Wyndham firms on bonds' price talk, but light trading as people wait for pricing Tuesday

By Sara Rosenberg

New York, June 3 - Wyndham International Inc. was trading at a slightly better level Monday due to the emergence of price talk on its bond deal. The company's B loan was trading at 94½ bid, 95 offer, which is a firm level relative to where the loan has previously been trading, according to a trader. The Dallas, Tex. lodging company's bank paper, which was languishing due to uncertainty over whether the bond deal was going to get done, has formerly been quoted as trading in the low 90s.

The Rule 144A $750 million senior secured notes due 2008 are currently expected to price at a yield in the 10¾% area with terms expected to be set on Tuesday.

With the bonds being talked at a yield of nearly 11%, investors have gained more confidence in the deal's ability to get done, a fund manager said.

JP Morgan and Bear Stearns & Co. are joint bookrunners on the notes. Credit Lyonnais, Fleet Securities, Credit Suisse First Boston, Deutsche Bank Securities Inc., Banc of America Securities, Scotia Capital and SG Cowen are co-managers.

However, Wyndham's bank debt did not see much trading activity Monday as people are waiting to see what happens with the bonds, the trader added.

Over the past couple of months, Wyndham has worked its way up from the low 70s range. In the wake of the terrorist attacks on Sept. 11, the company's bank debt traded down to approximately 72. In early January, amendments to the credit facility were agreed upon, strengthening the loans' price in the secondary.

Most recently though, Wyndham's loan has fluctuated each time a bond deal was rumored to be taking place.

At the end of March, the company was viewed as the "flavor of the week" by market participants due to an increase in trading levels to around 96 from the high 80s. The jump in price was attributed to rumors of an issuance of bonds.

In April, Wyndham firmed up again on news that Starwood Hotels & Resorts was making a private offering of $1 billion senior notes under Rule 144A of the Securities Act. That announcement had a double benefit for Wyndham, according to a market professional. First, Starwood took paper out of the market since some of the proceeds from the note offering were used to pay off outstanding bank debt. Due to this, investors scrambled to get a hold of lodging paper, such as Wyndham, to replace the Starwood paper. Second, people believed that if Starwood could get a high-yield deal done, it indicated that the high-yield market liked lodging paper, so Wyndham could pull off a high-yield offering as well.

At the end of May, Wyndham was better bid based on the company's announced upcoming bond deal, a market professional said, with trading taking place in the mid-90s. He explained that people are looking forward to proceeds from the note sale being used towards the repayment of some outstanding debt under the bank credit facilities.

Otherwise, it was a really quiet day in the secondary market, typical of a summer Mondays, according to a second trader.

Coming up in primary activity, market talk is that Advanced Medical Optics Inc.'s $140 million senior secured credit facility (B1/BB-) may launch this week. The loan is expected to consist of a $100 million term due in 2008 and a $40 million revolver due in 2007. Merrill Lynch and Bank of America are said to be the lead banks on the deal. Neither the syndicate nor the company was immediately available to confirm this information. Proceeds will be used to help fund the spin-off from Allergan Inc. and to repay debt.

Advanced Medical Optics is an Irvine, Calif. manufacturer and marketer of medical devices for the eye and contact lens care products.

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