Ardagh, Cascades price dual-currency deals; Sprint up on merger talk; funds gain $302 million

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., June 5 – The high-yield primary market saw issues from Ardagh Finance Holdings SA, Cascades Inc. and Southern Star Central Corp., among others, on Thursday, and DFC Global Corp. set price talk for its offerings of $500 million and £150 million of six-year senior secured notes (/B/).

The secondary market looked to be slightly firmer at the end of Thursday’s session.

Some names were getting boosted not by the overall market’s performance but by fresh news. Such was the case with Sprint Nextel Inc., whose bonds were climbing higher following reports claiming a merger deal with T-Mobile is in the works.

Other names climbed into higher territory on no news or catalyst at all. NII Holdings Inc. was one such name, as the company’s debt drove up as much as nearly 3 points on the day.

The KDP High Yield index held steady at 74.9, with a 5.1% yield. The CDX North American High Yield index was up just under half a point at 108 1/16 bid, 108 11/16 offered.

And market sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $302 million more came into those funds than left them in the week ended Wednesday.

Ardagh upsizes

In the primary market, Ardagh Finance Holdings priced an upsized $1.05 billion equivalent dual-currency five-year senior PIK notes transaction (Caa2/CCC+), according to an informed source.

The deal included $710 million of 8 5/8% notes that priced at 99. The coupon came at the tight end of coupon talk in the 8¾% area. The reoffer price came on top of price talk.

Ardagh also priced a €250 million tranche of 8 3/8% notes at 99. The coupon came at the tight end of coupon talk in the 8½% area. The reoffer price came on top of price talk.

The overall deal size was increased from $1 billion equivalent.

Citigroup Global Markets was the bookrunner.

The issuer is a financing subsidiary of Dublin, Ireland-based glass and metal container manufacturer Ardagh Group, which plans to use the proceeds to refinance its 11 1/8% senior secured PIK notes due 2018 and to fund a €73 million shareholder dividend.

Cascades drives by

Cascades priced upsized $550 million and C$250 million tranches of 5½% senior notes (Ba3/B) in a quick-to-market Thursday transaction, according to a syndicate source.

It included an upsized $550 million tranche of eight-year notes that priced at par to yield 5.498%. The tranche was upsized from $500 million. The yield printed at the tight end of the 5½% to 5¾% yield talk.

Wells Fargo Securities LLC was the left bookrunner. BofA Merrill Lynch, CIBC World Markets Corp., RBC Capital Markets LLC and TD Securities (USA) LLC were the joint bookrunners.

Cascades also priced an upsized C$250 million issue of seven-year notes at par to yield 5.499%. The tranche was upsized from C$200 million, and the yield also printed at the tight end of the 5½% to 5¾% yield talk.

For the Canadian dollar-denominated tranche, CIBC World Markets Inc. was the left bookrunner. National Bank Financial Inc., Scotia Capital Inc., TD Securities Inc., BMO Nesbitt Burns Inc. and Wells Fargo Securities were the joint bookrunners.

The Quebec-based manufacturer of green packaging and tissue paper products plans to use the proceeds to repay its existing senior notes due 2016 and 2017 and for general corporate purposes.

Southern Star prices tight

Southern Star Central priced a $450 million issue of eight-year senior notes (Ba1/BB+) at par to yield 5 1/8% on Thursday, according to an informed source.

The yield printed at the tight end of yield talk in the 5¼% area.

RBC Capital Markets was the left bookrunner. BofA Merrill Lynch was the joint bookrunner.

The Owensboro, Ky.-based interstate natural gas pipeline company plans to use the proceeds to repurchase any and all of its 6¾% senior notes due 2016, to repay borrowings under its revolver, to make a distribution to MSIP-SSCC Holdings, LLC and for general corporate purposes.

Michaels taps 5 7/8% notes

Michaels Stores Inc. priced a $250 million add-on to its 5 7/8% senior subordinated notes due Dec. 15, 2020 (Caa1/CCC+) at 102 to yield 5.505% on Thursday, according to a market source.

The reoffer price came at the rich end of the 101.5 to 102 price talk.

Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Barclays, BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, Wells Fargo Securities, Guggenheim and Macquarie managed the quick-to-market sale.

Proceeds will be used to repay debt.

The issuer is an Irving, Texas-based specialty retailer.

Jack Cooper PIK toggles

Jack Cooper priced a restructured $150 million issue of five-year senior PIK toggle notes (Caa2/CCC-) at 98 with a cash yield of 11.06% on Thursday, according to an informed source.

The notes pay a 10½% cash coupon, which increases to 11¼% for interest paid in kind.

The coupons, yield and reoffer price blew out well wide of price talk levels that had the deal coming with a coupon of 9¾% to 10% at 99 to yield 10% to 10¼%.

Wells Fargo was the left bookrunner. Barclays was the joint bookrunner.

In structural changes, call protection was increased to two years from one year. The first call premium remains unchanged at 102.

The equity clawback was also restructured, with the callback premium increased to 105 from 102. The 105 premium kicks in in 2015 and decreases to 103 in 2016.

The issuer will be JCH Parent, Inc.

The Kansas City, Mo.-based transport distribution services provider plans to use the proceeds to pay cash dividends, to make a contribution to Jack Cooper Holdings Corp. for the purpose of repaying bank debt, to make the first interest payment due on the notes and for other general corporate purposes.

$302 million inflow

As activity was finishing up on Thursday, market sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $302 million more came into those funds than left them in the week ended Wednesday.

This week’s addition of funds was the fourth consecutive inflow and came on the heels of the $600 million cash injection reported last week by Arcata, Calif.-based AMG, a unit of the Lipper analytics division of Thomson Reuters Corp., for the seven-day period ended May 28.

Counting the latest week’s results, there have now been 17 inflows seen to the weekly-only reporting funds in the 22 weeks since the start of the year, according to the analysis, against five outflows.

DFC Global price talk

DFC Global set price talk for its offerings of $500 million and £150 million of six-year senior secured notes (/B/) on Thursday, according to an informed source.

The dollar-denominated notes are expected to yield 10½% to 10¾%. The sterling-denominated notes are expected to yield 25 basis points to 50 bps behind the dollar notes.

Books closed at 4 p.m. ET Thursday, and the deal is set to price Friday morning after a shareholder vote.

Jefferies LLC and Credit Suisse are the joint bookrunners for the Rule 144A and Regulation S for life offer.

The notes become callable after three years at par plus 50% of the coupon.

The issuing entity will be DFC Finance Corp.

The bond deal, to help fund the merger of DFC Global with DFC Finance, an affiliate of Lone Star Funds, is set to price after the shareholder vote on the merger scheduled for Friday.

Berwyn, Pa.-based DFC Global is a non-bank provider of alternative financial services.

Sprint up on T-Mobile talk

Sprint Nextel bonds were active and mostly better on Thursday following word that the company is nearing a merger deal with T-Mobile.

A trader called the 6.9% notes due 2019 up over half a point at 111, while the 8¾% notes due 2032 rose a point to 117¼.

However, the 6 7/8% notes due 2028 slipped half a point to 102½, he said.

Late Wednesday, it was reported that Sprint and T-Mobile – the nation’s third- and fourth-largest wireless providers, respectively – were coming to terms on a deal valued at $32 billion. Under the terms of the deal, Overland Park, Kan.-based Sprint would acquire T-Mobile for about $40 per share in a combination of cash and stock.

The deal is expected to be officially announced this summer. But things could still go awry because the merger would have to undergo regulatory scrutiny.

Chatter is that the deal includes a break-up fee of over $1 billion payable to T-Mobile.

AT&T had previously sought to take over T-Mobile, but antitrust regulators killed the deal, stating that the consolidation would give consumers fewer choices.

NII bonds firm

NII Holdings debt was up in fairly active trading, according to a trader.

The 7 5/8% notes due 2021 popped up 2¾ points, the trader said, ending at 31.

He also saw the 10% notes due 2016 rising half a point to 33½.

Another trader said the bonds were “up a bunch,” seeing the 7 5/8% notes at 31 and the 10% notes at 33½.

There was no fresh news out on the Reston, Va.-based provider of Nextel mobile phone services in Latin America and Mexico.

Retail gains

The retail space was firming up as the sector overall was reporting higher sales for the month of May.

One trader saw Sears Holdings Corp.’s 6 5/8% notes due 2018 putting on half a point to close at 92.

Gymboree Corp.’s 9 1/8% notes due 2018 meantime jumped 2½ points to 67½.

Another market source deemed J.C. Penney Co. Inc.’s 5.65% notes due 2020 up a point at 87¼.

For its part, J.C. Penney launched a new $2.35 billion credit facility on Thursday.

According to a Thomson Reuters tracking poll, which watches sales of eight retailers, May retail sales were up 4.6%, helped in part by warmer weather.

It was expected that sales would increase 3.6%.

J. Crew falters

While many retailers were gaining ground, J. Crew Group Inc.’s 7¾% senior PIK toggle notes due 2019 traded down after reporting weak numbers, according to a trader.

He said the issue fell to par from previous levels around 103.

The New York-based retailer reported first-quarter results late Wednesday, showing a 5% gain in net sales but a 2% dip in same-store sales.

Net sales were $592 million.

The net loss widened to $30.1 million from $29.3 million. Adjusted EBITDA fell to $64.8 million from $101 million.

But a serious decline in operating income could result in the company writing down the value of its business. Operating income dropped 54% to $34 million.

J. Crew, which is owned by TPG Capital and Leonard Green & Partners LP, is hoping to launch an initial public offering later this year.

Production Resource downgraded

Production Resource Group Inc.’s 8 7/8% notes due 2019 managed to gain a bit despite getting downgraded by Moody’s Investors Service.

A trader called the issue up a quarter-point at 80.

Moody’s dropped its rating on the notes to Caa2 from Caa1. Additionally, the outlook was revised to negative from stable.

The agency said the action was due to increasing debt levels and weakening liquidity, which could hinder the company’s attempts to address deteriorating operating performance in a way that requires high levels of capital investment.

Production Resource is a supplier of entertainment and event technology.

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