Clean Harbors drives by with add-on; deal up; Intelsat, James River slate, ADS awaits

By Paul Deckelman

New York, Mar. 21 - The slow pace of last week's high-yield primary market seemed to linger on Monday, as only one domestic dollar-denominated deal - a $300 million add-on offering to an existing tranche of bonds from Clean Harbors, Inc. - was heard by syndicate sources to have priced during the session.

When the upsized new deal moved into the aftermarket, it was heard to have moved up by more than a point.

Apart from that, most of the day's primaryside activity was devoted to calendar building.

Intelsat Jackson Holdings SA, a unit of global communications satellite operator Intelsat SA, was heard by syndicate sources to be shopping a $2.65 billion blockbuster of a deal around to investors for pricing possibly as early as Tuesday. The three-part offering includes tranches of eight-, 10- and 12-year notes and could price anytime after the order books close.

From the energy sphere, James River Coal Co. was heard to be hitting the road on Monday with a $250 million eight-year offering. And Crestwood Midstream Partners LP was getting ready to pitch a $200 million eight-year deal to would-be investors

Price talk meantime emerged on defense contractor ADS Tactical Inc., whose $275 million secured deal is expected to close around midday Tuesday.

In Europe, Henderson Group plc priced a smallish sterling deal and Ontex IV SA began a European roadshow for an £805 million offering. And, Kabel BW plans to sell more than €2 billion-equivalent in a four-part euro-and dollar-denominated deal.

Domestic secondary market prices meantime felt firmer and statistical measures seemed to back that up.

But Sprint Nextel Corp.'s bonds and shares swooned on news that would-be Sprint acquisition target T-Mobile opted to go with the larger AT&T rather than combine with Sprint.

Clean Harbors drives by

The only deal pricing in the domestic market on Monday was Clean Harbors' upsized $250 million follow-on offering to its outstanding 7 5/8% senior secured notes due 2016.

The deal - which priced just hours after being announced by the Norwell, Mass.-based provider of environmental, energy, and industrial services - came to market at 104.5 to yield 6.132%, at the tight end of price talk in the 104 to 104.5 area.

Goldman Sachs & Co. and Merrill Lynch ran the books for the deal, which was upsized from the originally announced $200 million.

The company plans to use the net proceeds from the follow-on offering, along with available cash, to fund Clean Harbors' previously announced proposed acquisition of Badger Daylighting Ltd. and related transaction fees and expenses.

Calgary, Alta.-based Badger specializes in hydrovac excavation that safely uncovers buried pipelines, utility conduits and gas mains. Under terms of the deal, announced on Jan. 26, Clean Harbors will pay C$222 million in cash for the company and assume C$25 million of net debt.

Satellite firm launches deal

Apart from the actual pricing, the only real news in Junkbondland's primary on Monday was the slating of several notable deals.

For sheer size, Intelsat Jackson Holdings SA's quickly-shopped $2.65 billion three-part offering of new senior notes took the prize.

Syndicate sources expect the issue to price early Tuesday.

They heard that price talk envisioning a yield of 7% to 7¼% had emerged on the planned eight-year tranche, which will have four years of call protection; talk of 7¼% to 7½% was heard on the 10-year tranche, which will have five years of protection, while the 12-year notes, which will have six years of call protection, were being talked at a yield of 7½% to 7¾%.

Tranche sizes have not been set yet.

, Books on the deal are expected to close at 11 a.m. ET on Tuesday, with pricing expected afterwards.

The deal is being brought to market via bookrunners Barclays Capital Inc., Merrill Lynch, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and Morgan Stanley & Co. Inc.

Luxembourg-based Intelsat Jackson plans to use the deal proceeds, along with cash on hand, to fund tender offers for several series of the company's bonds which were separately announced on Monday.

James River coming to market

Another deal joining the calendar on Monday was James River Escrow Inc., a unit of Richmond, Va.-based coal producer James River Coal Co.

It was heard by junk market primaryside sources preparing to hit the road Tuesday to market a $250 million of eight-year senior notes, with pricing likely to take place on Friday.

Deutsche Bank Securities Inc. and UBS Securities LLC will be bookrunners on the deal.

The company plans to use the bond-deal proceeds, along with those of a concurrently announced convertible note offering, to help fund its previously announced acquisition of International Resource Partners LP, with any remaining proceeds slated for general corporate purposes, which could include acquiring or investing in businesses, or debt repayment.

Energy names active

Another energy operator - albeit in natural gas rather than coal, Houston-based Crestwood Midstream Partners LP said Monday that it plans to sell $200 million eight-year senior notes.

Junk market sources heard Crestwood was preparing for a roadshow to market the deal to investors, starting on Wednesday.

UBS Securities LLC, BNP Paribas Securities Corp., RBC Capital Markets LLC, and RBS Securities Inc. will be joint bookrunners.

The bonds will be issued through Crestwood Midstream Partners LP and Crestwood Midstream Finance Corp. Crestwood plans to use the proceeds from the offering to finance a portion of its recently announced acquisition of midstream assets in the Fayetteville Shale and the Granite Wash plays from Frontier Gas Services for about $338 million.

Market awaits ADS deal

A deal that has been marketed to investors since surfacing last week and that's expected to come down the chute on Tuesday is ADS Tactical Inc.'s $275 million offering of seven-year senior secured notes, which is expected to yield between 10¾% and 11%, according to junk market sources quoted on Monday.

The Virginia Beach, Va.-based defense contractor and equipment supplier to police and fire departments is likely to price its deal in the early afternoon Tuesday, following the closing of the order books around midday, the sources said.

They also heard that the issuer and underwriter J.P. Morgan Securities LLC had agreed to certain covenant changes in order to get the deal done, including the elimination of a special call provision that allows company to redeem 10% of notes annually at 103 during the four-year non-call period following the bonds' issuance.

Another reported change is to set the first-call price at par plus three-quarters of the coupon, rather than the usual par plus half the coupon found on most bonds.

The company plans to use the deal proceeds to repay debt and fund a dividend.

Kabel BW coming with big deal

Away from the domestic market's shores, Germany's Kabel BW was heard by European high yield market sources to have begun marketing a massive €2.25 billion equivalent four-part bond offering as part of the financing for the cable operator's acquisition by U.S. billionaire John Malone's Liberty Global Inc.

While the deal is mostly euro-denominated, the sources heard that it will include a $500 million offering of eight-year fixed-rate notes.

There will also be an €850 million tranche of eight-year fixed-rate paper, a €350 million seven-year floating-rate note component, and a €680 million piece of 10-year fixed-rate notes.

Credit Suisse Securities, J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. will be the bookrunners.

The deal is to be marketed to investors via a short roadshow process on Tuesday and Wednesday in Europe, including London, Paris and Frankfurt, and in the United States.

Rounding out European action

Elsewhere, Belgium-based Ontex IV SA, a manufacturer of private-label disposable diapers and wipes, was heard by European high yield market sources to have hit the road on Monday to begin marketing a €805 million two-part bond offering to investors in Europe.

They said that the offering will consist of a €570 million tranche of seven-year senior secured notes and a €235 million tranche of eight-year senior notes.

Merrill Lynch and Goldman Sachs will be joint bookrunners.

The deal will be marketed to investors in London through Tuesday; the roadshow then shifts to Paris and Frankfurt on Wednesday, and to Amsterdam on Thursday, the sources said.

Ontex plans to use the deal proceeds to repay credit facility borrowings and a vendor loan note.

And Henderson Group plc announced the pricing of £150 million issue of five-year guaranteed notes by its Henderson UK Finance plc unit on Monday.

The notes will carry an interest rate of 7¼% and will be guaranteed by Henderson Group, a global asset management firm based in St. Helier, Jersey.

Joint lead managers for the offering were HSBC Bank plc, Royal Bank of Scotland plc and UBS Ltd.

Proceeds of the deal will be used for general corporate purposes and to assist in meeting the wider group's ongoing debt obligations, the company said.

New Clean Harbors cleans up

A trader quoted the new Clean Harbors 7 5/8% notes due 2016 at 105½ bid, 106 offered - well up from the 104.5 at which the bonds had priced earlier.

A second trader saw the new bonds at that same level.

One of the traders surmised that the company's $300 million of existing 7 5/8% notes - which have been in the market since the summer of 2009 and which trade separately from the new issue, because the two issues have different Cusips - was trading approximately where the new deal came to market Monday.

New Boart bonds little moved

A trader saw Boart Longyear Management Pty Ltd.'s upsized $300 million offering of 10-year notes little-moved from the levels they had held in dealings late Friday after the bonds had priced.

A trader cited the Salt Lake City, Utah-based contract drilling company's new notes at 1013/4, but said he "never saw a right side."

The company's 7% notes due 2021 - upsized from the originally proposed $250 million - had priced on Friday at par, but had moved up to 101½ bid, 102½ offered in the aftermarket - and then just stayed there.

Secondary indicators stronger

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index gain 3/8 point on Monday to end at 103 bid, 103¾ offered, on top of Friday's 7/8 point rise, as the index continued its comeback from the lows hit last week.

The KDP High Yield Daily index meantime continued its own rebound, gaining 6 basis points for a second straight session on Monday to end at 75.65, while its yield came in by 1 bp to finish at 6.74%; the yield had narrowed by 6 bps Friday.

The Merrill Lynch High Yield Master II index rose for a fourth consecutive session on Monday, by 0.169%, on top of Friday's 0.182% gain. That lifted its year-to-date return to 3.583% from Friday's 3.408%, although the index remained behind the 2011 peak level of 3.73%, set on Mar. 9.

Advancing issues led decliners for a third consecutive session on Monday, and continued to hold a nearly seven-to-five edge over the losers.

Overall market activity, as measured by dollar-volume levels, was little changed on Monday, a far cry from Friday's 31% slide from the prior session's level.

"It was not an exciting time," a trader said, noting that most of the dealings were going on in issues like Sprint Nextel which had specific news driving its movements.

Sprint falls on T-Mobile

News that T-Mobile, the fourth-biggest U.S. wireless carrier, had chosen to throw its lot in with industry leader AT&T Corp. rather than try a combination with its nearest sector peer, Overland Park, Kan.-based Sprint Nextel - the Number-3 player in the market, sent the latter's shares and bonds tumbling. Sprint had hoped to build a combination of the two second-tier providers into a formidable foe to challenge the giant AT&T and its close runner-up, Verizon Wireless.

A trader saw Sprint as "the big trading name of the day," with over $100 million of its bonds changing hands at mostly lower levels.

He quoted its 8¾% bonds due 2032 down 4 points on the day at 107 7/8 bid, while its 6 7/8% notes due 2028 lost 3½ to end at 93¾ bid.

Sprint's 6.90% notes due 2019 were down a deuce or more at 105¼ bid, while its 8 3/8% notes due 2017 were likewise off more than 2 points.

The trader said that Sprint had actually traded lower than those levels by a point or two early on as market participants first digested the bitter weekend news, but then came off those lows to finish only down a relative few points from the pre-news levels seen late last week, when it seemed that Sprint could do no wrong in the junk market.

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