Rite Aid, Terra, ViaSat price deals, new bonds firmer; CIT up after Icahn news; Tronox down

By Paul Deckelman and Paul A. Harris

New York, Oct. 19 - Rite Aid Corp. and Terra Capital Inc. priced a pair of quickly shopped bond deals on Monday, with the offerings coming to market just a few hours after the bond sales were announced, and then trading firmer when they reached the aftermarket. Rite Aid, the more familiar bond market name, did its upsized deal as one of several moves announced Monday to finish off its previously announced efforts to completely refinance all of its 2010 debt.

Traders saw the new Rite Aid and Terra bonds firming when they were freed for aftermarket dealings.

Also pricing on Monday was an upsized offering from ViaSat, Inc. - which was actually moved up a little from the originally anticipated mid-week pricing.

Elsewhere in the primary sphere, Navios Maritime Finance (US) Inc., a unit of Greek shipping company Navios Maritime Holdings Inc., announced plans to sell $375 million of eight-year notes secured by mortgages against certain ships owned by its subsidiaries. Pricing is expected late in the week.

Pre-deal market price talk was meantime heard on MDC Partners Inc.'s issue of seven-year notes that is expected to price after the books close on Tuesday, and on Headwaters Inc.'s five-year senior secured offering.

Besides the new Rite Aid and Terra deals - ViaSat emerged too late in the day for any kind of aftermarket - recently priced deals from Trico Shipping AS and Talecris Biotherapeutics Holdings Corp. were seen hanging onto the gains which they notched after their Friday pricings.

Away from the new-deal market, CIT Group Inc.'s bonds were seen mostly firmer as investors sifted through the latest news about the troubled New York-based commercial lender, including management's changes in its previously announced exchange offer for some $29 billion of existing debt, and big bondholder Carl Icahn's alternative offer of a $6 billion loan to the company.

Tronox Worldwide LLC - whose bonds had shot up dramatically earlier in the month, only to start coming off their highs late last week - continued to head south on Monday.

Terra at tight end of talk

In the high-yield primary, Terra Capital priced a $600 million issue of 7¾% 10-year senior notes (B1) at 98.298 to yield 8% on Monday, according to market sources.

The yield printed at the tight end of the 8% to 8¼% yield talk. The reoffer price came slightly rich to the approximately 2 points of discount talk.

Credit Suisse and Citigroup ran the books for the quick-to-market deal.

Proceeds will be used to purchase the company's 7% notes due 2017, pay a cash dividend and/or consummate some acquisitions.

ViaSat tight to talk

ViaSat priced an upsized $275 million issue of 8 7/8% seven-year senior notes (B1/B) at 98.757 to yield 9 1/8% on Monday.

The yield printed at the tight end of the 9¼% area yield talk, while the issue price came in line with discount talk of up to 2 points. The amount was increased from $250 million.

J.P. Morgan Securities Inc., Banc of America Securities LLC and Wells Fargo Securities, LLC were joint bookrunners for the quick-to-market deal.

Proceeds will be used for general corporate purposes, which may include financing costs related to the purchase, launch and operation of the company's ViaSat-1 satellite, other potential acquisitions, working capital or capital expenditures.

Rite Aid upsizes

Rite Aid priced an upsized $270 million issue of 10¼% 10-year senior secured notes (Caa2/B-) at 99.242 to yield 10 3/8%.

The yield printed at the tight end of the 10 3/8% to 10½% price talk. Rite Aid raised the size from $250 million.

Citigroup, Bank of America Merrill Lynch, Goldman Sachs & Co., and Wells Fargo Securities were joint bookrunners for the quick-to-market deal.

The Camp Hill, Pa.-based drugstore company will use the proceeds to help refinance its first- and second-lien accounts receivable securitization facilities due September 2010.

Tuesday deals

Headwaters Inc. set price talk for its $280 million offering of five-year senior secured notes (B2/B+) at the 11¾% area with 2 to 3 points of original issue discount on Monday.

Books close at 3 p.m. ET on Tuesday, except for the accounts meeting with management on Tuesday. Pricing is expected to take place by the end of the Tuesday session.

The Rule 144A and Regulation S deal is being led by joint bookrunners Deutsche Bank Securities Inc., Morgan Stanley & Co. Inc. and Bank of America Merrill Lynch.

Elsewhere MDC Partners Inc. set price talk on its $200 million offering of seven-year senior unsecured notes B2/BB-) at an 11% coupon to yield in the 12% area.

The deal size could grow to $225 million, the source added.

The order books close at 10 a.m. ET on Tuesday, with pricing expected after that.

Goldman Sachs & Co. has the books.

Proceeds will be used to repay the company's senior secured credit facility maturing on June 17, 2012, to redeem its C$45 million of 8% convertible debentures due June 2010 and for general corporate purposes.

Navios to bring $375 million

Greece-based Navios Maritime Holdings Inc. plans to price $375 million of eight-year first-priority ship mortgage notes late this week.

The issue, which will come via financing unit Navios Maritime Finance (US) Inc., is expected to garner weak double-B ratings.

Banc of America Merrill Lynch and JP Morgan are joint bookrunners.

Proceeds will be used to repay bank debt and purchase vessels. The company will set up a $105 million escrow account to purchase the vessels, which are expected to be delivered during the second quarter of 2010.

New Terra notes trade up

A trader said that "all of the new issues did well" when they passed over to the secondary arena.

He saw Terra Capital's new 7¾% notes due 2019 at par bid, 101 offered - up solidly from the 98.298 level at which the Sioux City, Iowa-based chemical fertilizer company's $600 million issue priced to yield 8%.

Another trader saw the bonds at 100 3/8 bid, 100¾ offered.

"Once they came out of the box" after pricing, he said, he had seen them at par bid, 101 offered, "and then they just tightened in from there."

Existing Terra bonds little moved on deal

However, he said that the company's existing $330 million of 7% notes due 2017 - which are to be taken out using a portion of the proceeds from the new issue - did not trade on news of the new deal.

However, he said, those bonds had already had their move last week, when they jumped to around the 115¼ level on Wednesday from 104¾ previously.

"News probably came out on or around Oct. 14, and the issue traded up, with a few million in a 1151/4-115¾ range."

Sure enough, on Oct. 13, Terra - which had previously announced a tender offer for all of the 7% notes and the solicitation of indenture amendment consents from their holders - announced that it had upped the consideration it would pay for the notes to $1,153.75 per $1,000 principal amount from the original total consideration of $1,045 per $1,000 principal amount, causing the bonds to shoot up to the new tender price the next day.

New Rite Aid rises from issue

A trader saw the new Rite Aid 10¼% senior secured notes due 2019 at par bid, 101 offered, versus the 99.24 level at which the $270 million of new paper priced earlier in the session.

At another desk, however, a trader said that he had not seen any aftermarket in the Rite Aid bonds.

Existing Rite Aid bonds busily traded

Among the company's already established issues , a trader saw "plenty of activity " on the news of the new secured notes deal, which along with some modifications to its loans essentially completes its refinancing of debt originally due in 2010.

Rite Aid, he said "was quoted all day long, very active because of that deal."

He said Rite Aid's 10 3/8% notes due 2016 were "pretty much unchanged" around 101½ bid, 102 offered, while the company's 9½% notes due 2017 were trading around 83-84 and ending up around a point at 84. "There was decent activity in those," he said.

Another trader - while stopping short of calling the Camp Hill, Pa.-based Number-Three U.S. drugstore chain operator's bonds "the name of the morning," observed that "there was a lot of activity in them."

He saw the 91/2s "slowly move up" from lows around 82 bid early in the session to highs around 84 7/8, before going out around 841/2. He said the issue was active, with around $18 million traded.

Other Rite Aid issues were less busy; that trader saw its 9 3/8% notes due 2015, for instance moving between a low of 84¾ and a high of 851/2, but on only $3 million traded.

A market source said that Rite Aid's 8 5/8% notes due 2015 were up more than a point at just above the 84 level.

Another source, who saw those bonds finishing at that same level, called the advance a nearly 2 point gain.

Rite Aid said that it plans to use the proceeds of the bond deal, along with a $300 million credit facility addition, and revolver borrowings, to repay and cancel the company's $475 million outstanding under its accounts receivable securitization facilities.

Taking out that debt is the final step in Rite Aid's plan, announced earlier this year, to be rid of all of its 2010 maturities.

The company announced on June 29 that following several financial transactions it had successfully completed the refinancing of most of the September 2010 debt maturities, including its $145 million term loan and $1.75 billion senior secured revolving credit facility. Among the debt which the company incurred at that time was $410 million in new 9¾% first lien senior secured notes due 2016, the proceeds of which were used to repay existing revolving loans.

New Trico, Talecris issues stay firm

The new ViaSat 8 7/8% notes due 2016 came too late in the day for aftermarket activity.

However, traders reported continued strength in two of the new deals which had priced on Friday, for Trico Shipping and Talecris Biotherapeutics Holdings.

Trico's $400 million of 11 7/8% senior secured notes due 2014 were seen by a trader to have continued firming on Monday to 102 bid, 103 offered.

The Woodlands, Tex.-based provider of maritime services to the energy industry had priced those bonds on Friday at 96.393, to yield 12 7/8%, and they had shot up to levels as high as 101¾ bid, 102¼ offered in initial secondary market activity later that session.

Research Triangle Park, N.C.-based biotechnology company Talecris' new 7¾% notes due 2016 were meantime seen by a trader at 101½ bid, 102½ offered - around the level to which those bonds had risen Friday after the company had priced its $600 million offering of the notes, upsized from $550 million originally, at 99.321 to yield 7 7/8%.

Market indicators point higher

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index up ½ point on Monday at 94½ bid, 95 offered, after having finished about unchanged on Friday.

Meanwhile, the KDP High Yield Daily Index rose by 14 basis points on Monday to end at 69.64, after having risen 8 bps in Friday's dealings. Its yield narrowed by 4 bps, to 8.59% on Monday, after having come in by 1 bp the session before.

In the broader market, advancing issues bounced back from Friday's losing session to lead decliners by an eight-to-five margin.

Overall market activity, as measured by dollar-volume levels, fell about 16% from Friday's pace.

CIT seen better after Icahn news

A trader said that CIT Group Inc.'s bonds "jumped up a couple of points" when the news of Carl Icahn's alternative offer to the company hit the market, and remained higher.

He saw the company's short paper, like its 4 1/8% notes coming due on Nov. 3 and its 6 7/8% notes maturing Nov. 1 having started "right around 70. There was a lot of trading in the 6 7/8s."

He saw the latter bond ending in a 72-73 range, which he called up 3 or 4 points.

He also saw the 7 5/8% notes due 2012 quoted higher, pegging them in a 64-65 context, which he called up a point or so, but he said he "didn't see a lot of volume in that one at all. The shorter end is what moves the most."

The trader saw the CIT Group Funding Co. of Canada 5.60% notes due 2011 "plenty active", with between $15 million and $20 million having traded at levels in the 80s; he saw the bonds trading in a range of 87-88, with most trades around 88, which he called up 5 points on the day.

A second trader said that he "would have thought" that CIT would be a major market feature on the news, "but for some reason," it wasn't a focus where he was. He saw a lot of small pieces trading on a bid-wanted basis.

However, he said the 4¾% notes due 2010 did see at least $15 million of turnover. While they traded at 67½ in the morning - up about 3½ points from Friday's close at 64 - the bonds came back down off the highs to end around 66.

He saw the CIT Canada 5.60s, which had turnover of about $14 million, trade up to 88-88½ "first thing this morning," and then stay in an 871/2-88½ range all day - up from 86½ on Friday afternoon and 851/4-85¾ last Wednesday.

The billionaire investor - CIT's biggest bondholder - attacked as "incompetent and unconscionable" the company's official borrowing plan, saying CIT was "shamelessly offering certain large unsecured bondholders the opportunity to purchase $6 billion in secured loans in the company at well below fair market value," while shutting out smaller bondholders from participating in the loan and forcing them to go along with the scheme by using what he called "Tammany" tactics reminiscent of the heavy-handed political machine that controlled New York City for the better part of a century.

Icahn said he would offer the same kind of $6 billion lifeline to the company - but at half of the estimated $300 million cost that the current proposal carries. Icahn said that his proposal would let bondholders reject the current debt-exchange proposal as well as the company's alternative pre-packaged bankruptcy plan.

However, some analysts said that Icahn's plan of loaning the company money so it can pay its short-term debts, but still be obligated for his loan, would not do anything towards cutting the overall debt load.

Tronox trades lower

A trader saw Tronox Worldwide LLC's 9½% notes due 2012 in the low 60s - down from the mid-60s levels seen last week - on "some activity." He pegged the bonds in a 60-62 range, with trades around 60 down 3½ points from last week's close. He saw "decent activity" in the credit.

Another trader agreed that Tronox "seemed to be coming in today," on "pretty good volume," swinging between a low of 58½ bid and a high of 611/2.

The bankrupt Oklahoma City-based chemical pigment producer's bonds had been the junk market's recent big success story. They had shot strongly higher since it released favorable financial projections after the close on Oct. 7, jumping over 10 points the following day, to the upper 40s, and then adding almost 20 additional points after that, moving into the mid 60s, over the course of several sessions after that.

But that strong advance seemed to have stalled out around the middle of last week, and the bonds began to gradually come down from their zenith.

The issue, the second trader observed, had "caught up with itself."

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