Atrium prices, Petrobras upsizes to $750 million; El Paso up on asset sale; Trump, Calpine also higher

By Paul Deckelman and Paul A. Harris

New York, Dec. 3- Atrium Cos., Inc. was heard by syndicate sources to have sold a $50 million add-on issue to its existing 10½% senior subordinated notes due 2009 on Wednesday, the only domestic new deal heard to have priced, although Brazil's Petrobras sold a big new bond issue; meanwhile, a number of offerings are being marketed to potential investors by roadshows which have begun this week.

In the secondary market, the new issues of Hanover Compressor Co. and Six Flags Inc. that priced on Tuesday were seen having firmed smartly in aftermarket dealings. Other upsiders included El Paso Corp. and Dana Corp., each of which announced asset-sale plans, and Calpine Corp. and Trump Holdings and Funding.

The primary market continued to gather momentum during the mid-week session as three comparatively small issues priced - plus the Petrobras offering - while the new deal pipeline continued to build, with over $1 billion of new junk bond business coming into view.

In emerging markets action Wednesday Petrobras International Finance Co. priced a massively upsized $750 million of 8 3/8% global notes due Dec. 10, 2018 (Ba2) at 98.951 to yield 8½%. The deal was increased from a planned $500 million. Price talk on the deal, led by Credit Suisse First Boston and Lehman Brothers, was 8½%-8 5/8%.

Also during the session, terms emerged on Canadian retailer Hudson's Bay Co.'s C$120 million of 4.5-year unsecured medium term notes (BB+) which priced at par to yield 7½%, via Scotia Capital.

Meanwhile Huntsman LLC priced a $75.4 million add-on to its 11 5/8% senior secured notes due Oct. 15, 2010 (B2/B) at 99.50, resulting in an 11.722% yield to worst.

Price talk was 99.25 area on the deal, led by Credit Suisse First Boston and Deutsche Bank Securities.

The Salt Lake City-based petrochemical company sold the original $380 million for 98.815 on Sept. 16, resulting in an 11 7/8% yield, so Huntsman walked away with a modestly lower interest rate from Wednesday's transaction.

Also in the market with an add-on Wednesday was Atrium Cos., which priced a $50 million add-on to its 10½% senior subordinated notes due May 1, 2009 (B3/B-) at 106.875 for a 5.88% yield to worst.

UBS Investment Bank and CIBC World Markets were joint bookrunners on the deal from the Dallas-based window manufacturer.

The biggest deal that market sources commented on during the mid-week session was Plains All American Pipeline LP's split-rated offering, with UBS Investment Bank running the books.

The Houston-based crude oil transportation, terminalling and storage firm priced an upsized $250 million of 5 5/8% 10-year senior notes (Ba1/BBB-) at 99.734 to yield 5.66%, or a spread of 125 basis points.

The deal launched at a 125 basis points spread.

Two sell-side sources on high-yield syndicate desks not affiliated with the Plains deal said they had not heard of significant junk interest in the deal.

One source suggested that with the pipeline presently so full of speculative-grade offerings the buyside would not likely get too enthused about a piece of paper that came at a spread of 125 basis points.

And indeed the pipeline continued to fill, Wednesday, with timing announced on over $1 billion of new offerings.

In quick-to-market action Iron Mountain Inc. plans to price a $160 million add-on to its 6 5/8% senior notes due Jan. 1, 2016 on Thursday.

Bear Stearns & Co. is the bookrunner on the deal from the Boston-based outsourced records and information management services provider.

Iron Mountain director of investor relations Stephen P. Golden told Prospect News that the deal is expected to price somewhat below par.

"Our bonds are currently trading in the neighborhood of 7% so we expect that these bonds, which are going out as add-ons to the 6 5/8% bonds, will probably be priced in that neighborhood-in the 97-98 range.

Although the company's Wednesday press release specified a range of uses for the proceeds from the deal - to fund the repurchase or redemption of the 8 1/8% senior notes due 2008, and for general corporate purposes including repayment of debt and possible future acquisitions and investments - Golden told Prospect News that the bond sale is primarily a refinancing deal.

"We have 8 1/8% Canadian bonds out there and the rates are still good for us and the math still works," he said. "We want to get rid of those and term out some of our other floating-rate debt.

"Right now the interest rates are certainly looking good."

Also coming with a drive-by is iStar Financial Inc., which intends to conduct an investor conference call Thursday for an offering of $250 million of seven-year senior notes ahead of the expected pricing on Friday via Deutsche Bank Securities.

Meanwhile roadshow starts were heard on four new deals.

Marketing presentations started Wednesday for Bombardier Recreational Products' $200 million of 10-year senior subordinated notes (B3/B-), which are expected to price on Dec. 11.

Merrill Lynch and UBS Investment Bank will run the books on the deal from the Montreal-based manufacturer of recreational products.

The roadshow starts Monday for Land O'Lakes, Inc.'s $150 million of seven-year senior secured second lien notes, expected on Friday Dec. 12 or Monday Dec. 15. The Arden Hills, Minn.-based farmer-owned food and agricultural cooperative will have JP Morgan running the books.

The roadshow starts Friday for Great Lakes Dredge & Dock Corp.'s $170 million of 10-year senior subordinated notes. The LBO deal, led by Lehman Brothers, Credit Suisse First Boston and Banc of America Securities, is expected to price early in the week of Dec. 15.

And the roadshow started Wednesday for Global Motorsport Group Inc.'s offering of $85 million of five-year senior secured notes. The Morgan Hill, Calif.-based aftermarket supplier of motorcycle parts expects to price the deal on Dec. 17 via Jefferies & Co.

The new Atrium add-on notes - a relatively small issue - were not seen trading around in the secondary market on Wednesday but Six Flags' new 9 5/8% senior notes due 2014 certainly were - moving up to 102.25 bid, 102.75 offered from their par issue price late Tuesday.

And the new Hanover Compressor zero-coupon/11% subordinated notes due 2007 - which had priced at 69.30 Tuesday and moved up to 71 in initial aftermarket dealings - continued to firm Wednesday, rising to 71.75 bid, 72.75 offered.

Petrobras' 8 3/8% bonds, which priced at 98.951, were heard to have improved to 99.20 bid, 99.30 offered after having been freed. "The spreads are just coming in like crazy," a trader noted.

Back among the established issues, El Paso and Dana were both seen on the rise, possibly fueled by asset sales that each company announced.

Houston-based energy operator El Paso said that it had closed on the sale of its North American nitrogen business to Dyno Nobel, with net proceeds totaling approximately $57 million - the latest in a series of divestitures of non-core businesses.

El Paso "looked better" on the asset sale, a trader said, quoting its 7.95% notes due 2006 up a point-and-a-half at 93 bid, 95 offered, while its 7% notes due 2011 were at 88.5 bid, 90.5 offered.

El Paso bonds "are up two points over the past two days," a market source said, noting that its 7 7/8% notes due 2012, which were at 88.5 bid Monday had firmed to 89.5 on Tuesday and went home Wednesday at 90.5. He also saw El Paso Production' 7¾% notes due 2013 two points better at 97.5 bid, while the El Paso-owned Coastal Energy's 7¾% notes due 2010 were improved at 89.75.

At another desk, the El Paso 7 7/8s were seen more than two points higher, at 90.75, while its 7¾% bonds due 2032 were up a pair at 81.

Dana Corp. announced plans to divest itself of its Automotive Aftermarket Group, which makes and sells replacement auto parts, in favor of concentrating on its original equipment business of selling parts to the carmakers themselves. The Toledo, Ohio-based auto components maker did not indicate the price it expects to get for the business, which produced $2.2 billion in sales in 2002.

But debt investors surmised that the business will go for a pretty penny and that Dana is likely to use the proceeds to whittle down its $2.4 billion debt load. That possibility caused Standard & Poor's - which rates the company's corporate credit and senior unsecured debt at BB - to revise Dana's outlook to "positive" from "negative."

Dana's 6½% notes due 2009 were seen a point better Wednesday at 103 bid, 105 offered, while its 9% and 10 1/8% notes, both due 2011, were up more than a point to levels in the 116 range. Its 7% bonds due 2029 were likewise a point higher, at 93 bid.

Calpine bonds "were all over the joint," a market source said, quoting the San Jose, Calif.-based independent power producer's 8½% notes due 2011 up a point-and-a-half at 76.75 bid.

At another desk, the 81/2s were seen going home at about 76 bid, 77 offered, still a three point gain on the session, while its 8 5/8% notes due 2010 were pegged two-and-a-half points better at 75.5 bid, 77.5 offered.

There was no fresh news out on Calpine, beyond Tuesday morning's announcement that Calpine had signed a one-year agreement to supply varying amounts of electricity, up to a maximum of 155 megawatts, to Houston-based Utility Choice Electric.

"That's a plus," a trader said, "but it's not that big a plus. Something is obviously going on," he added, referring to market scuttlebutt that Calpine - which has already tapped the capital markets twice this year, most recently back on Nov. 6 with a $400 million bond issue - might be looking for another refinancing deal. Some debt traders, however, are skeptical of that scenario and ascribe the upward movement of the bonds merely to market technical factors rather than to any real or imagined news developments.

The trader said that Calpine's 8 5/8s were up nearly two points, "a pretty substantial move," and said that the bonds had started the week at 73 bid, 73.5 offered and ended Wednesday around the 76 level, "a pretty big move."

"There seems to be a lot of activity" in Calpine, he said, although not all of it was necessarily buying; "There was two-way flow, with a lot going on in both directions."

A trader said that Charter Communications Inc.'s 8 5/8% notes due 2009 had risen around two points on the session to 83 bid, 85 offered.

Another gainer was the Trump Holdings 11 5/8% due 2010, which were as much as three points better, with bid levels in the 92-93 area. The Atlantic City, N.J. casino operator's 11¼% Trump A.C. first mortgage notes due 2006 were nearly two point better at 76.5, although there was no fresh positive news out on the debt-laden gaming company.

Levi Strauss & Co. bonds, which had fallen about five points Monday as the San Francisco-based blue jeans company hired a turnaround specialist - a sign a debt restructuring may be coming - but then got most of that back on Tuesday, were essentially unchanged on Wednesday, its 11 5/8% notes due 2008 at 72.5 bid, 74 offered and its 12¼% notes due 2012 at 70 bid, 71 offered.

But for the most part, a trader said, "high yield is still grinding north."

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