Elan prices upsized two-part offering; Collins & Aikman falls

By Paul Deckelman and Paul A. Harris

New York, Nov. 10 - Elan Corp. plc priced an upsized $1.15 billion two-part offering of fixed- and floating-rate seven-year notes Wednesday. The Irish pharmaceuticals maker's issue was the largest of several new deals that came to market, along with an upsized pricing from Ultrapetrol (Bahamas) Ltd. and a quickly-shopped discount note deal from American Achievement.

In secondary dealings, Collins & Aikman Products Co. bonds - which had pretty much weathered Tuesday's release of a wider third-quarter loss, were seen heading downward in an apparent delayed reaction to those numbers.

The high yield primary continued to smoke on Wednesday, with just under $1.7 billion of proceeds pricing in seven high yield tranches, two of which came in an upsized $1.15 billion blowout deal from Irish biotech firm Elan.

In round numbers the Wednesday session brought the two-day Tuesday-Wednesday total to approximately $3.68 billion of proceeds.

One investment banker who spoke to Prospect News before the terms of a $50 million add-on from Thornburg Mortgage, Inc. had circulated the market, well after Wednesday's close, put the Tuesday-Wednesday junk bond rampage into an interesting context.

"The past five-day period [Wednesday, Nov. 3 through Wednesday, Nov. 10] is the biggest week in 2004," said the sell-sider.

"From last Thursday through today we've had 17 transactions totaling almost $5.7 billion. There was one week in early March that had 20 deals, but less proceeds.

"So in terms of proceeds we've had a huge run here."

Upsized Elan a blowout

In the day's biggest transaction, Issuers Elan Finance plc and Elan Finance Corp. priced an upsized $1.15 billion of seven-year senior notes (B3/B) in fixed- and floating-rate tranches via Morgan Stanley.

Both tranches came at the tight end of talk.

Elan sold $850 million of fixed-rate notes at par to yield 7¾%, at the bottom of the 7¾% to 8% talk.

The company also sold $300 million of floating-rate notes at par to yield three month Libor plus 400 basis points, again at the tight end of the Libor plus 400-425 basis points price talk.

The debt refinancing and general corporate purposes deal was upsized from $850 million.

Ultrapetrol upsizes by $30 million

Also upsized on Wednesday was Ultrapetrol (Bahamas) Ltd.'s $180 million of 10-year senior secured notes (B3/BB-) which priced at par to yield 9%, at the tight end of the 9% to 9¼% price talk and increased from $150 million.

Credit Suisse First Boston ran the books for the shipping company's debt refinancing issue in which both U.S. high yield accounts and emerging markets players participated.

CanWest, Integrated Alarm sell

Elsewhere CanWest Media, Inc. sold $130 million of 8% senior subordinated notes due Sept. 15, 2012 (B2/B-) at 104 to yield 7¼%.

The debt refinancing deal from the Winnipeg, Saskatchewan, newspaper, television and advertising company came right on top of the 104 area price talk, with Citigroup running the books.

The new notes were issued concurrently with the announced exchange offer for Hollinger Participation Trust's 12 1/8% senior notes due 2010. Approximately $631 million of the notes will be offered in the exchange.

Also Wednesday Integrated Alarm Services Group, Inc. priced a restructured $125 million of seven-year senior secured second-lien notes at par on Wednesday to yield 12%.

Price talk was revised to 12% from 10¼% to 10½%. At the same time that price talk was revised the company added second-lien structure to the notes.

Morgan Joseph & Co. ran the books for the debt refinancing and acquisition deal from the Albany, N.Y.-based provider of monitoring, financing and business support services to independent security alarm dealers in the U.S.

Deals from American Achievement, Thornburg

ACC Group Holding Corp., the parent of American Achievement Corp., sold $131.5 million of eight-year senior discount notes (Caa1/B-) at 67.885 on Wednesday to yield 10 ¼%, generating $89.269 million of proceeds, at the wide end of the 10%-10¼% price talk.

The notes come with a zero coupon for the first four years, after which they become cash pay.

Goldman Sachs & Co. ran the books for the quick-to-market dividend funding/stock repurchasing deal from the Austin, Texas-based scholastic products company.

Finally, Thornburg Mortgage, Inc. priced a $50 million add-on to its 8% senior notes due May 15, 2013 (Ba2/BB-) at 107.15 on Wednesday, resulting in a 6.63% yield to worst and a 6 7/8% yield to maturity.

Price talk was 6 7/8% area.

Credit Suisse First Boston ran the books for the Santa Fe, N.M. single-family residential mortgage lender.

The original upsized $200 million offering priced May 8, 2003, and a $55 million add-on priced Nov. 17, 2003.

Three roadshow starts announced

Three additional prospective issuers stepped into the light during Wednesday's session.

The roadshow starts early next week for Park-Ohio Holdings' $200 million of 10-year non-call-five senior subordinated notes, via Lehman Brothers and JP Morgan.

The Cleveland-based manufacturer of engineered parts will use the proceeds to refinance debt.

Meanwhile the roadshow started Wednesday for Altra Industrial Motion's $165 million offering of seven-year senior secured notes in fixed- and floating-rate tranches.

Jefferies & Co. is the bookrunner for the acquisition deal from the Quincy, Mass.-based company which makes power transmissions for heavy equipment.

And Trailer Bridge Inc. will begin a roadshow Thursday for $80 million of seven-year senior secured notes (B3), according to an informed source.

Again Jefferies & Co. has the books for the offering from the Jacksonville, Fla.-based shipping company.

The week's last (announced) deal

After the hectic Tuesday and Wednesday session only one announced deal remains on the calendar as business to be priced by the end of the Nov. 8 week, which is officially shortened by the Thursday closing of the bond market, in observance of Veterans Day.

Price talk of 9¼% area emerged Wednesday on Affinia Group Inc.'s $300 million of 10-year non-call-five senior subordinated notes (Caa1/B), expected to price on Friday via Credit Suisse First Boston, Deutsche Bank Securities, Goldman Sachs & Co. and JP Morgan.

A sell-side source told Prospect News that the remainder of the present week does not figure to see a great deal of volume in the new issue market.

"The market is closed Thursday, and Friday is not a great day to do drive-bys, especially given that senior people in the market will take the excuse of Veterans Day to cut Friday short, or not come in at all," said the source.

"I would be surprised if you saw a lot of activity through the rest of this week."

Elan up in trading

When the new Elan 7¾% notes due 2011 were freed for secondary dealings, they initially broke at 101.25 bid, up from their par issue price. As the afternoon wore on, the bonds - which had been upsized to $850 million, the size of the whole original two-part offering - continued to firm, ending at 102.625 bid, 103.125 offered.

A trader saw the seven-year floating-rate notes, which had also priced at par, as having risen to 102.25 bid, 103 offered.

Also in the new-deal arena, he saw the Ultrapetrol 9% senior secured first preferred ship mortgage notes due 2014 unchanged from their par issue price, finishing at par bid, 100.5 offered.

Tenneco gains more

Among recently priced deals, he said, "only Tenneco [Automotive Inc.] was really doing anything, with the Lake Forest Ill.-based auto parts maker's new 8 5/8% notes due 2014 - which had priced at par on Tuesday and which had then initially firmed to a close at 101.75 bid, 102.25 offered - as having pushed further upward in Wednesday's dealings, to 103 bid, 103.5 offered.

Other new-deal issues did not do nearly as well, he indicated, with Flextronics International's 6¼% notes due 2014 retreating to 99.75 bid, par offered, from their par issue price on Tuesday. Fellow Singapore-based semiconductor name Stats ChipPAC Ltd.'s recently priced seven-year notes were seen at 99.5 bid, par offered.

Collins & Aikman slips

Back among the existing issues, Collins & Aikman seemed to be the main feature in a secondary market that was largely rangebound ahead of Thursday's Veterans' day holiday, which will see only limited activity, with The Bond Market Association having recommended a close for the U.S. debt markets and traders at many houses indicating that they would not be working Thursday.

The Collins & Aikman bonds had pretty much held their own on Tuesday, after release of the company's third-quarter numbers, but they spent Wednesday's session spinning their wheels in a ditch, with the company's 12 7/8% notes due 2012 seen three points lower on the session at 86 bid, while a market source also quoted its 10¾% notes due 2011 down ¾ point at 100.5 bid and its 9¾% notes due 2010 one-quarter point worse at 106.5.

At another desk, the 12 7/8s were seen at 85.5 bid, down three points, while the 103/4s were two points lower at par.

Collins & Aikman on Tuesday reported that it lost $55.6 million (67 cents per share) in the quarter, which included after-tax charges for restructuring and long-lived asset impairments and loss on early extinguishment of debt of $25.1 million (30 cents per share). That loss was well above the year-earlier red ink of $32.1 million (38 cents per share), which included after-tax charges for restructuring and long-lived asset impairments of $16 million (19 cents per share).

And Collins & Aikman also forecast lower fourth-quarter and full-year numbers than previously, citing reduced production by the Big Three, its bread-and-butter customer base. Collins & Aikman now expects a 2004 full-year loss before one-time items in a range of 60 to 65 cents a share, possibly triple the loss of 20 to 30 cents a share that it projected back in August. It sees full-year 2004 sales to be about $3.875 billion, reflecting a $25 million decline from plan in the third quarter, and an approximate $100 million reduction in fourth quarter revenue. It said that 2004 full-year EBITDA before restructuring and impairment charges would now likely be $335 million to $345 million, reflecting approximately $25 million in lower contribution margin on reduced third and fourth quarter sales.

Visteon unchanged despite Ford talk

Also in the automotive sector, Visteon Corp.'s bonds were little changed Wednesday, even as former corporate parent Ford Motor Co. - Viston's main customer - said that it might help its one-time subsidiary.

Visteon's 7.95% notes due 2005 were off slightly at 102.247 bid from 102.261 previously. Its 8¼% notes due 2010 were unchanged at 105 and its 7% notes due 2014 were likewise steady at 95.5.

Ford Chairman and Chief Executive Bill Ford Jr., speaking to reporters after addressing the U.S. Chamber of Commerce, said the success of Visteonwas vitally important to the giant automaker.

Ford helped Visteon last year to the tune of $1.7 billion, rehiring some high-wage workers and picking up health care and other Visteon costs.

Ford said that the company founded by his great grandfather, Henry Ford, "is not Santa Claus" - but would be willing to sit down with executives of Visteon to see how it might be able to help its problem child.

Visteon, which sells most of its output to Ford, posted a $1.36 billion net loss last month after $1.2 billion of charges.

Revlon unmoved by earnings

Among companies reporting third-quarter earnings Wednesday, Revlon Inc. bonds were seen little changed, even as the underperforming New York-based cosmetics company posted a net loss of $91.6 million (25 cents per share), which included the effect of the $59 million charge from the debt refinancing. Analysts had expected a loss of around eight to 10 cents per share. A year earlier, Revlon had lost $54.7 million (78 cents per share).

Revlon chalked the wider loss up to a falloff in U.S. sales of color cosmetics, more product returns, and a $59 million charge related to debt refinancing transactions the company completed during the third quarter (see related story elsewhere in this issue).

Still, its 8 1/8% notes due 2006 were unchanged at 99 bid, and its 9% notes due 2006 were down ¼ point at the most, at 98.75.

Goodyear lower on costs warning

A trader saw Goodyear Tire & Rubber Co.'s bonds lower after the Akron, Ohio-based tiremaker managed to post a third-quarter profit, versus a year-earlier loss, but warned that it saw raw materials costs - the main drag on its results - continuing to rise into 2005.

Goodyear's Goodyear's 6 3/8% notes due 2008 and 7% notes due 2028 each were seen down 1 ½ points, at 98 bid and 81 bid, respectively. The company's benchmark 7.857% notes due 2011 were 99.125 bid, down 3/8 point on the day.

On its conference call, Goodyear predicted that raw materials costs would be up 9% in the fourth quarter and would rise another 4% to 6% next year. Company executives also noted slower vehicle production in the United States and a slowing in the Chinese consumer tier market as challenges to Goodyear's earnings going forward.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.