Primary quiet, calendar builds as ServiceMaster, Precision Drilling, Kissner deals slate; Jack Ohio on tap

By Paul Deckelman

New York, Oct. 31 – The high yield primary market closed out the month of October on a quiet note on Monday, syndicate sources said, with no new dollar-denominated and fully junk-rated deals seen having priced.

However, there was activity behind the scenes, as several prospective new deals hit the radar screens.

The biggest was ServiceMaster Global Holdings, Inc., which announced plans to sell $1 billion of eight-year notes. The provider of cleaning, pest-control and other forms of maintenance services is expected to price its megadeal near the end of the week.

Kissner Holdings LP, a Canada-based producer of salt, for both culinary and chemical purposes, began shopping a $400 million issue of six-year secured notes around to potential investors. That deal is also seen getting done around the end of the week.

Another Canadian entity – energy drilling contractor Precision Drilling Corp. – will bring its newly announced $350 million seven-year issue to market possibly as early as Tuesday, the syndicate sources said.

And Tuesday could see the pricing of a considerably bigger issue – Midwestern gaming and hospitality operator Jack Entertainment LLC’s Ohio subsidiary’s $1.05 billion of senior secured paper, divided into $750 million of five-year first-lien notes and $300 million of six-year second-lien paper.

In the European high yield sphere, Crystal Almond Sarl, the parent of Greek telecommunications company WIND Hellas, priced €250 million of five-year senior secured notes.

Meanwhile, Enterprise Inns plc, a British pub operator, upsized to £250 million the amount of new secured 2022 notes it will issue to finance the company’s tender offer for its remaining outstanding 2018 secured paper.

Among the new deals that have recently priced, traders saw sizable activity in Rackspace Hosting Inc., AMC Entertainment Holdings Inc. and Netflix, Inc.’s paper.

Away from the new deals, CenturyLink, Inc.’s bonds were in retreat as investors reacted warily to the telecommunications company’s plan to buy sector peer Level 3 Communications Inc. in a $34 billion transaction.

ServiceMaster megadeal

Although several pricings were thought possible in Junkbondland on Monday, none materialized.

However, things were going on, with the forward calendar building via the addition of several prospective offerings.

ServiceMaster Global Holdings, Inc., a Memphis, Tenn.-based provider of janitorial, cleaning, pest-control and systems maintenance services to commercial and residential customers – announced plans to sell $1 billion of eight-year senior notes.

High yield primaryside sources said that the issue will be pitched to potential investors via a conference call scheduled for 12:30 p.m. ET on Tuesday and is expected to price on Thursday.

The issuer will be the company’s ServiceMaster Co. subsidiary.

The transaction will come to market via Credit Suisse Securities (USA) LLC, J. P. Morgan Securities LLC, Capital One Securities, Goldman Sachs & Co., Morgan Stanley & Co. Inc., CIB Natixis, Regions Securities and RBC Capital Markets Corp.

ServiceMaster, plans to use the expected new-deal proceeds to refinance existing debt and for general corporate purposes.

Kissner, Precision Drilling

A pair of Canadian companies began shopping new deals to potential buyers.

Kissner Holdings LP is scheduled to hit the road on Tuesday to market its planned $400 million issue of six-year senior secured notes to investors.

High yield syndicate sources said that the company will host a group lunch in Boston and then a similar meeting on Wednesday in New York. The roadshow then moves west, finishing up on Thursday in Los Angeles, with pricing expected on Friday.

The Cambridge, Ont.-based vertically-integrated producer and distributor of bulk rock salt and packaged specialty de-icing products plans to use the expected new-deal proceeds to refinance existing debt and to fund a distribution to its corporate parent.

Calgary-based Precision Drilling Corp. began shopping around its planned issue of $350 million seven-year senior notes.

Sources said that the deal is expected to price at an 8% yield after the order books close at 12 noon ET on Tuesday.

The transaction is coming to market via bookrunners Credit Suisse Securities (USA) LLC and RBC Capital Markets Corp.

The company plans to use the expected new-deal proceeds to repay its existing 2019 Canadian dollar-denominated notes, make other debt repurchases and for general corporate purposes.

Jack on tap

A Tuesday pricing is also seen likely for Jack Ohio Finance LLC’s and Jack Ohio Finance 1 Corp.’s $1.05 billion two-part senior secured bond offering, consisting of $750 million first-lien notes due 2021 (B3/B+) and $300 million second-lien notes due 2022 (Caa3/CCC).

Price talk emerged Monday on those two tranches. Talk on the first-lien tranche was set at 6.5% to 6.75%, while the second-lien piece of paper is expected to yield 10% to 10.25%.

Order books are scheduled to close at 12 noon ET on Tuesday, with pricing expected thereafter.

The issuers are subsidiaries of Detroit-based gaming operator Jack Entertainment LLC, which plans to use the expected new-deal proceeds to finance debt and provide cash for upcoming payments, with remaining proceeds, if any, to finance ongoing working capital needs, capital expenditures and general corporate purposes.

The deal comes to market via left lead bookrunner Goldman Sachs along with joint bookrunners Credit Suisse, Wells Fargo Securities LLC and Deutsche Bank Securities Inc.

Crystal Almond euro deal prices

In the non-dollar market, Crystal Almond Sarl, the parent company of Greek telecommunications operator WIND Hellas Telecommunications SA, priced €250 million senior secured notes due 2021 (/B/B).

European high yield market sources said that the notes, carrying a 10% coupon, priced at 98, yielding 10.525%.

The offering was bought to market via J.P. Morgan. It was marketed to investors via a roadshow last week.

The Athens, Greece-based telecommunications services provider plans to use the expected new-deal proceeds to refinance an existing senior secured facility and for general corporate purposes of WIND Hellas, including capital expenditure investments.

Enterprise upsizes offering

Britain’s Enterprise Inns plc announced in a press release that it would upsize a planned offering of fixed-rate secured bonds due 2022 to £250 million, from the originally announced £150 million.

It said that the coupon on the new bonds would be 6.375%, with an issue price of par.

Enterprise – a leased and tenanted pub company based in Solihull, England – announced on Oct. 24 that it would sell at least £150 million of the notes, in connection with its tender offer for its £350.479 million of its 6½% secured bonds due 2018 remaining outstanding from the originally issued £600 million.

The new issue is being brought to market via stabilization managers BNP Paribas, Lloyds Bank, Deutsche Bank and Royal Bank of Scotland.

Recent deals busy

In the secondary market, traders reported some activity in a couple of the recently planned offerings.

In line with a generally soggy market, all were on the downside.

One of the market sources said that Rackspace Hosting’s 8 5/8% notes due 2024 were down on the day at 100 1/8 bid, with about $17 million traded.

The San Antonio, Texas-based managed cloud company priced $1.2 billion of the notes at par last Tuesday in a regularly scheduled deal.

While the bonds initially got as good as 101½ when they hit the aftermarket, they have gradually declined since then, including easings on Friday and again on Monday.

AMC Entertainment’s 5 7/8% senior subordinated notes due 2026 eased by 1/8 point on Monday to 100 5/8 bid, also on about $17 million volume, a market source said.

The Leawood, Kans.-based movie theater operator priced an upsized $595 million of those notes on Friday as part of a scheduled approximately $900 million equivalent two-part offering that also included a tranche of sterling notes.

The bonds got up to around a 100¾ to 101 bid context in Friday’s aftermarket action.

And Netflix’s 4 3/8% notes due 2026 backpedaled by 3/8 bid on Monday to end at 98 3/8 bid, with about $9 million changing hands.

The Los Gatos, Calif.-based distributor of movies and TV programming priced $1 billion of those notes at par a week ago, after the quickly shopped issue was upsized from $800 million originally.

But the bonds struggled from the get-go, traders said, eventually setting in a point or so below their issue price

CenturyLink in retreat

Away from the new or recent deals, traders said that CenturyLink’s bonds were getting clobbered in active trading, with one estimating the Monroe, La.-based telecom company’s whole capital structure was down “anywhere from 1 to 4 points.”

Its 7½% notes due 2024 fell 4¼ points to 104¼ bid, on volume of over $44 million, the heaviest volume of any credit.

Those notes had shot up from about a 106 bid level last week to a peak of around 110 on the news that CenturyLink was in merger talks with sector peer Level 3 Communications.

But it began to give up those gains on Friday, and plunged headlong on Monday.

CenturyLink’s 5.8% notes due 2022 followed a similar up-and-down trajectory, ending Monday at 101½ bid, down more than 3 points on the day, with over $16 million traded.

A trader said that the downside move “makes sense, since they are acquiring a lower-credit company.”

CenturyLink and Broomfield Colo.-based Level 3 announced on Monday that they will combine, with CenturyLink paying $25 billion for Level 3’s equity. Including assumed debt, the transaction is valued at $34 billion.

© 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.