Levi prices two-part deal; Collins & Aikman bounces, Elan also

By Paul Deckelman and Paul A. Harris

New York, March 7 - Levi Strauss & Co. successfully priced a retooled two-part offering of dollar- and euro-denominated bonds in Monday market activity. Elsewhere, the primary market was relatively quiet, although there was some calendar-building activity going on as Trustreet Properties Inc. announced plans for a 10-year note offering and Progress Rail Services Corp. and American Tire Distributors Inc. were heard getting ready to take their respective planned bond deals on the road to market them.

In secondary dealings, things were described as fairly quiet, with a number of portfolio managers and other senior decision makers apparently off attending a Citibank conference in Colorado, traders said.

One opined that it was "one of the quietest days that I've seen in a while." Nonetheless, there were some things going on, with Collins & Aikman Products Co.'s and Elan Corp.'s battered bonds each heard to have firmed, bouncing back from lumps they took last week.

A relatively quiet primary market saw just two tranches of junk bonds in a single deal price during the Monday session: a dollar-denominated floating-rate note and a euro-denominated fixed-rate note both sold by Levi Strauss & Co.

Both parts priced at par, seeing healthy demand from global investors.

And the forward calendar continued to build, with three companies positioning offerings in the $200 million to $300 million-range for pricing during the March 14 week.

Levis Strauss upsizes slightly

The only deal to price on Monday came from San Francisco pants-maker Levi Strauss which completed two tranches, slightly upsizing its issue to $578 million from $550 million.

Levi Strauss priced $380 million of seven-year senior floating-rate notes at par to yield three-month Libor plus 475 basis points, right on top of price talk.

The euro-denominated tranche, meanwhile, came at the tight end of talk.

The company priced €150 million of eight-year senior fixed-rate notes at par to yield 8 5/8%, tight to the 8¾% area price talk.

An add-on, which was to have tapped the company's 9¾% senior notes due Jan. 15, 2015, was earlier dropped from the financing due to the strength of the two tranches of new notes.

Banc of America Securities and Citigroup were joint bookrunners for the debt refinancing deal.

An informed source told Prospect New that the book on the Levis tranches was healthily oversubscribed with good demand from global investors, and added that the new bonds traded well in the aftermarket.

Forward calendar builds

In a session that may have been muted to a certain extent by Citigroup's 14th Annual High Yield/Leveraged Finance Conference, taking place through Wednesday in Vail, Colo., three prospective issuers announced roadshow starts.

American Tire Distributors Inc. will run a roadshow from March 8 through March 17 for its $300 million offering of high-yield notes in two tranches.

The Charlotte, N.C., independent wholesale tire supplier plans to sell $130 million of seven-year non-call-two floating-rate notes and $200 million 10-year non-call-five senior subordinated fixed-rate notes.

Banc of America Securities will run the books for the acquisition-related deal.

Elsewhere Orlando, Fla., REIT Trustreet Properties, Inc. will run a roadshow from March 9 until March 17 for a $250 million offering of 10-year non-call-five senior notes (B1/B+/BB-), with pricing expected on March 17, also via Banc of America Securities.

Proceeds will be used to repay indebtedness incurred in connection with the recently completed mergers in which CNL Restaurant Properties, Inc. and the 18 CNL Income Funds merged with and into U.S. Restaurant Properties, Inc.

And Progress Rail Services Corp. in conjunction with Progress Metal Reclamation Co. will start a roadshow Wednesday for $200 million of seven-year senior notes, via Morgan Stanley and JP Morgan.

Pricing is expected mid to late in the week of March 14.

The Albertville, Ala., railroad equipment and services provider will use the proceeds to help fund the acquisition of Progress Rail by One Equity Partners.

Delta Petroleum may move up

Little information surfaced Monday on the nine deals, totaling just under $3.15 billion and €600 million, that remain on the calendar as business expected to be concluded by the end of the present week.

A sell-side source said that Delta Petroleum is rumored to be poised to price its $150 million offering of 10-year senior notes (B3/B) earlier in the week than had originally been expected.

The JP Morgan and Citigroup-led debt refinancing deal had been expected to price on Thursday.

Another market source told Prospect News on Thursday that Denver-based oil and gas exploration and development company has it notes pro formaed in the 8 7/8% range.

Levi edges up in trading

When the new Levi Strauss floating rate notes due 2012 were freed for secondary dealings, the bonds were being quoted around 100.5 bid, 101 offered, "and that's as good as they got," a trader said. The new issue, he added, "wasn't that active in the Street."

At another desk, a trader said that late in the day, the new dollar notes "tightened up" to a 100.625 bid, 100.875 offered range.

He also saw the new euro-denominated 8 5/8% notes due 2013 trading at 101.25 bid, 101.75 offered.

As for the company's existing bonds, "people stopped quoting the old ones and just focused on the new ones," he said. "People weren't quoting the others much."

At another desk, Levi's 11 5/8% notes due 2008 - which are to be taken out with the proceeds from the new bond issue - were virtually unchanged at 106.25 bid, while the company's 7% notes due 2006 were down a quarter point at 103.25. Levi's recently priced 9¾% notes due 2015 were unchanged at 105.5.

Collins & Aikman higher

Back among existing issues not affected by primary activity, Collins & Aikman's bonds, which were taking some lumps last week in up-and-down trading, were seen up about a point at one desk, with the 10¾% senior notes due 2011 at 93 bid and its 12 7/8% subordinated notes due 2012 at 68.5 bid.

But people at other shops saw considerably more bounce in the bonds, with a trader estimating the senior notes up three points to as high as 94 bid, 95 offered and the juniors a whopping six points better at 72 bid, 73 offered.

Most other quotes fell somewhere between those two extremes, with the higher quotes predominating.

The bonds, a trader said, "had a nice little bounce, probably on short covering," following their recent gyrations at mostly lower levels, which were sparked by reports that the Troy, Mich.-based automotive component maker would be hurt badly by rising plastic prices, which have escalated along with world oil prices, since most plastics are derived from petrochemicals.

Those bonds "were a little oversold," another trader said, "and then somebody stepped in and started buying the seniors, and the juniors were way oversold, relatively. There apparently were people who were selling the subs and buying the seniors and it got really out of whack, by about 20 points or so, and it's come back about 12. The whole capital structure's up several points."

The trader also cited market rumors that "they're getting squeezed by some of their suppliers. The numbers are out next week, so we'll see what happens."

Elan short bonds bounce back

The trader also saw some rebound in Elan Corp., at least in the short end, with the Irish pharmaceuticals company's 7¼% notes due 2008 having moved up to 91.5 bid, 92 offered from prior offered levels around 90.5, "so they were a little bit better."

However, he pegged the company's other bonds, such as its 7¾% notes due 2011, as softer on the session at 84.5 bid, 85.5 offered.

Another trader saw those bonds at 85 bid, 87 offered, unchanged on the day, while the senior bonds were up at least a point at 91 bid, 93 offered.

Elan's New York Stock Exchange-traded shares, which had been battered along with its bonds by last week's news that Elan and partner Biogen Idec Inc. were pulling their multiple sclerosis drug Tysabri off the market after one patient taking it died of a rare condition and a second also came down with symptoms of the same potentially fatal ailment, were up 73 cents (12.78%) Monday to $6.44. Volume of 54 million shares was about five times the norm.

And General Nutrition Centers 8½% notes due 2010 were being quoted at 88.25, which one market source said was a gain of several points.

However, at another shop, a trader said the bonds' 88 bid 90 offered levels, and the 98 bid, par levels of its 8 5/8% notes were really little changed from where they had been on Friday, when they were "down quite a bit," after releasing lackluster quarterly numbers, he said, adding "it was pretty nasty."

Insight rises

Insight Communications Co. Inc.'s zero-coupon notes due 2011 were being quoted up as much as 1½ points at 101.75 bid on the news that the New York-based cable operator could be taken private by its founders, Sidney R. Knafel and Michael S. Willner, who along with the private equity firm Carlyle Group have offered about $650 million for the company, or $10.70 per share.

Insight said its board would form a special committee of independent directors to consider the proposal with the assistance of outside financial and legal advisors.

While the holding company bonds were seen smartly higher, the 9¾% notes due 2009 and 10½% notes due 2010 of Insight's operating company, Insight Midwest, were little changed at 105 bid and 108.875 bid, respectively.

AT&T Corp. - which is in the process of being acquired by SBC Communications Inc. - announced plans to tender for up to $1.25 billion of its approximately $2.75 billion of 7.30% notes due 2011, which currently carry a stepped-up 9.05% coupon (see "Tenders and Redemptions" elsewhere in this issue for full details).

A trader said that the bonds - technically rated high junk, though usually still traded off the high-grade desks at most shops - had been trading "around their tender price," which is expected to be in the high teens when the price is set on March 21. Nonetheless, he saw the bonds up about a point on the session to 117 bid, 117.5 offered.

Earlier, the Bedminster, N.J.-based telecommunications giant's 8% notes due 2031, which are not the subject of the tender offer, were seen up as much as 1½ points to around the 130 bid area.

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