Fisher Scientific prices 10-year deal; Collins & Aikman continues to struggle

By Paul Deckelman and Paul A. Harris

New York, June 27 - Fisher Scientific International Inc. on Monday became the latest established high-yield issuer to opportunistically tap the market with a quickly marketed deal, selling $500 million of 10-year bonds, the proceeds of which will be used to fund a tender offer for some of the company's outstanding debt.

The new-deal market was otherwise fairly quiet, other than news of a trio of upcoming perpetual preferred deals - for Hovnanian Enterprises Inc., Scottish Re Group Ltd. and AmerUs Group Co., and the start of roadshows for two other offerings, from Psychiatric Solutions Inc. and PCA International Inc./Portrait Corp. of America.

In the secondary market, traders said things were deadly dull - and are likely to only get quieter, as the week moves toward its abbreviated pre-July 4th session on Friday.

"It's disappearing week," was how one put it.

Overall, the junk market was down a quarter of a point to half a point on Monday, an official on a high-yield syndicate desk said.

The source added that trading was light and there was not a lot of conviction at the lower levels.

"Things were drifting a little bit lower on the prospects of higher oil prices, etc.," the source added, noting that the price of a barrel of crude oil climbed above the $60 mark on Monday.

One of the few names seen actually doing anything was Collins & Aikman Corp., whose Collins & Aikman Products Co. bonds, which got solidly hammered on Friday, gyrated around at still lower levels Monday, before coming off those lows to finish only a little down from where they started.

Fisher Scientific drives through

In a quick-to-market transaction Monday, Fisher Scientific priced a $500 million issue of 6 1/8% 10-year senior subordinated notes (BB+) at 99.087 to yield 6¼%, right on top of price talk.

Deutsche Bank Securities and Bank of America Securities were joint bookrunners for the debt refinancing and general corporate purposes deal from the Hampton, N.H.-based manufacturer, distributor and marketer of scientific and laboratory products.

One market source reported trading the company's existing 6¾% notes on Monday.

On the back of the news of the new issue the existing debt traded down about half a point, the source said, only to end the session back where they had closed Friday.

"That bodes well for that deal," the source remarked.

Earlier Monday, in London, Georgica priced a £60 million issue of seven-year senior secured second-lien floating-rate notes (Caa1/CCC+) at par to yield three-month Libor plus 700 basis points.

The interest rate came right on top of price talk which had been raised from three-month Libor plus 650 to 675 basis points.

The Royal Bank of Scotland ran the books for the debt refinancing and general corporate purposes deal.

The calendar takes shape

One primary market source remarked Monday that for the shortened week leading to the Independence Day break in the bond market things seem notably busy.

Compression Polymers Holdings LLC released talk on its $215 million two-part high-yield bond offering. Talk on $150 million of eight-year fixed-rate notes (B2/B-) is for a yield of 10½% to 10¾%. Meanwhile talk on $65 million of seven-year floating-rate notes is six-month Libor plus 650 basis points area.

Pricing is expected on Wednesday via Wachovia Securities.

Elsewhere Commercial Vehicle Group Inc. talked its $150 million of eight-year senior notes (Ba3/B+) at the 8¼% area, with pricing set for Wednesday via Credit Suisse First Boston.

And PCA International LLC (Portrait Corp. of America) talked its $50 million offering of four-year second-lien senior secured notes (B3) at the 14% area, with pricing expected on Tuesday or Wednesday. Jefferies & Co. has the books.

Finally, El Paso Corp. plans to complete the remarketing of its 6.14% senior unsecured notes due Aug. 16, 2007 on Tuesday via Credit Suisse First Boston.

The notes are talked in a range from 7 5/8% at 101.714 to yield 7.203% to 7 7/8% at 101.714 to yield 7.465%.

Fisher not seen in trading

Traders said that they had not seen the new Fisher Scientific 6 1/8% notes due 2015 trading in secondary by the time dealing wrapped up for the day.

Meanwhile, one of them quoted the company's outstanding 8% notes due 2013, which are to be taken out using the proceeds of the new offering, at 114 bid, 115 offered, while the company's 6¾% notes due 2014 were at 103 bid,105 offered, which he called pretty much unchanged, "not much happening there."

The outstanding paper, he continued, "really didn't trade a whole hell of a lot to begin with," noting that the 8s, in particular, carry "a super-high premium. It's hard to get retail investors involved."

As for the new bonds, the coupon "is so damn tight, it's tough."

Apart from any kind of new-deal linked issues, the trader said, it was "actually not a bad morning - but then it just kind of petered out."

"It was pretty quiet," another trader said. "The market opened softer, and then tried to rally - but there was no follow-through."

Collins & Aikman lower

As was the case on Friday, Collins & Aikman was moving around at lower levels, although nothing like the dramatic drop that the Troy, Mich.-based automotive interior components maker's bonds went though on Friday on market talk that its bank meeting with its lenders had not gone well and indications that it is liquidity challenged.

That had chopped the company's 10¾% senior notes due 2011 all the way down to closing levels around 29 from prior levels around 40-41, while its 12 7/8% subordinated notes due 2012 fell to around four cents on the dollar from prior levels around seven cents.

On Monday, a trader said, those senior bonds had fallen as low as 23 bid, 25 offered, before they "got up off the bottom, to end only moderately lower, around 27 bid, 28 offered. At the same time, he said, the 12 7/8s were being offered around 4.5, and he suspected that the bonds were probably trading in a context of 3 bid, 4.5 offered.

Another trader agreed that the 10¾% bonds were going out at 27 bid, 28 offered, "slightly off their lows" for the session.

The Collins & Aikman bonds had fallen sharply Friday as word made the rounds that the bank meeting with the lenders had not gone well, with the company said to have sprung the unpleasant surprise news that it now expects its full-year EBITDA to come in somewhat below the $200 million to $225 million range that it had earlier forecast.

Also adding to market unease about Collins & Aikman, according to a market source, were indications, he said that the company had already "run through" half of the $300 million of debtor-in-possession money the banks had agreed to lend it to fund operations while it straightens itself out. After the company's May 17 filing with the U.S. Bankruptcy Court for the Eastern District of Michigan in Detroit, the jurist overseeing the reorganization, Judge Steven W. Rhodes, granted access to $150 million of the DIP money on an interim basis, and scheduled a hearing about releasing the remainder for June 30.

However, last Wednesday, Collins & Aikman filed an emergency request with the court, saying it needed a post-petition "bridge loan" of $30 million from its lending customers in order to meet working capital and other needs until the remainder of the DIP money can kick in.

According to court papers, Rhodes granted the company's request for an expedited hearing process, shortening the customary objections period so that it would end at noon ET Thursday, and then slating a special hearing on Collins & Aikman's motion afterward. The court papers further said that after hearing the company's arguments, Rhodes issued an interim order late Thursday granting the company motion and approving the bridge loan arrangement, giving the lending customers administrative priority claim status - which bumps them ahead of the most other creditors.

Traders said there was little going on otherwise in the automotive sphere outside the Collins & Aikman meanderings, with even the news that Visteon Corp. had lined up a $300 million short-term credit facility not having much impact on the Van Buren Township, Mich.-based automotive components maker's bonds, which had come in on Friday in sector sympathy with Collins & Aikman; its 8¼% notes due 2010 had finished down several points Friday at 89 bid, 90.5 offered, but were not seen having budged much, a market source said.

Rite Aid lower

Elsewhere, a trader said, Rite Aid Corp. paper was softer, in response to the weaker fiscal first-quarter numbers that the Camp Hill, Pa.-based drugstore chain operator reported last week, and its reduced sales and profit outlook.

He said that the company's bonds "had a nice little run" upward, fueled by speculation that Rite Aid might sell its West Coat operations to rival apothecary operator CVS Corp. - speculation which Rite Aid executives flatly dashed last week on the conference call that followed the release of the numbers.

Since then, he said, the company's bonds had come in, with its 6 7/8% notes due 2013 now trading at 86 bid, 88 offered, down from 88 bid, 90 offered before the numbers, while its 7.70% notes due 2027 dipped to 80.5 bid, 82.5 offered, from 83 bid, 85 offered previously.

The trader also said that there was little or no response to mainstream junk cable names like Cablevision Systems Corp. or Charter Communications Commission to Monday's 6-3 U.S. Supreme Court decision that the cablers are not required to share their lines with rival providers of high-speed Internet service.

However, Adelphia Communications Corp.'s bonds were heard trading at higher levels, after the bankrupt Greenwood Village, Colo.-based cable operator released details of its revised bankruptcy plan, which provides for the payment of over $9 billion in cash plus an undetermined amount of TimeWarner Inc. stock to its creditors in exchange for their claims (TimeWarner and Comcast Corp. are buying most of Adelphia's assets.)

A trader said its 10¼% notes due 2011 were seen at 93 bid, 94 offered, up from 89 bid, 90 a week ago.

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