Restructured Berry Plastics deal prices, Netflix slates, Viasystems expected; secondary sinks

By Paul Deckelman and Paul A. Harris

New York, Oct. 28 - Berry Plastics Corp. priced a restructured $625 million two-part secured junk bond offering on Wednesday after doing some tinkering around with the relative sizes of the deal's two tranches.

Also in the new-deal arena, Netflix Inc. announced plans to sell $200 million of eight-year senior notes. High yield syndicate sources saw the Los Gatos, Calif.-based mail-order DVD rental company beginning a roadshow for the deal on Thursday.

They meantime heard that St. Louis-based electronic components manufacturer Viasystems Group Inc. - which announced a tender offer for its 10½% senior subordinated notes due 2011 - is likely to tap the junk market for $200 million to fund that transaction.

Pre-deal market price talk emerged on Associated Materials LLC/Associated Materials Finance Inc.'s $200 million offering of secured notes, which is expected to price on Thursday.

Primaryside players were bracing themselves for a slew of other deals besides the Associated Materials offering which are expected to come to market Thursday - from Reynolds Group, GCI Inc. and Potlatch Corp.

With the junk market generally lower on Wednesday, several recently priced issues were seen having come off somewhat from the levels they had previously held, including Tuesday's issue from Universal City Development Partners LTD and last Thursday's Navistar International Corp.

Apart from the new-deal names, traders saw the secondary market generally lower. There was a fair amount of activity - though little real price action - in CIT Group Inc., ahead of Thursday's scheduled end of the troubled New York commercial lenders big exchange offer for its current bonds.

Berry restructures deal

Berry Plastics priced $620 million of notes in a restructured two-part deal on Wednesday.

Final terms saw a $45 million face amount shifted to the first priority notes tranche from the second priority tranche.

The transaction included an upsized $370 million issue of 8¼% first priority senior secured notes (B1/B) which priced at 98.841 to yield 8½%. The yield printed at the wide end of the 8¼% to 8½% price talk. The tranche was upsized from $325 million.

The company also priced a downsized $250 million tranche of 8 7/8% second priority senior secured mirror notes due Sept. 15, 2014 at 92.25 to yield 10.974%. The deal came cheap to the 93.25 price talk. The second priority tranche was downsized from $295 million.

Bank of America Merrill Lynch and Barclays Capital Inc. were joint bookrunners.

Proceeds will be used to fund the company's acquisition of Pliant Corp.

Associated Materials talks $200 million

Elsewhere, a busy Thursday session in the high-yield primary continued to take shape.

Associated Materials set price talk for its $200 million offering of seven-year senior secured second-lien notes at 10% to 10¼%.

Meanwhile the Dallas-based building materials company also decreased the call protection to three years from four years.

Pricing is expected on Thursday morning.

J.P. Morgan Securities Inc., UBS Investment Bank and Wells Fargo Securities are joint bookrunners for the debt refinancing deal.

Associated Materials takes a place alongside three additional deals that are expected to price on Thursday.

GCI Inc. set price talk for its $400 million offering of 10-year senior notes (B2/existing B-) at 8½% to 8¾% on Tuesday.

Deutsche Bank Securities Inc., Calyon Securities, Morgan Stanley & Co. and RBC Capital Markets Corp. are joint bookrunners for the debt refinancing.

Reynolds Group also set price talk for its $1.8 billion equivalent two-part offering of seven-year senior secured notes at 7¾% to 8% with zero to 1 point of original issue discount on Tuesday.

The planned tranche sizes are $1.125 billion and €450 million.

Credit Suisse is the bookrunner for the acquisition financing.

Also expected to price Thursday is Potlatch Corp.'s $150 million offering of 10-year senior notes (Ba1/BB), a debt refinancing and general corporate purposed deal being led by Bank of America Merrill Lynch and Goldman Sachs & Co.

Netflix to roadshow $200 million

Meanwhile Netflix will begin a brief roadshow on Thursday for a $200 million offering of eight-year senior unsecured notes (Ba2/BB-).

The roadshow wraps up Monday, and the deal is expected to price Tuesday.

JP Morgan has the books.

Proceeds will be used to terminate the Los Gatos, Calif.-based movie rental company's credit facilities, and for general corporate purposes.

Berry too late for aftermarket

The new two-part Berry Plastics issue priced too late in the day for any kind of an aftermarket, traders said.

However, the Evansville, Ind.-based plastic container and packaging materials company's existing 8 7/8% notes due 2014 were fairly active, with a market source seeing more than $10 million of the bonds having changed hands by the mid-afternoon.

A trader said there were "a lot" of dealings in the bond on Wednesday. He saw them open the day around 95 bid, and fall as low as 94¼ bid, before coming back from that nadir to end at 941/2.

"It didn't fall off too much from the early levels," he said - although the bonds were trading well below the 961/4-97 context in which they had been trading at the beginning of the week, though on sparse dealings.

Another trader also saw the existing Berry bonds trading between 94¼ and 95, calling them down 1 to 1½ points from their Tuesday levels.

He saw $20 million of the existing credit changing hands.

GMAC unchanged to higher on deal

The news that consumer lender GMAC LLC had sold a $2.9 billion offering of three year notes guaranteed by the Federal Deposit Insurance Corp. caused some activity in the company's existing bonds. A trader saw its 6¾% notes due 2014 in a 90-92 range, after having been offered on Tuesday in the high 80s, so "yes, they are up from [Tuesday]."

However, he saw GMAC's 7¼% notes due 2011, its most actively traded issue, trading around 98 versus 98½ last week.

At another shop, a market source quoted GMAC's 6 7/8% notes due 2012 up about 2 points to the 94 level.

New Universal bonds seen easier

A trader said that both tranches of Universal City Development Partners' $625 million deal, which priced on Tuesday, were lower on the day.

He said that late in the afternoon, its new 8 7/8% senior notes due 2015 were in about a point on the session, at 98 1/8 bid, 98 5/8 offered, "in from [Tuesday] night's levels."

However, he added that he "did not see a lot in that name."

At another desk, a trader said the new Universal Orlando 8 7/8s had retreated ¾ point on the day, seeing them at 97½ bid, 98½ offered, down from 98¾ bid, 99½ on Tuesday. The company had priced $400 million of those bonds on Tuesday at 98.856 to yield 9 1/8%, and the y had gotten as good as par bid in initial aftermarket action.

The trader meanwhile saw Universal's 10 3/8% senior subordinated notes due 2016 at par bid, 100½ offered, which he called down ½ point. That $225 million tranche of bonds had priced Tuesday at 98.796 to yield 11 1/8%, and the bonds had risen as high as a 101 bid level later that session after they had been freed.

Freedom Group gains

A trader saw Freedom Group Inc.'s 10¼% senior secured notes due 2015 offered at 107 "first thing this morning," versus the 106¼ at which the Madison, N.C.-based firearms manufacturer's $75 million add-on deal priced on Tuesday to yield 8.61%.

After that initial quote, he did not see the issue again, speculating that "it's the kind of credit that gets put away," particularly because both the add-on offering as well as the $200 million of original bonds which priced in July are small, illiquid deals not likely to trade much.

Navistar lower

A trader saw Navistar International's 8¼% notes due 2021 trading down on the day, in line with the generally easier market.

He quoted the bonds having eased from the day's highs around 973/4, seeing them in a context of 97-97¾ and going out around 97½ at the last trade.

A second trader saw the Warrenville, Ill.-based truck and bus maker's 97¾ bid get hit, and saw the bonds trading on the day between 97¼ and 98.

He noted that as has been the case since the $1 billion issue priced on a week ago at 96.328 to yield 8¾%, it has been busily traded -- $91 million changing hands last Friday alone - and Wednesday was no exception. He estimated turnover, according to the Trace bond-tracking system, of at least $35 million, putting it at Number One on the Most Actives list - and added that the real volume might actually be significantly higher, since Trace tends to categorize all trades of more than $1 million and less than $5 million as $1 million-plus.

Market indicators lose ground

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index down a full point on Wednesday at 92 bid, 92½ offered, after having eased by 5/8 point on Tuesday.

Meanwhile, the KDP High Yield Daily Index fell by 29 basis points on Wednesday to end at 69.60, after having lost 23 bps in Tuesday's dealings. Its yield gapped upward by 10 bps to 8.63%, after having held steady the previous session.

In the broader market, advancing issues fell behind decliners Wednesday by around a nine-to-five margin, breaking a two-session winning streak.

Overall market activity, as measured by dollar-volume levels, was up 1% from Tuesday's pace.

A trader described Wednesday's dealings as "sort of boring today."

A second agreed that it was "kind of a dull day, in terms of the whole." He added that the market was "a little softer, across the board" while at another shop, a trader called Wednesday's market "down pretty good," estimating the market down by at least a point.

"A lot of the activity was two-sided," said yet another trader. "Over the last couple of months, if it was a halfway decent offering, it was being lifted, but today, if it was a bid, it was getting hit. We saw that throughout the day. You pick the name - if there was a two-sided market, the bid was getting hit."

Everyone," he continued, "decided to sell," and "bids were getting hit left and right."

He estimated the overall market was down "a point, 11/2, two [points]."

CIT action quieting down

CIT Group's notes saw some action, but "not as much as you might think," a trader said.

The trader said the 7 5/8% notes due 2012 were the credit's most active issue - but only on about $10 million traded - trading around 65.

"That's about the same as they have been, maybe slightly better than yesterday," he said.

At another desk, a trader agreed that there was "not quite as much activity" in CIT. He speculated that any action going on was simply people moving things around ahead of the tender offer deadline on Thursday.

He noted that long-dated paper remained in the mid-60s.

The New York-based lender announced that it had expanded its existing $3 billion senior secured credit facility by $4.5 billion. The new portion of the loan - which was provided by a group including some CIT bondholders - will be secured by substantially the same assets as the original tranche, the company said in a press release. The facility comes due January 2012, but can be extended for another year.

"We believe this secured financing will serve the best interests of all stakeholders and will allow us to better position CIT for the future," said Jeffrey M. Peek, chairman and CEO, in the statement. "This expanded credit facility will allow us to continue to serve our existing small business and middle market customers as we advance our restructuring plan."

CIT also continued to fan the flame that burns between the company and billionaire investor Carl Icahn. In the release, CIT said it had received a commitment letter from Icahn for the entire $4.5 billion loan, but elected not to go that route.

"Although Mr. Icahn and his advisors had been in discussions with the company for several days and were fully aware of CIT's deadline, they provided the company less than one hour to review and accept his commitment letter," the release said.

"Additionally, despite several requests from the company for information and multiple deadline extensions, the company has yet to receive a signed credit agreement and evidence of Mr. Icahn's ability to fund the commitment.

"As a result of the lack of evidence that Mr. Icahn has arranged sufficient funding at this time, CIT's board of directors determined that the best interests of the company and its stakeholders would be served by proceeding with the credit facility provided by a diverse group of lenders."

Among other names in the financial realm, First Data Corp.'s 9 7/8% notes due 2015 lost "another point," a trader said to around 92. He added that the paper had lost about 5 points in the last eight days.

Stephanie N. Rotondo contributed to this report

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