Two euro deals, CBD price; funds see $0.90 million outflow; Trump up, Tekni-Plex down

By Paul A. Harris

St. Louis, Oct. 21 - Thursday's primary market session saw two euro-denominated issues which had been wending their ways along the junk trail come to completion - both of them sized at €150 million - along with an even smaller issue from Cincinnati Bell's CBD Media LLC.

Meanwhile Imco Recycling Inc. started a roadshow for a $125 million offering.

And a string of eight consecutive weekly inflows to the high-yield mutual funds was snapped late Thursday, but just by a smidge, as AMG Data Services reported a $0.90 million outflow for week ending Oct. 20.

In the aftermarket, word that Donald J. Trump had announced a bankruptcy reorganization plan Thursday for Trump Hotels & Casino Resorts Inc. that would give bondholders an equity stake in his casino company but would allow him to retain his position as chairman and chief executive officer prompted a firming in the bonds.

And the bonds of Tekni-Plex, Inc. got hosed after management warned in a conference call that the first quarter of 2005 could see a crimp in the cash line, partly because it can't pass along price increases.

Also the auto sector remained soft.

Tiny outflow

"What kind of number is that?"

That comment came from a sell-side source who informed Prospect News late Thursday that AMG Data Services of Arcata, Calif., had reported a $0.90 million outflow from high-yield mutual funds for week ending Oct. 20.

It was the first outflow in nine weeks, trailing a modest $43 million inflow for the week that ended Oct. 13.

Although weekly inflows and outflows are now tied at 21 for 2004, $3.616 billion more has flowed from the funds this year than has come into them, according to a Prospect News analysis of the AMG figures.

The figures include only those funds which report on a weekly basis, and exclude the effect of distributions. The fund flows are considered by many in the market to be a reliable barometer of overall market liquidity trends, even though the aggregate amount of money in the junk funds represents only a relatively small percentage of funds in the broader high yield universe.

Two €150 million deals get done

Thursday's primary market session saw a pair of euro-denominated bond deals, both of which had been marketed via investor roadshows, come to completion.

Editis' Odyssee Financing SA sold €150 million of 10-year senior notes (B3/B) at par on Thursday to yield 8 3/8%, on the tight end of the 8½% area price talk.

Lehman Brothers was the global coordinator, with Credit Suisse First Boston and Lehman Brothers running the books for the acquisition deal from Editis, formerly Vivendi Universal Publishing, a Paris-based publisher of educational and consumer media.

A market source told Prospect News that the deal had played to strong demand.

The same could not be said for the second of the two euro-denominated deals that priced Thursday, the source added.

IT Holdings Finance SA, a Milan, Italy-based holding company for fashion brands including Versace, Dolce & Gabbana, and Roberto Cavalli, priced a downsized €150 million issue of 9 7/8% eight-year senior notes (B3/B+) at 96.645 on Thursday to yield 10½%.

Price talk was for a yield of 10½%, with the bonds pricing at a discount, having been revised from 10% area. Originally the deal had been talked at 9¼%-9½%. The offering was reduced from €185 million.

Merrill Lynch & Co. ran the books for the debt refinancing deal.

Meanwhile in the U.S., CBD Media LLC, Cincinnati Bell's Yellow and White Pages publishing operation, sold $100 million of eight-year senior notes (Caa2/CCC+) at par on Thursday to yield 9¼%, on the wide end of the 9%-9¼% price talk.

Lehman Brothers, Banc of America Securities and Goldman Sachs & Co. ran the books for the dividend-funding deal.

Roadshow starts for IMCO deal

One roadshow start was heard during the Thursday session as IMCO Recycling Escrow Inc. launched $125 million of 10-year senior notes (CCC+) on a marketing tour set to run through Oct. 28.

Deutsche Bank Securities and Citigroup will run the books for the deal that the aluminum and zinc recycler is bringing to repay debt related to its merger with Commonwealth Industries Inc., a Louisville, Ky. manufacturer of aluminum sheet.

Rounding out the week

Also during the session price talk emerged on the two deals positioned on the forward calendar as business to be concluded by Friday's close.

Price talk is 7½%-7¾% on Advanced Micro Devices Inc.'s $600 million of eight-year non-call-four senior notes (B3/B-/B-), expected on Friday via Citigroup.

Also, price talk emerged Thursday on New Skies Satellites NV's $285 million two-part bond offering (Caa1/B-).

Price talk is Libor plus 525 basis points on $160 million of seven-year non-call-two senior floating-rate notes.

Meanwhile talk is for a yield in the 9¼% area on $125 million of eight-year non-call-four senior subordinated fixed-rate notes.

The deal is expected to price on Friday, with Deutsche Bank Securities running the books.

"You're an owner!"

In what sources characterized as a low-volume trading day in the high yield secondary market, one name that generated discussion on Thursday was "Donald J. Trump."

Trump announced a bankruptcy reorganization Thursday which would give bondholders a stake but would allow him to retain his position as chairman and CEO, one trader explained.

The plan, which must still be approved by bondholders, has Trump investing $71 million of his own money in Trump Hotels & Casino Resorts Inc. as part of a restructuring in which bondholders exchange approximately $575 million in debt for an equity stake in the company.

The move, which reduces Trump's personal stake in the company to 27% from 56%, would reduce debt by $400 million, saving approximately $98 million in annual interest payments.

The company said about 57% of the holders of Trump Atlantic City Associates' first mortgage notes due 2006, about 68% of Trump Casino Holdings LLC's first priority mortgage notes due 2010 and about 81% of Trump Casino Holdings LLC's second priority notes due 2010 have indicated they will support the reorganization.

The trader went on to say that as news of the deal circulated existing Trump paper was initially better.

"Thankfully his acting career is really taking off because he certainly isn't a very good casino operator," the trader quipped.

The trader said that Trump A.C. bonds were trading at 87.50 bid, 89.50 offered earlier Thursday, then settled to 87 bid, 88 offered.

That was still better on the day - the trader gave 85.50 bid, 87 offered as the Wednesday levels on the Trump bonds.

Another trader, who had not seen movement in Trump paper, said: "I don't know if this deal is going to fly or not.

"It seems like a pretty good deal for Trump and not a very good deal for anyone else.

"It looks like Trump gets a pretty significant equity piece, although he's not retaining control. I don't know why anybody would do that deal, although stranger things have happened."

Secondary back to Monday's levels

The trader went on to say that the secondary junk market, net-net, had not moved meaningfully through the first four sessions of the present week.

"It was pretty firm at the open today," the trader said.

"The market swooned in the middle of the week, but it has sort of been edging up toward the end of the week.

"So we're basically unchanged from where we were on Monday."

A crimp in the hose

Elsewhere the paper of plastics company Tekni-Plex eased in the wake of a management conference call that warned of expected weakness during the first quarter of the coming year.

The company said it is not positioned to pass along price increases in raw materials, according to one trader.

The source spotted the 12¾% subordinated notes due 2010 at 73 bid, 75 offered, down two or three points from 76.50 bid, 77.50 offered at the beginning of the week.

"On the conference call the party line was 'Hey look, this is the way our business is,'" the trader commented.

"They said they were double-whammied this year with high resin prices and slack demand, particularly in the garden hose segment of the business.

"As long as I've been trading these things this always seems to happen. One year it's blamed on poor weather - one year it's too hot, one year it's too rainy - they always seem to have issues in the garden hose segment.

"I also think they took a big inventory write-down.

"However they seemed to be very nonplussed by the whole situation. They raised equity over the last year. They are having some integration issues with the new company that they purchased."

The trader went on to say that at present prices the Tekni-Plex paper seems to make sense.

"If you're a money manager, and you own these things, I think they have a tremendous amount of value. If you don't think the company is going to go under in the next six-to-eight months you buy the subs and clip the coupon.

"You have to keep in mind that that is a big coupon. If you think that the company goes for another year, that is a nice return: a 12¾% coupon, trading at 75 cents on the dollar, represents a significant return for a company that is trading a lot worse than the actual situation merits."

Another trader spotted the Tekni-Plex 12¾% notes down 2.5 points, to 72.75 bid, 74.75. Meanwhile the 8¾% notes due 2013 were off 0.25 points, trading at 93.75 bid, 94.75 offered.

Lots of reasons not to get in

Prospect News asked this trader, who mentioned that the market had seemed slightly softer over the past couple of sessions, whether the junk market was finally beginning to run a parallel course with the queasy U.S. stock market.

The trader responded, perhaps so, but it's a stretch.

"Junk is only moving parallel to equities in certain spots," the trader said. "A half a point, maybe, but nothing super-dramatic. Auto parts have been weak. Calpine has been weak over the past couple of days.

"The triple-C stuff has been a little weak, following stocks.

"Volume has been really low. And there isn't a ton of new issuance.

"Between the elections and oil prices, and everything else that is going on there are just not a lot of reasons to dive in.

"There still is money. Guys are long cash. But they're not in a real hurry to invest it. And they're doing a little more due diligence out there."

Having mentioned Calpine Corp., Prospect News pressed the source for some spots.

"They kind of finished their descent," said the trader, adding that the 8½% notes due 2011 were at 57 bid, 58 offered, unchanged, while the 81/2s due 2008 were at 62 bid, 63 offered, a quarter of a point weaker from Wednesday, while the 81/4s due 2005 were 97.25 bid, 98.25 offered, up a quarter of a point from the previous session.

Charter higher

"Charter [Communications] felt a little better," the trader added, saying that the trouble St. Louis cable TV and internet service provider's 8 5/8% notes had opened Thursday at 77.75 bid, 78.75 offered and finished out 78.50 bid, 79 offered.

Another trader had the same Charter bonds up about half a point or so: 78 bid, 79 offered, from 77.50 bid, 78.50 offered.

"These are callable this year in April," the trader quipped, "but obviously that's not going to happen."

Auto sector remains under pressure

Sources also reported varied activity in the existing paper of auto sector names.

"There is still weakness in the high-grade area," one trader said.

"And despite solid numbers from Ford I think the sector is just under pressure. And the suppliers are under continued pressure."

One source had Tower Automotive's 2012 bonds "all over the map," and said they finished the day at 66.50 bid, 68.50 offered. They had been 65.50 bid, 67.50 offered earlier in the session.

The same source said that Collins & Aikman's 12 7/8% notes "recovered a little," trading late at 83.50 bid, 85.50 offered, up from the previous session's 83 bid, 84 offered.

MarkWest moves off highs

Among recently priced issues, a trader had only seen movement in MarkWest Energy Partners LP's 6 7/8% notes due 2014.

The company priced $225 million of the senior notes (B1/B+) at par on Tuesday to yield 6 7/8%, inside of the 7%-7¼%, in a deal that reportedly saw robust demand.

On Wednesday the trader had seen a 101 bid on the new notes from the Denver, Colo.-based natural gas production and transportation company.

However the bonds finished Thursday's session at 100.875 bid, 101.375 offered, "maybe a little weaker."

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