Massively upsized SunGard drives by, along with Asbury and New York Times, new bonds firmer

By Paul Deckelman

New York, Nov. 1 - November kicked with a bang on Monday, as more than $2 billion of new high-yield bonds priced - most of it via a hugely upsized deal from Wayne, Pa.-based SunGard Data Systems, Inc.

That behemoth of a deal was upsized to $1.6 billion; along the way, what started out as an offering for a single tranche of eight-year notes was restructured to add a second tranche, of 10-years.

SunGard came too late in the day for real aftermarket dealings.

However, traders got to push several other of the day's deals notably higher.

New York Times Co. suddenly appeared in the market with what eventually became a $225 million offering of six-year notes; it firmed by at least 2 points.

Meanwhile, Asbury Automotive Group, Inc. also cruised strongly higher on the break, after having priced a $200 million 10-year subordinated paper offering. Quality Distribution, Inc. was also seen at least a little firmer after its own offering of eight-year secured notes came to market.

While those deals were pricing, along with a Canadian-dollar denominated deal for customs brokers Livingston International Inc., the forward calendar was growing, with new offerings slating from Frac Tech Services, Interline Brands, Inc., Harbinger Group Inc. and Canada's Gateway Casinos & Entertainment Ltd., the latter a loonie-denominated deal that dismayed some of the Canadian banks that were not invited to participate.

Away from the new deals, Dallas-based energy operator EXCO Resources Inc.'s bonds were heavily traded, at lower levels, on news of a planned management-led buyout of the company.

Super-sized SunGard drives by

Easily the biggest deal of the day, accounting for $1.6 billion of the $2.25 billion of dollar-denominated debt that priced on Monday was SunGard Data Systems' two-part mega-deal (Caa1/B).

The quickly-shopped deal was originally envisioned as a $500 million offering of eight-year senior notes.

However, by around mid-afternoon, it had doubled in size to $1 billion, with the addition of a 10-year tranche of senior notes.

By the time the deal priced late in the session, it had grown further still to meet strong investor demand, finally finishing up with $900 million of the eight-year bonds and $700 million of the 10-years.

Both tranches of notes priced at par, to yield 7 3/8% and 7 5/8%, respectively, pricing on the tight side of price talk which had envisioned a yield for the eight-year notes in the 7½% area, and 25 bps over the eight-years for the 10-year paper.

The offering came to market via joint bookrunners J.P. Morgan Securities LLC, Goldman Sachs & Co., Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets, Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities, Inc. and Morgan Stanley & Co., Inc.

The company plans to use the proceeds of the deal to fund a tender offer for its $1.6 billion of 9 1/8% notes due 2013.

SunGard's deal priced too late in the day for aftermarket dealings.

Asbury, Times trade up

Two other opportunistically timed and rapidly marketed drive-by offerings earlier in the day did see some play in the aftermarket.

The New York Times was making some of its own news, heard by junk market sources to have priced an upsized $225 million offering of six-year senior notes (B1/B+). Those 6 5/8% coupon notes priced at par, at the tight end of price talk envisioning a yield around 6¾%.

The deal was upsized from the originally announced $200 million.

Bookrunner Barclays Capital brought the offering to market.

The New York-based newspaper publisher and media company plans to use the proceeds from the deal for general corporate purposes, including debt repayment.

When the bonds were freed for secondary activity, a trader saw them push up to 102¼ bid, 102¾ offered.

Keeping the Gray Lady company on her upside ride was Asbury Automotive Group, which also brought a quickly shopped $200 million offering of 10-year senior subordinated notes (Caa1/B-) to market, syndicate sources said.

They said the 8 3/8% notes priced at par, at the tight end of price talk of a yield in the 8½% area.

The deal came to market via joint bookrunners Bank of America Merrill Lynch and J.P. Morgan.

The Duluth Ga.-based automotive retailer plans to use the proceeds from the deal to fund a tender for its outstanding 8% subordinated notes due 2014.

A trader said that the Asbury Auto bonds were motoring higher in the aftermarket, quoting them at 102 bid, 103 offered.

Quality Distribution prices, firms

Quality Distribution, LLC and QD Capital Corp. priced $225 million of eight-year second-priority senior secured notes (Caa1/B-). Those 9 7/8% notes priced at 99.324 to yield 10%.

The notes came wide of the 9¾% price talk which had circulated around the market late in the day on Friday, the sources said.

Unlike the day's other pricings, Quality was a forward-calendar offering which had been shopped around to potential investors via a short roadshow that began around the middle of last week.

It came to market via joint bookrunners Credit Suisse, Bank of America, RBC Capital Markets Corp. and Jefferies & Co. Inc.

The issuers are subsidiaries of Quality Distribution, Inc., a Tampa, Fla.-based provider of bulk transportation and related services which plans to use the proceeds from the bond sale to redeem all of its outstanding 10% senior notes due 2013, its 9% senior subordinated notes due 2010 and its senior floating-rate notes due 2012.

Proceeds will also be used to redeem at par plus accrued interest enough of the 11¾% senior subordinated payment-in-kind notes due 2013 to reduce the balance to $35 million.

Remaining proceeds will be used to pay down the company's ABL facility.

When the Quality bonds broke, a trader quoted them at 99 5/8 bid, 100 1/8 offered, up a little from their issue price.

Livingston livens things up

Apart from the U.S. dollar pricings, there was one Canadian-dollar issue that priced, from Livingston International, which priced C$135 million of five-year senior notes on Monday. The notes, carrying a 10 1/8% coupon, priced at par, on the tight side of pre-deal market price talk envisioning a yield of around 10¼%, give or take 1/8 point.

The quickly-shopped deal came to market via joint bookrunners RBC and CIBC World Markets.

Livingston, with executive offices in Toronto and Buffalo, N.Y., provides customs brokerage, transportation and logistics services to companies shipping goods internationally. It plans to use the proceeds from the deal to partially repay notes and preferred shares held by its sponsors, repay existing term loan B debt, and pay related fees and expenses.

Gateway rolls the dice

Livingston wasn't the only north-of-the-border entity making its presence felt in Monday's market.

British Columbia-based Gateway Casinos & Entertainment Ltd. was heard by high yield syndicate sources on Monday to have begun shopping around a C$170 million offering of seven-year second-priority senior secured notes.

That issue is expected to price sometime this week.

The bookrunners on the deal are RBS Securities Inc., Jefferies, J.P. Morgan, Goldman Sachs and Morgan Stanley.

But a source noted that the underwriting group for the Burnaby, B.C.-based gaming company includes "no Canadian dealers" - and said that some investment bankers with Canadian institutions were miffed at the apparent exclusion. He described them as "upset."

Gateway- which is currently lining up a C$385 million credit facility, plans to use the combined proceeds from the bond and bank borrowing to refinance existing credit facility debt incurred as part of its recently completed pre-negotiated restructuring process.

A Harbinger of things to come...

Back in the U.S. market, Harbinger Group, Inc. announced plans to sell $325 million of five-year, first-priority senior secured notes, in connection with a pending financial transaction by the New York-based holding company.

High yield syndicate sources had no information on possible timing on the deal, which will be brought to market via joint bookrunners Credit Suisse Securities (USA) LLC and Goldman Sachs & Co.

Harbinger said it plans to use the deal proceeds for general corporate purposes, which may include acquisitions and other investments.

The company said the proceeds will be held in a segregated escrow account until the completion of a previously announced transaction under which Harbinger will issue some 119.9 million shares of its own stock in exchange for the roughly 27.8 million shares of Spectrum Brands Holdings, Inc., a Madison, Wis.-based consumer products manufacturer majority owned by Harbinger Group's parent, Harbinger Capital Partners LLC. The deal will effectively transfer majority ownership of Spectrum from Harbinger Capital Partners, a privately held hedge fund, to its publicly traded subsidiary, Harbinger Group, which Harbinger Capital Partners views as "an efficient, long-term capital market vehicle through which to exercise majority ownership of SPB."

The latter company is known for such iconic small-appliance brands as Black & Decker and the George Foreman line of electric grills, as well as Rayovac batteries and Remington shavers.

Harbinger further said that if the escrow conditions are not fulfilled by March 31, the notes will be redeemed.

Interline ahead for Thursday

Market sources said that Interline Brands will shop a $275 million offering of eight-year senior subordinated notes around this week, with pricing anticipated on Thursday morning following a short road show.

The Jacksonville, Fla.-based company, which sells janitorial supplies and products and equipment for repair and maintenance of buildings and other facilities, plans to pitch its deal to investors on a two-day roadshow, in New York on Tuesday and in Boston on Wednesday, with pricing to follow.

The deal will be brought to market via bookrunners Barclays and J.P. Morgan.

The company plans to use the proceeds from the offering, along with cash on hand, to fund its previously announced tender offer for those 8 1/8% 2014 notes, and to repay existing credit facility debt.

Interline said in its announcement of the bond deal that it also intends to enter into a new $225 million asset-based credit facility.

Frac Tech next week

Frac Tech Services launched a $550 million offering of eight-year notes on Monday.

Primaryside sources said the deal will be marketed to potential investors via a roadshow this week. One said pricing would "probably" take place next week.

Credit Suisse, RBC, Bank of America, Citigroup and Wells Fargo will be the bookrunners on the deal.

Frac Tech, a privately held Cisco, Tex.-based manufacturer of high pressure pumping equipment and oilfield service company, plans to use the proceeds from the deal to repay existing secured debt, fund a distribution to its owners and for general corporate purposes.

Secondary holds its ground

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index off about 1/8 point on Monday, to end at 100 3/8 bid, 100¾ offered, after having been unchanged on Friday.

The KDP High Yield Daily index meantime gained 5 basis points Monday to finish at 74.67, after having risen by 7 bps on Friday. Its yield tightened by 2 bps on Monday to 7.12%, after having come in by 3 bps on Friday.

The Merrill Lynch High Yield Master II index gained 0.018% on Monday, after having firmed by 0.067% on Friday. The latest advance pushed its year-to-date return up to 14.495%, its eighth consecutive new 2010 peak level, eclipsing the old mark of 14.438%, recorded on Thursday.

Investors exit EXCO

Among specific names, a trader said as much as $120 million of EXCO Resources' 7½% notes due 2018 changed hands, as the bonds fell 3 to 3½ points to around 95 on investor angst over the news that the company's chief executive officer, Douglas H. Miller, plans to buy out all of the outstanding shares, in a deal valued at more than $4 billion.

A second trader said EXCO volume was "more than 20% of every bond that traded and still all over the shop." He said the bonds dipped as low as 92, climbed as high as 97 and traded "everywhere in between."

"Nobody has any real idea of what this plan entails or whether the change-of-control clause is executable."

"This was the big volume guy of the day," with over $125 million changing hands, a third trader said. "The bonds were all over the place" before ending around 96¼ bid.

That was up somewhat from the lower end of the 93 to 97 range in which the bonds were trading during the morning hours, and up as well from the 95 to 95½ area in which most of the volume trading took place.

However, he noted, "last week, they were trading at par."

U.S. Oncology up on buyout

But buyouts don't necessarily mean bad news.

U.S. Oncology Inc.'s bonds were actively trading - one as much as 13 points higher on the day - on the news that the Woodlands, Tex.-based cancer care company will be acquired by a larger healthcare industry player, McKesson Corp., in a $4 billion deal which will include McKesson's assumption of $2.16 billion of U.S. Oncology's debt.

That gave a huge boost to the latter's 9 1/8% senior secured notes due 2017. Those bonds zoomed to about the 124-125 level, a 13 point jump on the day. Traders said the bonds rose to around where they would likely be taken out via a make-whole call. A trader said they were the most active of the company's three issues, with over $22 million traded.

-Stephanie N. Rotondo contributed to this report

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