Beverages & More deal prices; Viskase in mystery jump; GM little moved on Chrysler talk

By Paul Deckelman and Paul A. Harris

New York, Feb. 16 - Beverages & More Inc. popped the top on a $100 million offering of five-year secured bonds during Friday's abbreviated pre-holiday session - and the California-based wine and spirits seller's new issue went down smooth and easy with investors, who took it higher in aftermarket dealings.

Elsewhere in the new-deal arena, large deals being done as part of merger and acquisition transactions came to the fore, as more details emerged about Univision Communications Inc.'s planned $1.5 billion mega-deal, which will fund the Spanish-language media company's leveraged buyout. International media company Reader's Digest Association, another pending buyout, was heard to have hit the road to market its $750 million 10-year bond deal, GNC Corp., which is also being bought out, will be bringing a big new deal to market in March to fund the tender offer for its existing bonds announced Friday as part of that larger transaction.

Also in the primary sphere, participants heard that Hawker Beechcraft Corp., the venerable small-plane division of defense contractor Raytheon Aircraft Co., will be selling more than $1 billion of bonds near the end of the month. And Esterline Technologies was slated to begin a brief roadshow this upcoming week for its 10-year bond offering.

In the secondary market, several traders noted a jump in the bonds of Viskase Cos. Inc., which went from the 70s to the low 90s - but they had absolutely no explanation for the rise in the normally little-traded name.

And they didn't see very much activity in the very well known and well traded General Motors Corp., even amid media reports that the world's largest carmaker is supposedly eying struggling Big Three rival Chrysler - now a division of DaimlerChrysler AG - as a possible acquisition target or strategic partner.

Overall, trading was light and dull heading into the Presidents' Day holiday weekend, which saw a 2 p.m. ET close Friday in the U.S. debt markets and a complete U.S. financial market shutdown on Monday.

A high yield syndicate official said that the junk market remained firm during the shortened session ahead of the three-day Presidents Day weekend.

2.4 billion presidents

The primary market saw the completion of a single transaction.

Beverages & More, Inc. (BevMo) priced a $100 million issue of five-year senior secured notes (Caa1/CCC+) at par to yield 9¼%, at the tight end of the 9¼% to 9½% price talk.

Jefferies & Co. ran the books for acquisition deal from the Concord, Calif.-based retailer of alcoholic beverages and related products.

Tallying the BevMo deal, the pre-Presidents Day week saw slightly less than $2.4 billion of issuance in seven dollar denominated tranches, around $100 million more than the previous week's approximately $2.3 billion in six tranches.

At Friday's close, issuance for the seven-week old year of 2007 stood at just below $22 billion in 68 dollar-denominated tranches.

Hence in year-over-year comparison with 2006, which saw record-breaking issuance in high yield, 2007 has pulled ahead. At the Feb. 16, 2006 close, new issuance on the year totaled slightly more than $19.6 billion.

Hence 2007 issuance ended Friday $2.4 billion ahead of 2006, year-over-year.

In terms of deal volume the difference is even more dramatic - 2006 saw just 48 tranches priced by the Feb. 16 close.

Calendar grows

The new deal calendar took aboard passengers - a couple of them hefty ones - as the week came to a close.

On Friday Los Angeles-based Spanish-language media company, Univision Communications Inc., announced a $1.5 billion offering of eight-year senior unsecured notes (B3) - a deal that is expected to hit the road on Tuesday and price late in the week of Feb. 26.

Credit Suisse, Banc of America Securities LLC, Deutsche Bank Securities, Wachovia Securities, RBS Greenwich Capital and Lehman Brothers are joint bookrunners for the LBO deal.

Meanwhile Reader's Digest Association, Inc. began a roadshow on Friday for its $750 million offering of 10-year senior subordinated notes (B3/CCC+).

JP Morgan, Merrill Lynch & Co. Citigroup and RBC Greenwich Capital are joint bookrunners for that LBO financing.

Elsewhere Esterline Technologies Corp. of Bellevue, Wash., will begin a brief roadshow for its $150 million offering of 10-year senior notes (BB-) on Wednesday.

The roadshow will conclude on Friday, with the notes expected to price later the same day.

Wachovia Securities has the books for acquisition deal from the designer and manufacturer of engineered products for the defense and aerospace industry.

The week ahead

Including Esterline, the primary market ended Friday with visibility on slightly more than $1.9 billion of business expected to price by the end of the four sessions in the post-Presidents Day week.

Caribbean wireless network operator Digicel Group Ltd. is in the market with a $1.4 billion offering of eight-year senior notes in two tranches: $1 billion of cash-pay notes and $400 million of PIK toggle notes.

Citigroup and JP Morgan are joint bookrunners for the share repurchase and capital expenditures deal.

St. Charles, Mo.-based American Railcar Industries, Inc., meanwhile, is in the market with a $250 million offering of seven-year senior unsecured notes via UBS Investment Bank.

Proceeds will be used for general corporate purposes including capital expenditures, strategic transactions and working capital.

Finally, Detroit-based Key Plastics Finance Corp. is roadshowing its $115 million offering of six-year senior secured notes (B2/B), a debt refinancing deal which is being led by Jefferies.

All four, Esterline, Digicel, American Railcar and Key Plastics, are expected to price late in the week.

Secondary drinks in new BevMo bonds

When the new Beverages & More 9 ¼% secured notes due 2012 were freed for secondary dealings, a trader saw those bonds push up to 102 bid, 103 offered - well up from their par issue price earlier in the session.

By way of contrast, Rite Aid Corp.'s two new tranches of bonds, which each priced at par on Thursday, were seen continuing to straddle that issue price; both the 7½% secured notes due 2017 and the 8 5/8% senior notes due 2015 were quoted at 99.5 bid, 100.5 offered. The Camp Hill, Pa.-based drugstore chain operator's established 9¼% notes due 2013 were meantime quoted at 102.75, up ¼ point on the session.

Vigorous Viskase

Elsewhere among the established names, Viskase Cos. 8% notes due 2008 were clearly the major mover on the session - although nobody seemed to know why. No fresh news was seen out on the Darian, Ill.-based maker of casings for sausages, bologna and other processed meat products.

Even so, a trader said, the 8s - which he described as "PIK notes that will soon go to cash-pay" - jumped to 93 bid from prior levels several days ago of 71.

"Normally, they trade in pretty small volume," he said. "Today, they traded $7 or $8 million - so something is going on, though I don't know what it is."

"Normally, they trade by appointment," another trader said of the bonds, "but they're well up today, though I don't know why."

"Nice!" was how yet another trader described the move up to 91, and adding: "For them, this is huge trading," with several of the day's trades being for $1 million of notes, or not too far away from it.

The trader said there wasn't even a new Securities and Exchange Commission filing that might shed some light on the bonds' move.

It should be noted that the company is 30% owned by an affiliate of activist billionaire investor Carl Icahn.

Pokagon gets poked around

Another fairly sizable move - though by no means in that same 20-point category - was seen in Pokagon Gaming Authority's 10 3/8% notes due 2014. Those bonds were quoted down more than 4 points at 105.75.

There was no fresh news seen out on the company - a Native American gaming operation of the Pokagon Band of Potowatomi Indians, who are developing the Four Winds casino in Michigan.

Also in the gaming sector, a trader said that had heard that Trump Entertainment Resorts Inc.'s 8½% notes due 2015 had risen on Thursday and were again firmer on Friday on market rumors that the Atlantic City, N.J.-based gaming operator had been talking to private equity powerhouse The Blackstone Group Inc. - a big player in the recent M&A binge. Blackstone already has extensive interests in the gaming's cousin, the lodging industry, through its investments in such well-known industry names as La Quinta, Prime Hospitality, Extended Stay America, MeriStar, Boca Resorts and Wyndham International.

"In this market, it's very possible," he said - although the rumor at this point remains just that, with no official confirmation or acknowledgment by any of the parties involved.

The trader saw Trump's bonds get as good as 101 bid, 101.5 offered, before ending at 100.5 bid, 101 offered, which he called up ½ point on the session, on top of a 1 point rise on Thursday.

Another gaming name seen making a move - albeit in thin pre-holiday trading - was Las Vegas-based Pinnacle Entertainment Inc., whose 8¾% notes due 2013 were seen to have retreated more than 2 points on the day to 103.375 bid. No fresh negative news that might explain that easing was seen late Friday.

GM stays in neutral

Elsewhere, the news report that General Motors has been in preliminary talks with DaimlerChrysler on possibly acquiring the German automotive powerhouse's struggling Chrysler Group had little impact on the Detroit giant's bonds, with a trader quoting GM's benchmark 8 3/8% notes due 2033 at 95.875 bid, 96.375 offered. The GM bonds, he said, did "nothing."

At another desk, the bonds were seen bid around 95.5. GM's 7 1/8% notes due 2013 were down ¼ point at 97.5 bid.

An auto-industry trade publication, Automotive News, said Friday that the two companies were engaged in high-level talks about GM buying Chrysler Group, or possibly forming a strategic alliance with the Number-Three domestic carmaker.

The trade paper attributed its information to unidentified sources in Germany and the United States.

Many in the financial community were deeply skeptical about the notion that GM might be thinking of buying Chrysler - although such a step would instantly add Chrysler's approximately 10% to 15% share of the U.S. auto market to GM's, which languishes around 25% - less than half of what it once was, during the heady years when The Big Three dominated the domestic, and world car industry, and it was famously said by GM chief "Engine Charlie" Wilson (later U.S. Defense Secretary) that "what was good for the country was good for General Motors and vice versa."

The skeptics said that with both GM and Chrysler trying to cut back on their respective operations to fit their reduced sales, by closing plants and reducing headcount, a combination of two such bloated, struggling companies made absolutely no economic sense.

Both GM and DaimlerChrysler declined comment on the report.

Visteon higher

Also in the autosphere, Visteon Corp.'s bonds were seen better, even though the Van Buren Township, Mich.-based parts company posted a quarterly loss and issued bearish guidance for this year. Its 8¼% notes due 2010 came in at 104, according to one trader - a 2 point gain.

Investors shrugged off the fourth-quarter loss of $39 million (30 cents per share), apparently heartened because it was far less than the 76 cents per share of red ink which Wall Street was looking for.

However, the results were a steep deterioration from the company's year-earlier profit of $1.34 billion ($10.25 per share) a year ago. Total revenue slipped 0.8% to $2.84 billion, with product sales edging up just 0.3% and services revenue falling 20%. Non-Ford product sales rose 13% to $1.62 billion.

The company said it expects a tough 2007, estimating 2007 full year results before interest, taxes and restructuring costs in the range of break-even to a loss of $100 million

MagnaChip gains continue

Apart from the auto names, traders saw MagnaChip Semiconductor Ltd.'s bonds continuing to improve, with the Korean-based computer chip manufacturer's 8% subordinated notes due 2014 at 73 bid, 74 offered and its 6 7/8% senior notes due 2011 at 87.5 bid, 88.5 offered, which one trader called up a point on the session "in pretty decent volume for them." Another trader noted that the bonds were up 2½ to 3 points on the week.

The first trader attributed the recent rise in the company's bonds to "short-covering, and a little bit of good news." Among that good news was signs of strength in the junk market's high-tech sector, including such names as Amkor Technology Inc., and Freescale Semiconductor, as well as investor optimism about the prospects for Korean electronics manufacturer (and MagnaChip customer) LG Electronics. MagnaChip had its own good news this past week as well, announcing several product launches.

Movie Gallery moves up

In the distressed-debt precincts, Movie Gallery Inc. got a boost in its bonds amid heavy trading.

Traders were not sure why activity surged in the notes, but speculated it could be due to the company's upcoming bank refinancing.

The company's 11% notes due 2012 were slotted at 85 bid, 86 offered, 1½ points up from the previous day, according to one trader. One market insider said the notes closed Thursday at 83 and started Friday morning trading at 84.

"Wow, they're really moving up," he said.

The movie rental chain announced on Feb. 6 it had secured a refinancing commitment for its existing senior secured credit facility. The deal, underwritten by Goldman Sachs Credit Partners LP, is expected to close in the first quarter. The bank meeting is scheduled for Tuesday.

Stephanie N. Rotondo contributed to this report

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