Playtex prices upsized issue; Owens-Illinois lower after downgrade

By Paul Deckelman and Paul A. Harris

New York, Feb. 4 - Playtex Products Inc. priced an upsized seven-year issue on Wednesday, a session which also saw add-on pricings from Dunlop Standard Aerospace and Ameripath, as well as a euro-denominated offering from German auto parts maker Schefenacker AG.

In secondary dealings, Owens-Illinois Inc. bonds were being quoted several points lower, after Standard & Poor's cut the Toledo, Ohio-based packaging maker's corporate credit rating in the wake of the company's recently reported billion-dollar-plus quarterly loss and its announcement of additional asbestos reserve related charges and a goodwill impairment.

In total four deals priced during the mid-week session in the primary market, while the new deal calendar continued to build.

In the latter category the most eye-catching news of the session came from Calpine Corp., which is planning to return to the junk bond market with approximately $1 billion.

Market softness doesn't hurt new deals

One sell-side official late in Wednesday's session said that, as was the case Tuesday, the junk bond market ended "a little bit softer," on the day

However, the sell-sider said, the softness in the market did not seem to be impacting the executions of the new deals, as all of Wednesday's transactions came within price talk.

Two of four issues upsized

Two of Wednesday's four deals priced in upsized amounts.

Playtex Products, Inc. priced an upsized $460 million of seven-year senior secured notes (B2/B), at par to yield 8%.

The Westport, Conn. personal care and consumer products company's offering, via Credit Suisse First Boston, came spot on the 8% area price talk and was increased from $450 million.

Word circulated the market as the session wound down that Playtex had run into some resistance. And indeed the deal did come with covenants dealing with change of control and asset sales (see related story in this issue).

Also upsized, Wednesday, was the deal from Esslingen, Germany auto parts company Schefenacker AG, which priced €200 million of 10-year senior subordinated notes (B2/B-) at par to yield 9 ½%.

The Citigroup deal was increased from €175 million and came at the wide end of the 9 3/8%-9½% price talk.

Wednesday's remaining two transactions were add-ons.

Dunlop Standard Aerospace Holdings plc priced a $120 million add-on to its 11 7/8% senior notes due May 15, 2009 (B3/CCC+) at 105.125, resulting in a 9.983% yield to worst.

The Credit Suisse First Boston-led deal came tight to the 105 area price talk and generated $126.150 million of proceeds.

The issuer is a Coventry, U.K.-based provider of aftermarket parts and services to aerospace and defense industry. It priced the original $225 million issue on May 7, 1999.

And Ameripath, Inc. priced a $75 million add-on to its 10½% senior subordinated notes due April 1, 2013 at 107.125, resulting in a 9.116% yield to worst.

Credit Suisse First Boston, Deutsche Bank Securities, Citigroup and Wachovia Securities were bookrunners on that deal which generated $80.34 million of proceeds for the Riviera Beach, Fla.-based provider of cancer diagnostics, genomics and related information services.

Calpine, Argosy, UbiquiTel add deals

Although no precise timing or bond structure was heard during Wednesday's session, Calpine Generating Co., LLC announced in a press release that it plans to sell approximately $1 billion of non-recourse second priority secured notes.

Deutsche Bank Securities will run the books on the Rule 144A bond deal as well as the company's approximately $1.3 billion first priority senior secured term loans, according to a syndicate source.

Timing was heard on a quick-to-market deal from Alton, Ill.-based Argosy Gaming Co., which plans to price $350 million of 10-year senior subordinated notes (B2 existing/B+) on Thursday.

The Morgan Stanley-led deal was marketed during a Wednesday afternoon conference call.

Conshohocken, Pa.-based Sprint affiliate UbiquiTel Inc. will run a conventional roadshow from Feb. 6 to Feb. 12 for an offering of $250 million of seven-year senior notes (Caa1).

Bear Stearns & Co., Citigroup and Banc of America Securities will run the books.

And some details emerged Wednesday on a couple of add-ons.

Pegasus Communications Corp. announced a $100 million add-on to its 11¼% senior notes due Jan. 15, 2010, with proceeds going to tender for its outstanding debt securities maturing in 2005 through 2007.

Banc of America Securities is the dealer manager of the tender and, according to market sources, will emerge as bookrunner on the bond deal.

And United Biscuits Finance plc will offer a £75 million add-on to its 10¾% senior subordinated notes due 2011 (B1/B-).

Deutsche Bank Securities will run the books for the deal from the Hayes, U.K.-based snack food company.

The original £120 million priced on April 10, 2001.

No timing was heard on the deal.

Busy late week takes shape

Price talk was heard on six offerings that are among 11 deals that market sources expect to be priced before the end of the Feb. 2 week.

* Price talk is 7%-7¼% on General Communications, Inc. $200 million of 10-year senior notes (B2/B+), expected to price on Thursday afternoon, via Deutsche Bank Securities;

* Talk is 7 5/8% area on Pinnacle Foods Holding Corp.'s $200 million add-on to its 8¼% senior subordinated notes due Dec. 1, 2013 (B3 confirmed/B expected), expected to price on Thursday via JP Morgan and Citigroup;

* The talk is 8½%-8¾% on Ply Gem Industries' $180 million of eight-year senior subordinated notes (B3/B-), expected to price late Thursday afternoon via UBS Investment Bank and Deutsche Bank Securities;

* Price talk is for a yield in the 8¾% area on Affinity Group Holding, Inc.'s $190 million of eight-year senior subordinated notes (B3/B-), expected to price on Friday via CIBC World Markets;

* Talk is 8¾%-9% on Inverness Medical Innovations' $150 million of eight-year senior subordinated notes (B-), expected to price late Thursday via UBS Investment Bank and Merrill Lynch & Co.; and

* Price talk is 10¾% area on Pliant Corp.'s $225 million of five-year senior secured discount notes (B3/B), expected to price on Friday. JP Morgan, Deutsche Bank Securities and Credit Suisse First Boston are underwriters.

PGN price talk

In emerging markets news Wednesday, price talk of 7.35%-7½% was heard on PGN Euro Finance's $150 million of 10-year notes (B3/B+).

The roadshow travels to Boston on Thursday, and the deal is expected to price in the middle of the Feb. 9 week.

Credit Suisse First Boston is the bookrunner on the notes which will be guaranteed by Indonesian natural gas firm PT Perusahaan Gas Negara (Persero) Tbk.

Playtex little changed in trading

When the new Playtex Products 8% notes due 2011 were freed for secondary dealings, the bonds didn't get very far.

A trader quoted them as gaining perhaps a quarter point over their par issue price, dryly exclaiming "whoop-de-doo."

Another trader said that the new bonds had actually gotten as high as 101 bid, 101.5 offered on the break, before slipping back from those highs to end around par.

Meantime, the Westport, Conn.-based consumer products maker's outstanding 9 3/8% notes - which had been beaten down to about the 95 bid level over the past few sessions, after the company released bearish guidance, remained in that context Wednesday, not deteriorating any further, although a trader noted that this was still "down about six or eight points" from the levels they had held before the earnings warning.

Qwest's new bonds better

Qwest Communications International's new bonds, which priced last Friday and which have been struggling in the aftermarket ever since, "bounced a little bit" on Wednesday, on what the trader called "a little short-covering,"

He quoted the Denver-based regional Bell operating company's paper - a massive $1.775 billion sold in three parts - as being about half a point better on the session, with its 7¼% notes due 2011 finishing the session at 97.25 bid, 98.25 offered; its 7½% notes due 2014 closing at 97 bid, 97.5 offered; and its floating rate notes due 2009 ending at 97.75 bid, 98.25 offered.

"Some people stepped in and bought something," he said. "It seemed like bids emerged all through the day in selected new issues that had really gotten slaughtered."

For instance, he continued, Alamosa (Delaware) Inc.'s new 8½% senior notes due 2012, which had priced at par on Jan. 13, "got all the way down to 94 bid, 94.5 offered," he noted, before finding some strength and getting part of the way back up Wednesday to the 96 bid, 96.5 offered area.

"So some of the issues that were overdone [on the downside] bounced exceedingly well. Others kind of held their ground."

Buyers for Winn-Dixie

Among secondary issues which he saw bouncing back a bit after having taken a drubbing were the 8 7/8% notes due 2008 of Winn-Dixie Stores Inc., which had fallen as low as the upper 70s from bid levels above par over the past few sessions, in response to the Jacksonville, Fla.-based supermarket operator's recently reported quarterly loss, which surprised many Wall Streeters who had been looking for a profit, however small.

However, after the bonds went home Tuesday quoted around 81 bid, "buyers emerged" Wednesday, taking them up to about the 83 bid, 85 level.

Owens-Illinois suffers

However, the trader warned, "earnings continue to come in - but people are spoiled. They think that everything is going to continue to knock the cover off the ball."

When that doesn't happen, bonds take a hit. Case in point: Owens Illinois, which last week reported a $1.1 billion quarterly loss.

Standard & Poor's on Wednesday cut the company's corporate credit rating to BB- from BB previously, with a negative outlook; the ratings agency said the downgrade was "reflecting the company's announcement of additional asbestos reserve related charges and a goodwill impairment; its sub par financial profile relative to ratings expectations; and ongoing business challenges that have delayed the expected progress in reducing Owens-Illinois' sizable debt burden."

Owens Illinois 7½% notes were seen at 99 bid, 101 offered, down from 102 bid, 103 offered previously. Its 8¾% notes, recently as high as 110 bid, 111 offered, dipped to 106.5 bid, 108.5 offered.

A trader noted that when the high yield secondary market rally was going great guns during the late summer and then into the fall - and even the early winter - "if you had bad news on something, the market ignored it. Nothing happened. Now you see bad news and BOOOM! It's down five, six, seven, eight points. "

Little by little, he said, "people are unloading the stuff," with many taking profits off the recent market run-up.

"You pick your spots," he continued. "Either you do real well - or you get your butt kicked."

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