came with a two-part offering on Tuesday. The shorter tranche of that latter transaction gained about a point in Wednesday's dealings.

The forward calendar fattened with the addition of Manitowoc Co., Inc.'s $500 million offering. Price talk emerged on several other deals which could price Thursday or Friday, including Sears Holding Corp. and European issuers Ardagh Packaging Finance plc, Hapag-Lloyd AG and Seadrill Ltd.

Additionally, Burger King Holdings, Inc. is slated to wrap up its road show Thursday for a $900 million eight-year bond deal, which will now include a tranche of euro-denominated notes along with the originally planned dollar paper.

While "The King's" road show was winding down, another restaurateur, IHOP and Applebee's operator DineEquity Inc., and building supplies provider Associated Materials, Inc., were beginning roadshows for their respective offerings.

Secondary trading Wednesday was again mostly focused on the new deals, although the overall market was seen firmer.

TPC upsizes

Three issuers, each bringing a single tranche of junk, raised $805 million on Wednesday.

TPC Group priced an upsized $350 million issue of 8¼% seven-year senior secured notes (B1/B+) at 99.35 to yield 8 3/8%, at the tight end of the 8½% area price talk.

Deutsche Bank Securities and JP Morgan were the joint bookrunners.

The Houston-based petrochemical company will use the proceeds to repay all of its outstanding term loan debt and to fund a distribution to parent TPC Group Inc. for general corporate purposes, which may include dividends, stock repurchases or other returns of capital to its stockholders.

Rotech atop talk

Rotech Healthcare priced a slightly upsized $230 million issue of 10¾% five-year senior secured notes (B1/B+) at 97.189 to yield 11½%.

The yield printed on top of the price talk.

Credit Suisse ran the books for the debt refinancing and general corporate purposes deal.

A mutual fund investor was taken by surprise by the fact that the home medical equipment company didn't bring a bigger deal.

The reason: Rotech has about $250 million of outstanding 9½% senior subordinated notes due April 2012.

What mystifies this buy-sider is the fact that the new 10¾% notes due 2015 have a springing maturity, should Rotech fail to refinance the 9½% subordinated notes by a certain date.

And the clock is ticking.

"Why didn't they just take out those subs with this deal?" the manager wanted to know.

Regardless, look for the company to come back to the primary market soon - perhaps with an add-on - to head off that springing maturity in the near term.

The fact that the new 10¾% notes due 2015 were up about 2 points in the secondary market on Wednesday won't hurt the company's chances of bringing another deal in the near term, the buy-sider added.

Omega upsizes

Omega Healthcare Investors priced an upsized $225 million issue of 6¾% 12-year senior notes (expected ratings Ba2/BB+) at 98.984 to yield 6 7/8%, at the tight end of the 7% area price talk.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Jefferies & Co. and UBS Investment Bank were the joint bookrunners for the quick-to-market issue which was upsized from $200 million.

Proceeds will be used to repay revolver debt and for general corporate purposes.

Talking the deals

The week is backloaded, market sources say, meaning that the while the first three sessions of the present week passed in relative quiet, the Thursday and Friday sessions figure to be a lot busier.

Sears Holdings talked its $500 million offering of eight-year senior secured notes (Ba1/BB+) with a 6¾% area yield on Wednesday.

Pricing is set for Thursday afternoon.

Bank of America Merrill Lynch, Wells Fargo Securities, Barclays Capital, Deutsche Bank Securities, Goldman, Sachs & Co. and Citigroup are the joint bookrunners.

Ardagh talks multi-tranche deal

Meanwhile Ardagh Packaging Finance plc set price talk for its €1.7 billion equivalent multi-currency offering.

Tranches of €850 million and $375 million of seven-year senior secured notes are talked at the 7½% area. The seven-year notes come with four years of call protection.

Meanwhile, tranches of €315 million and $310 million of 10-year senior unsecured notes are talked with a 9¼% area yield. The 10-year notes come with five years of call protection.

The deal is set to price on Thursday.

Citigroup is the left bookrunner for the Rule 144A and Regulation S for life deal. Credit Suisse and JPMorgan are the joint bookrunners.

Also from Europe, German container shipping firm Hapag-Lloyd talked its $500 million equivalent offering of five-year senior notes (B3/B/) with a 9¼% area yield.

The notes, which will be issued in dollar and euro denominations, are expected to price on Friday.

Deutsche Bank, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan and UniCredit are managing the Rule 144A and Regulation S transaction.

When it was announced, the deal was expected to also include dollar- and euro-denominated tranches of seven-year notes, with four years of call protection. However, there was no further news on a possible seven-year tranche, the market source said.

And Seadrill talked a $200 million to $400 million offering of bonds with a 6½% area yield, with no discount.

Carnegie ASA and Pareto Securities AS are the joint bookrunners for the Rule 144A deal.

Burger King carves out euro tranche

Meanwhile, Blue Acquisition Sub Inc. (Burger King Holdings Inc.) will sell euro-denominated notes, in addition to its previously announced dollar-denominated notes, as part of its $900 million equivalent offering of eight-year senior notes.

Tranche sizes remain to be determined.

The roadshow is expected to wind up on Thursday.

J.P. Morgan Securities Inc. and Barclays Capital Inc. are the joint bookrunners.

DineEquity starts roadshow

The forward calendar continued to build.

DineEquity began a roadshow on Wednesday in New York for a $825 million offering of eight-year senior unsecured notes (B3/CCC+).

Pricing is set for Thursday, Oct. 7.

Barclays Capital and Goldman Sachs & Co. are joint bookrunners.

Proceeds will be used to refinance outstanding Applebee's and IHOP securitization debt, and to redeem a portion of the series A stock.

Associated Materials to sell $730 million

Associated Materials is marketing a $730 million offering of seven-year senior secured notes.

The deal is set to price early in the week ahead.

Deutsche Bank Securities, UBS Investment Bank and Barclays Capital are managing the sale.

The Cuyahoga Falls, Ohio-based building products company plans to use the proceeds to finance the acquisition of its parent company by affiliates of Hellman & Friedman.

New deals the focus

A secondary market trader said that "once again, it was all new deals," with trading in the established issues pretty much relegated to the back burner.

New Omegas, Rotechs trade up

A trader said that when the new Omega Healthcare 6¾% notes due 2022 moved over into the secondary market after having priced fairly early in the session at 98.984, the nursing home REIT's new deal got as good as 99 5/8 bid. After that, he said, "it was trading down, as people were hitting bids," easing from the peak level to 99 3/8 bid, 99 5/8 offered, and going out around 99¼ bid.

Another saw the bonds at 99 3/8 bid, 99½ offered.

As for Rotech's 10¾% senior secured notes due 2015, a trader saw the $230 million issue at 98¾ bid, 99¾ offered on the break, while a second saw them move out to 99½ bid, 99 5/8 offered - well up from the 97.189 level where the bonds had priced.

The upsized $350 million of TPC Group's 8¼% senior secured notes due 2017, which priced at 99.35, came to market too late in the session for any kind of aftermarket.

Shorter HealthSouth bonds firm up

That had been the case on Tuesday with HealthSouth's $500 million two-part offering, but on Wednesday the Birmingham, Ala.-based rehabilitative medicine clinic and hospital operator's new paper was trading around.

A trader said that its $275 million of 7¼% notes due 2018, upsized from $250 million originally, "seem to be going better" than the other half of the deal, the $250 million of 7¾% notes due 2022, although on "not a lot of activity" in the shorter bond, which he quoted having gotten as good as 101 bid, up from their par pricing level on Tuesday. The bonds went home straddling their high, at 100 7/8 bid, 101 1/8 offered.

On the other hand, he said that "a lot" of the 73/4s had traded around 100¼ bid, up just a little from Tuesday's par issue price.

Another trader saw the eight-year bonds doing even better, at 101 bid, 100½ offered, while the 12-years finished at par bid, 100½ bid.

New Logan's holds gains

Investors meantime were definitely not singing the late Jim Morrison's classic "Roadhouse Blues," as the new 10¾% second-lien senior secured notes due 2017 from Nashville-based restaurant operator Logan's Roadhouse, Inc., issued though its Roadhouse Finance Corp. unit, pretty much held onto to the better than 2 point gain which the $355 million issue had notched late Tuesday after pricing at par earlier in the session.

A trader said that he "didn't see a lot of it" trading on Wednesday, seeing a locked price of 102¾ for a $500,000 block of bonds, but not much more activity.

That price, he said, compared favorably with the 102¾ offered level at which the bonds had gone home on Tuesday, "so they've done well."

A second trader saw them Wednesday at 102 1/8 bid, 102 5/8 offered, in slightly from Tuesday's 102¼ bid, 102¾ offered aftermarket level.

Market indicators up again

Away from the new-deal world, a market source quoted the new CDX North American Series 15 HY index, which began trading on Monday, unchanged on Wednesday at 97 bid, 97½ offered, after having gained 1/8 point on Tuesday.

The KDP High Yield Daily index meantime rose by 10 basis points on Wednesday to finish at 73.06, after having gained 6 bps on Tuesday. Its yield came in by 2 bps Wednesday to 7.71%, after having narrowed by 3 bps on Tuesday.

The Merrill Lynch High Yield Master II index rose by 0.132% on Wednesday, after having improved by 0.12% on Tuesday. Its year-to-date return ended the day at 11.537%, establishing yet another new peak level for 2010, versus the previous mark of 11.391%, which had been set just on Tuesday.

Advancing issues led decliners for a fourth consecutive session on Wednesday, with their advantage widening out to better than four to three versus around the seven-to-six ratio seen on Tuesday.

Overall activity, represented by dollar-volume levels, rose by 5% on Wednesday, after having jumped by 46% on Tuesday.

Edgen Murray active

A trader said that Edgen Murray Corp.'s 12¼% notes due 2015 were one of the more active names on the day and "traded down a lot" to finish between 70 5/8 and 711/2.

At another desk, a trader quoted the bonds at 70½ bid, 72 offered.

Still another market source said the bonds were actually ending up ¼ point on the day at 71¾ bid, after having gone as low as 70 3/8 earlier. Those gyrations followed Tuesday's 1½ points loss down to 711/2.

The first trader noted that "two weeks ago," the bonds were trading at 751/2, "and they've been dropping steadily ever since," although he could find no recent news out about the Baton Rouge, La.-based supplier of steel piping and other infrastructure elements to the energy industry.

Another trader said he had heard there was a negative research report out on the company, although he did not specify by whom.

Last week, the company met with "certain investors," according to a regulatory filing. It wasn't clear why the company held the meeting, but it is believed that a decline in capital has put Edgen Murray close to a covenant breach on its term loans.

One of the traders noted that the company had priced that $465 million issue of bonds back on Dec. 16 of last year at 99.059 to yield 12½% -- and they had lost ground consistently since then., even with a lack of openly bad news.

Meanwhile, McJunkin Red Man Corp.'s 9½% senior secured notes due 2016 -- which, ironically, priced on the same day as the Edgen Murray bonds - continued to have their own problems.

A trader quoted them on Wednesday at 89½ bid, 90 offered, "so they haven't gotten beat up as much as Edgen Murray" - but they are still well down from the 97.533 price at which that $1 billion issue came to market in December to yield 10%.

The Tulsa, Okla.-based industrial piping manufacturer - which, like Edgen Murray also is a supplier of infrastructure materials to the energy industry - also priced a $50 million add-on to the bonds at 97.544 on Feb. 8 to also yield 10%.

There has been no fresh obvious negative news out on the company that might explain the slide down into the upper 80s since the add-on deal got done.

A second trader Wednesday saw the bonds at 89 bid, 90½ offered. On Tuesday, they had gotten as low as 88½ bid, 89 offered.

Ford takes an upside ride

In the autosphere, a trader saw some "big premiums" in Ford Motor Co.'s paper, with its 7.45% bonds due 2031 up another 1¼ to 1½ points on the day at 103 bid, 104 offered.

He said the second-biggest domestic carmaker's bonds "definitely felt a little better, and there was decent volume in that name:"

Meanwhile, Ford's domestic arch-rival, General Motors Corp.'s benchmark 8 3/8% bonds due 2033 stayed at 33 bid, 33½ offered, which the trader said was "no real change, and on not much activity at all."

Stephanie N. Rotondo contributed to this report

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