Nielsen, Viking Acquisition drive by, Simmons prices too, firms to end busy primary week

By Paul Deckelman

New York, Oct. 29 - The high yield market closed out the week on a very active note, as five deals priced - several of them opportunistic quickly marketed drive-by offerings from issuers looking to take advantage of good market conditions while they can.

In that latter category fell a $330 million add-on offering to its existing debt from New York-based media giant Nielsen Co., which just visited the junk bond market just a few weeks ago. After the additional bonds priced, they were heard to have traded around their issue level.

That was definitely not the case for Viking Acquisition Inc./Global Autocare Inc., whose eight-year deal was on the forward calendar, but had not been expected to price during Friday's session. Yet, there it was, even in upsized form - and after the bonds had moved into the secondary market, they were seen as having firmed smartly from their par issue price.

Simmons Foods Inc., a regular calendar deal, also priced, an upsized issue of seven-year senior secured notes - and when the Fayetteville, Ark.-based poultry producer and pet-food manufacturer's new deal began trading around it moved higher by several points.

There were also euro-denominated deals pricing, from Belgian telecommunications and broadband provider Telenet Group, and from another communications company, Siemens Enterprise Communications.

Away from deals that actually priced, TransDigm Group Inc. revealed plans for a $780 million bond issue as part of a larger financing plan to fund an acquisition. Roofing Supply Group was heard getting ready to hit the road with a seven-year secured bond offering, while talk emerged on Quality Distribution Inc.'s deal, which is expected to price on Monday.

That closed out a week which saw more than $7 billion of dollar-denominated paper come to market, as well as over €1 billion in euro paper.

Simmons prices, shows strength

One of the more notable deals of the day was from Simmons Foods, which priced an upsized $265 million offering of seven-year second-lien senior secured notes (B3/B-) on Friday, according to primary market sources.

The notes priced at par to yield 10½%, at the wide end of price talk heard Thursday calling for a yield of 10¼% to 10½%.

The transaction was upsized from $250 million heard initially.

It came to market via Wells Fargo Securities, LLC and BMO Capital Markets Corp.

Proceeds will be used, along with the funds from an amended and restated senior secured credit facilities, to finance the acquisition of Menu Foods Ltd., a maker of private-label canned pet foods, as well as to repay Menu Foods' senior credit facility and refinance certain other Menu Foods debt.

A trader said that from where he sat, the Simmons deal "was touch and go - a lot of people didn't want to play it - but yet, in a search for coupon, the bonds traded up - to 1031/2."

Indeed, the pet-food maker's new paper was the unlikely star of the session, with several traders seeing the new bonds at those lofty levels as investors went after them like a clowder of cats devouring a fish - a rise made even more notable by the fact, as the trader reiterated, that "a lot of people didn't want to play it."

Viking is victorious

Another strongly trading new-deal, he said, was the Viking Acquisition/Global Autocare offering.

There too, he said, "people didn't think they could get it done - but yield-hungry mongers took it."

Viking, a unit of Avista Capital Partners, a New York-based private-equity company that is in the process of buying out consumer products giant Clorox Co.'s automotive-care products business, Global Autocare, priced an upsized $275 million offering of eight-year senior notes (Caa1/CCC+) on Friday.

The bonds priced par to yield 9¼%, at the tight end of price talk envisioning a yield in the 9¼% to 9½% range.

The deal was upsized from the originally shopped $250 million. The book runners were J.P. Morgan Securities LLC and RBC Capital Markets Corp.

The odd thing was that although the deal had first surfaced on junk participants' radar screens on Monday, nobody was really expecting to see it on Friday - it was nestled deep in the forward calendar, considered to be one of those deals "out on the horizon" somewhere.

But then it was quickly brought to the fore to take advantage of favorable market conditions.

A trader said that that was pretty typical of the way the junk primary has been behaving for some weeks or even months now, with a plethora of rapidly appearing deals springing up from out of nowhere as borrowers try to ride the gravy train and take advantage of the strong demand for bonds, which has been fueled in no small part by the billions of dollars of cash inflows into Junkbondland.

"Everybody is coming with a deal," he said, "because you borrow money when you can - not when you need to."

Strong demand for the new Viking bonds was seen in the aftermarket, where a trader quoted them at 102 bid, 103 offered, well up from their par issue price earlier in the session.

At another desk, those bonds were quoted at 102¼ bid, 102¾ offered.

Nielsen makes a return visit

Another opportunistically timed pricing was seen on Friday from Nielsen Finance LLC and Nielsen Finance Co., wholly owned subsidiaries of New York-based information and media giant Nielsen Co. BV.

They priced a $330 million add-on (Caa1/B/CCC) to the company's recently issued 7¾% senior notes due 2018.

The new bonds priced at 103 to yield 7.119%

They were not seen having moved too much, with a trader pegging the new paper between 103 and 104.

The quickly-shopped offering followed the $750 million of those same bonds which the company priced on Sept. 30. Those original bonds - upsized from the initially planned $500 million - came to market at 99.267 to yield 7 7/8%.

The add-on brings the total amount of those bonds outstanding to $1.08 billion.

While the original Rule 144A bond deal was brought to market by Deutsche Bank Securities Inc., Credit Suisse Securities, Goldman Sachs & Co., J.P. Morgan and Morgan Stanley & Co. Inc., Friday's deal, on the other hand, was brought to market solely by J.P. Morgan.

Nielsen said that the new notes will trade interchangeably with the original $750 million tranche.

Proceeds from the add-on offering will be used to redeem the company's outstanding 10% senior notes due 2014 and 9% senior notes due 2014 in a separately announced transaction.

Telenet deal upsizes

Over on the other side of "the pond," European high yield sources said that Telenet Finance Luxembourg SCA came to market Friday with an upsized €500 million offering of 10-year senior secured notes (Ba3).

The notes priced at par to yield 6 3/8%, inside of price talk which had emerged on Thursday envisioning a yield the area of 6½%.

The issue was upsized from the originally shopped $350 million.

The deal came to market via BNP Paribas Securities Corp. and Credit Suisse, the joint bookrunners for the quick-to-market offering.

The issuers' parent company, Belgian broadband operator Telenet, plans to use the proceeds to repay bank debt and for general corporate purposes.

Siemens is seen

Meanwhile, Siemens Enterprise Communications priced a €200 million offering of five-year first-lien senior secured notes (B3/B-) on Friday, bringing the 10¾% bonds to market at 97.195 to yield 11½%.

The debt, issued by the company's EN Germany Holdings unit, priced in line with price talk which had emerged on Thursday envisioning a yield in the 11½% area, at a discount from par of between 2¾ and 3 points.

The London-based end-to-end enterprise communications provider also agreed to changes in the bonds' covenants and other terms, including the extension of call protection by an additional year to four years rather than the originally planned three.

The deal came to market via left lead bookrunner Jefferies & Co. Inc., as well as UBS Investment Bank and Wells Fargo.

Siemens plans to use the proceeds for general corporate purposes, with a portion to be used to refinance debt and retire contractual obligations.

TransDigm to try the bond market

Back on the domestic front, TransDigm Group Inc. unveiled plans to sell $780 million of senior subordinated notes, as part of a larger overall funding plan by the Cleveland-based aircraft components company to fund a pending acquisition.

TransDigm disclosed its plans for the bond sale and for $1.2 billion in new term loan and revolving credit bank financing in a filing Friday with the Securities and Exchange Commission.

Timing is not set on the bond deal, which is expected to take shape after the bank loan financing. The later funding effort will kick off on Wednesday as TtransDigm meets with its bankers. Credit Suisse, UBS, Barclays and Morgan Stanley, already reported on the bank financing, are also expected to work on the bank deal, a high yield market source said, although no one outfit has been selected as the left-side lead bookrunner yet.

TransDigm plans to use the proceeds from the financing moves to fund the previously announced $1.23 billion acquisition of another aerospace industry company, Irvine, Calif.-based McKechnie Aerospace Holdings, Inc.

Some of the proceeds would also go to pay about $280 million of existing term loan borrowings at TransDigm and refinance its revolver.

Roofing Supply to add to new deal supply

Also heard slating a deal on Friday was Roofing Supply Group LLC and Roofing Supply Finance Inc. Those arms of Roofing Supply Group, a Dallas-based wholesale distributor of roofing supplies to contractors and homebuilders, will begin a road show on Tuesday to market the company's planned $225 million offering of seven-year senior secured notes around to potential investors, high yield syndicate sources said.

That deal is expected to come to market early in the following Nov. 8 week, the sources said.

Deutsche Bank is the left bookrunner on the deal. Also on board as joint books are Goldman Sachs and Jefferies

The company plans to use the proceeds from the deal to repay existing debt.

Talk emerges on Quality Distribution

A high yield primary source heard that Quality Distribution, LLC's and QD Capital Corp.'s planned $225 million offering of eight-year second-priority senior secured notes is expected to produce a yield in the 9¾% area.

The source said that the order books on the deal will be closed on Monday, with pricing expected later that same session.

The notes will come to market via joint bookrunners Credit Suisse, Bank of America Merrill Lynch, RBC and Jefferies.

The issuing parties are units of Quality Distribution, Inc., a Tampa, Fla.-based provider of bulk transportation and related services.

Quality Distribution 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, all of which may be redeemed at par.

Proceeds will also be used to redeem at par sufficient 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.

Earlier new deals hold their own

Traders meantime saw new deals which priced earlier in the week and then moved up strongly continuing to hold those better levels as the week came to a close.

Hexion U.S. Finance Corp. /Hexion Nova Scotia Finance, ULC's new deal, and that of new corporate cousin Momentive Performance Materials Inc. both remained around or above the 104 mark on Friday; Hexion's $440 million of 9% second-priority senior secured notes due 2020 and Momentive's $635 million of 9% springing second-line secured notes due 2021 had both priced at par on Wednesday and then shot right up to around 102¾ bid, 103 offered when they went into secondary, pushing still higher on Thursday and holding those gains on Friday

And a trader likewise saw Denver-based energy E&P operator Berry Petroleum Corp.'s $300 million of 6¾% notes due 2020 continuing to hold the high ground above 103 after pricing at par on Wednesday.

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index unchanged for a second consecutive session on Friday at 100 3/8 bid, 100 5/8 offered.

The index thus ends the week up from 99 7/8 bid 100 1/8 offered at the close on the previous Friday, Oct. 22.

The KDP High Yield Daily index meantime gained 7 basis points Friday to finish at 74.62, after having risen by 4 bps on Thursday. Its yield came in by 3 bps on Friday to 7.14%, after having edged downward by 1 bp on Thursday. On the week, the index showed improvement from the prior Friday's 74.31 reading and 7.23% yield.

The Merrill Lynch High Yield Master II index gained 0.067% on Friday, after having risen by 0.112% on Thursday. The latest advance pushed its year-to-date return up to 14.438%, its seventh consecutive new 2010 peak level, eclipsing the old mark of 14.361% recorded on Thursday. For the week, the Merrill Lynch index rose by 0.582%, versus the prior week's 13.776%.

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