TXU prices upsized 3-part mega-deal; Alliant brings reduced offering; Cablevision up as Dolan deal nixed

By Paul Deckelman and Paul A. Harris

New York, Oct. 24 - TXU Corp. upsized and priced its three-part bond deal on Wednesday, turning it into one of the biggest junk offerings of all time. Those bonds were seen having firmed a bit when they were freed for secondary dealings.

Also coming to market was Alliant Holdings I Inc.'s revived eight-year note offering, although that deal was downsized and priced at a sizable discount to par in order to get done, even with a fat coupon in the double-digits.

In the secondary market, apart from the new TXU bonds, traders saw some upside in Cablevision Systems Corp.'s bonds on the news that the controlling Dolan family had failed to get enough non-family shareholders to go along with its plan to take the Bethpage, N.Y.-based company private.

According to a buy-side source the CDX High Yield 9 index closed Wednesday at 98 5/16 bid, 98 9/16 offered, down ¼ point on the day.

The source added that the market was quiet, with all players focused on the massive (and upsized) TXU Corp. LBO deal.

TXU greatly upsizes

TXU priced a massively upsized $7.5 billion three part transaction on Wednesday.

The transaction, which was increased from $4.5 billion, included an unannounced $2.5 billion issue of toggle notes.

Texas Competitive Energy Holdings Co. LLC (TCEH) priced an upsized $3 billion issue of eight-year senior cash-pay notes (B3/CCC) at par to yield 10¼%.

The Texas Competitive cash-pay notes tranche was raised from $2.5 billion. The notes were priced on top of price talk.

Goldman Sachs & Co., Morgan Stanley, Citigroup, JPMorgan, Lehman Brothers and Credit Suisse were joint bookrunners.

Meanwhile Energy Future Holdings (EFH) priced an upsized $4.5 billion two-part notes transaction (B3/CCC+), which included the unannounced $2.5 billion toggle notes tranche - the overall amount by which Energy Future was increased.

Energy Future priced a $2 billion issue of 10-year senior cash-pay notes at par to yield 10 7/8%, in the middle of price talk that had the Energy Future notes pricing 50 to 75 basis points behind the Texas Competitive cash-pay notes.

In addition Energy Future priced the unannounced $2.5 billion tranche of 11¼% 10-year senior toggle notes at 97.815 to yield 11 5/8%. No price talk was circulated on the toggle notes.

Morgan Stanley, Goldman Sachs & Co., Citigroup, JP Morgan, Lehman Brothers and Credit Suisse were joint bookrunners for the Energy Future tranches.

TXU went well

Sources on both the buy-side and sell-side said that the TXU deal went well.

A buy-side source saw the cash-pay notes "moving up a little," shortly after the terms were circulated, spotting the new Energy Future 10 7/8% notes at 101 bid, and the Texas Competitive 10¼% notes at 101¼ bid.

The buy-sider had not seen any trades in the PIK toggle notes.

However sources told Prospect News that five accounts were heard to have each taken $500 million of the toggle notes.

A sell-side source, not in the deal, said that the TXU transaction went well, and spoke to the notable amount of liquidity in the high yield market at present. However the source added that as a utility company TXU is a defensive play for investors who are thought to be keeping a weather eye on the U.S. economy.

Therefore TXU is not a good indicator as to how other deals might fare, the sell-sider asserted.

Alliant downsized

Also pricing on Wednesday was a downsized offering from Alliant Holdings I, Inc. of $265 million of 11% 7.5-year senior notes (Caa1/CCC).

The notes priced at 96.328 to yield 11¾%. The yield was printed on top of the price talk.

Bookrunner JP Morgan and co-manager UBS Investment Bank led the quick-to-market deal, proceeds from which are pegged to help fund the acquisition of the California-based specialty insurance broker by the Blackstone Group.

Agilent brings split deal

In addition to the junk that priced on Wednesday, Agilent Technologies priced an upsized $600 million issue of 6½% 10-year notes at Treasuries plus 222 basis points, the spread at which the notes had been launched.

Some high yield accounts were in the deal, according to a market source.

The notes came at a 99.60 dollar price, and will yield 6.555%.

Citigroup and JP Morgan ran the books for the issue which was upsized from $500 million.

Post-TXU

Since late last week market sources had been keenly tuned into the massive TXU deal which priced, as expected, on Wednesday.

With TXU having cleared, the market is expecting only two other deals to price before Friday's close.

U.K.-based oil and gas exploration and production company Melrose Resources plc is expected to price its €250 million offering of eight-year senior subordinated notes, via Merrill Lynch.

If Melrose crosses the finish line it will be the first European junk issuer to do so since the mid-summer market correction.

Also expected to price late this week or early next week is the Ceridian Corp./Merger Foundation Sub Inc. $1 billion two-part offering of eight-year senior notes (CCC+).

The deal, which is being led by Deutsche Bank Securities, Credit Suisse and Banc of America Securities, is comprised of tranches of cash-pay notes and PIK toggle notes. Tranche sizes remain to be determined.

New TXU notes trade up

When the new TXU bonds were freed for secondary dealings, a trader saw the 10 7/8% notes due 2017 move up to 100.75 bid, 101.25 offered from their par issue price earlier in the session. He saw its 10¼% notes due 2015 firm slightly to 100.5 bid, 101 offered, also up from par.

Another trader saw the 10 7/8s get as good as 101.625 bid, and the 101/4s also rise as high as 101.625, before dropping off those peaks to go home at around 100.75 bid.

Yet another trader said TXU's 10¼%s were active and up slightly from its par issue price at par bid, 101 offered. Still another also called the new issue "pretty active," though the notes came off their highs of 101.25 bid, 101.5 offered to close at 100.75.

Cablevision firmer as buyout fails

Back among the established issues, a trader said that Cablevision's 8% notes due 2012 were a point higher at 98.5 bid, 99.5 offered, citing the demise of the Dolan buyout plan, which he suggested was "probably good for the bonds."

However, another trader saw little movement in the name, quoting its 6¾% notes at 97 bid, 97.5 offered, around unchanged from Tuesday's levels though about ½ point higher than Monday's. He saw its 7 7/8% notes at 98.25 bid, 99.25 offered, up maybe ¼ point.

Although he had "seen reports" that the bonds were higher in the wake of the buyout plan's demise, it was his contention that "across the board, it was about the same."

Morris up on asset sale

Elsewhere, a trader said that Morris Publishing Group's 7% notes due 2013 were up about 1 point to 77 bid 78 offered on news of an asset sale by the company.

Morris agreed to sell several daily and weekly titles to GateHouse Media, Inc. for $115 million. The transaction is expected to close before the end of November and is subject to regulatory approval and customary closing conditions.

The publications to be acquired are located in South Dakota, Florida, Kansas, Michigan, Missouri, Nebraska, Oklahoma and Tennessee.

Overall, a trader said, Wednesday was "a sideways day. Stocks were down a lot, but then came all the way back" later on. "Things got whacked, but stocks held things together. That buoyed the market when things got ugly."

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