Heckmann, Wind, Inmarsat price; Crown Castle shelves deal, bonds fall; Burger King sizzles

By Paul Deckelman and Paul A. Harris

New York, April 4- The high-yield primary market saw three deals totaling more than $800 million price on Wednesday - while a fourth, itself worth $1 billion, fell by the wayside.

The latter was from communications antenna tower operator Crown Castle International Corp., which announced the postponement of its planned 10-year mega-deal, which had been expected to price during the session. The company cited market conditions, and also said that it was scrubbing its just-announced tender offer for its existing 2015 bonds, which was going to be funded using the new issue proceeds. Those existing bonds, which had gained solidly on Tuesday on the tender news, gave it all back on Wednesday.

While that drama was playing out, three other deals did in fact come to market.

Heckmann Corp., a provider of environmental and other water services to the energy industry, priced $250 million of six-year notes in a scheduled forward calendar deal. The new bonds "didn't go anywhere" when they hit the aftermarket, a trader said.

A financing unit of Wind Telecom SpA, the Italian telecommunications company, priced a $400 million tranche mirroring its existing dollar-denominated 2018 notes, part of a larger €504 million equivalent two-part deal which also included a euro-denominated mirror to an existing issue. The dollar bonds were heard to have moved up modestly in the secondary.

From that same telecom sphere, a unit of British satellite communications provider Inmarsat plc launched a quickly shopped $200 million add-on to its existing 2017 notes. Those bonds were not seen in the aftermarket.

Traders saw solid gains of anywhere from 2 to 4 points at various times in the new bonds of educational materials provider Cengage Learning Acquisitions Inc. That upsized $725 million offering of eight-year secured notes had priced very late in the session on Tuesday. The company's existing bonds, which have recently gyrated amid investor uncertainty about the fate of the new deal, were seen better Wednesday now that that transaction has actually taken place.

Away from the new deals, traders saw king-sized gains in the bonds of Burger King Holdings, Inc., which were pushed up on the news the fast-food restaurant company plans to re-enter the public equity markets that it left when it went private in late 2010.

Statistical market performance measures were down across the board.

Activity was heard to be dwindling ahead of Thursday, the last full trading session before the scheduled early market close on Friday.

Wind prices dual-currency deal

Against the backdrop of a selloff in the stock market, three issuers brought a combined three tranches of notes, raising a total of $930 million during the Wednesday session in the dollar-denominated primary market.

Italy's Wind Acquisition Finance SA priced €504 million equivalent of mirror notes due Feb. 15, 2018 (Ba3/BB) on Wednesday, according to market sources.

In the dollar-denominated piece, Wind priced a $400 million tranche 7¼% notes at 92.181 to yield 9%. The reoffer price came toward the cheap end of the 92 to 93 price talk.

The deal also included a €200 million tranche of 7 3/8% notes which priced at 90.121 to yield 9 5/8%. The reoffer price came toward the cheap end of the 90 to 91 price talk.

Deutsche Bank, BNP Paribas and Banca IMI were joint global coordinators and joint bookrunners. Barclays, Credit Suisse, ING and SG CIB were joint bookrunners.

The mirror notes will not be fungible with the existing issues.

The telecommunications firm plans to use the proceeds to repay debt incurred to fund the acquisition of spectrum in an auction and for general corporate purposes.

In November 2010 the company priced €1.75 billion of the 7 3/8% notes at 99.327 to yield 7½% and $1.3 billion of the 7¼% notes at 99.323 to yield 7 3/8%.

Heckmann wide of talk

Heckmann priced a $250 million issue of 9 7/8% senior notes due April 15, 2018 (Caa1/B-) at 99.442 to yield 10%.

The yield printed 50 basis points higher than the wide end of the 9¼% to 9½% yield talk.

There were 36 accounts in the book, according to an investor who played the deal. The source added that it struggled somewhat.

"When you play a deal like this you do so knowing that you're going to own the bonds," the buysider remarked.

Jefferies was the left bookrunner. Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC were joint bookrunners.

Proceeds, along with proceeds from a concurrent equity offering, will be used to finance Heckmann's acquisition of Thermo Fluids Inc.

Heckmann is a Coraopolis, Pa.-based provider of water solutions for the oil and gas exploration and production industry. In addition the company provides environmental services and waste recycling solutions.

Inmarsat taps 7 3/8% notes

Inmarsat Finance plc priced a $200 million add-on to its 7 3/8% senior notes due Dec. 1, 2017 (Ba2/BB+) at 106.

The reoffer price came at the rich end of the 105.5 to 106 price talk and resulted in a 5.529% yield to worst.

Credit Suisse and Barclays were joint global coordinators and lead bookrunners.

Crédit Agricole, Mizuho, RBC and Royal Bank of Scotland were joint bookrunners.

Proceeds will be used for general corporate purposes.

The original $650 million issue priced at 99.256 to yield 7½% in November 2009.

Crown Castle postpones

Crown Castle International announced Wednesday that in light of current capital market conditions it has decided not to proceed with its previously announced $1 billion offering of 10-year senior notes (B1/B-).

The quick-to-market deal had been talked to yield 5½% to 5¾%, and was scheduled to price on Wednesday.

"People may be getting a little bit weary of long-maturity five-handle deals when there are growing expectations that we could see rising rates," a high-yield mutual fund manager remarked on Crown Castle's postponement announcement.

Morgan Stanley, Bank of America Merrill Lynch, RBS, SunTrust, TD, Barclays, Credit Agricole, J.P. Morgan, RBC, Citigroup, Deutsche Bank and Mitsubishi were the joint bookrunners.

The Houston-based owner, operator and leaser of towers and other infrastructure for wireless communications had planned to use the proceeds to finance a tender offer for its 9% notes and to redeem any notes that remained outstanding after the expiration of the tender offer.

Crown Castle also announced in the Wednesday press release that it terminated the tender offer.

HD books closed

The order books are closed on the bond tranches of HD Supply, Inc.'s $2,625,000,000 of new bond and bank debt, said a buyside source shortly after Wednesday's close.

There had been some discussion about the deal's covenants, the source added.

Pricing is set for Thursday.

The deal features $1.85 billion of debt that will come in the form of a term loan B and seven-year senior secured first-priority notes, which come with three years of call protection.

The notes (B2/B+) are talked to yield 8% to 8¼%.

The loan and first-priority notes tranches, the sizes of which remain to be determined, are being led by joint bookrunners Bank of America Merrill Lynch, Goldman Sachs, Barclays, J.P. Morgan, Credit Suisse, Deutsche Bank, Wells Fargo and UBS.

In addition HD Supply is offering $775 million of eight-year senior secured second-priority notes (Caa1/CCC+), which come with four years of call protection.

Talk on the second-priority notes is in the 10¾% area.

On the second-lien tranche Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital, JPMorgan, Credit Suisse, Deutsche Bank, Wells Fargo and UBS are the joint bookrunners.

Proceeds from the Rule 144A and Regulation S with registration rights notes and the new term loan B will be used to refinance HD's 12% senior notes due 2014, its ABL credit facility and its existing senior secured term loan.

The only other deal expected to price on Thursday is the Nesco, LLC $275 million offering of senior secured notes due April 15, 2017 (Caa1/B-).

Bank of America Merrill Lynch, Wells Fargo, PNC, Morgan Stanley, Jefferies and Deutsche Bank are the joint bookrunners.

Proceeds will be used to refinance the interim credit facility used to fund Platinum Equity's acquisition of Nesco, as well as to repay borrowings under the company's ABL facility and to fund a special dividend to shareholders.

Not a heckuva lot of movement

When the new Heckmann six-year bonds were freed for secondary dealings, a trader said "they didn't go anywhere," seeing them trading right around their 99.442 issue price.

A second trader saw "a little bit" of movement, pegging the bonds in a 99½ to par context, "so they were up slightly, but not huge."

Yet another trader said that with the overall quiet junk market, "if $10 million [of Heckmann] traded, I would be surprised."

Wind gains slightly

A trader said that Wind Acquisition Finance's dollar-denominated 2018 notes were trading at 93 bid, 93½ offered.

That was up from the 92.181 level where the Italian telecommunications company had priced its $400 million mirror tranche.

However, a trader at another desk said he had not seen any signs of those bonds in the aftermarket.

Another secondary no-show, he said, was the Inmarsat add-on deal; the British satellite telecom company's quickly-shopped $200 million deal had priced earlier at 106.

Cengage seen solid

Tuesday's lone new deal, from Stamford, Conn.-based educational print and digital materials provider Cengage, was seen to have traded several points up from the par level where those 11½% first-lien senior secured notes due 2020 had priced.

The issue, originally announced at $575 million back on March 23, was heard by syndicate sources a week later to have been downsized to $525 million; then on Tuesday, it was heard to have been upsized to somewhere between $650 million and $700 million, while revised, tighter price talk was issued. The issue finally priced later Tuesday at the tight end of the revised talk, upsized again to $725 million.

A trader on Wednesday saw the bonds at 103 bid, 103½ offered.

A second trader said the deal "did really well," quoting the bonds as having moved as high as the 104 bid level.

However, at another desk, a trader said that even though that deal priced fairly late in Tuesday's session, there was a little bit of an aftermarket at that time at 102 bid, 102½ offered, and said that he saw "nothing today" in the credit.

And still another trader also quoted the bonds with a 102 handle.

Existing Cengage gains also

Meanwhile, the company's existing 10½% notes due 2015 - which had been gyrating around on Tuesday amid investor uncertainty about whether the new deal would in fact price, given all of the upsizings and downsizings - benefitted from having the matter settled once and for all with the pricing.

A trader saw them trading in a 77 to 80 bid range, and said that the bonds "were up 5 to 6 points from earlier in the week.

However he added that "a few weeks earlier, they had been in the mid-80s. So those things have been gyrating all over the place."

A second trader said the notes were at 77 bid, 78 offered, versus levels around 76 on Tuesday, when the bonds had gone as low as 72½ bid before moving back up once it became apparent that the new deal would actually be priced.

Crown gets crushed as deal dies

Traders said that the news that Crown Castle International had postponed its planned $1 billion offering of 10-year notes kicked the legs out from under the company's existing 9% notes due 2015, which had firmed smartly on Tuesday when the bond deal - and the separate tender offer for those 9% bonds that the deal proceeds were going to fund - were first announced.

A trader said that the 9% notes "that traded up 2 points [Tuesday] traded down 2 points today."

He saw the paper "pretty much" trading in a 110¼ to 110½ range, versus Tuesday's late levels in the vicinity of 111¾ or 112 bid.

On Tuesday, more than $13 million of the bonds had traded, making it one of the day's most actively traded junk credits.

"It's interesting how market conditions can change so much in one day," the trader said., somewhat ironically.

"They announced [Tuesday] that they were going to do it - and then this morning, they said "oh, market conditions have changed, so we're not going to do it."

He opined that "you would think their bankers would have a little bit better color on what the high-yield market would be able to digest."

He said that the matter was compounded by the fact that "folks had bought the old issue" based on anticipation that the bonds would be taken out at a premium. The bonds had traded up on Tuesday to around 111.85 - just above the tender offer's total consideration price of $1,117.31 per $1,000 of the bonds tendered by the early deadline of 5 p.m. ET on April 17, the equivalent of a 111.731 price.

"I guess it was just sloppy," he declared.

A second trader said that after the Houston-based communications antenna operator announced its intentions of doing a deal to fund the 9% tender offer, thus pushing the latter bonds smartly higher, "the initial talk [on the new deal] was 5% to 5¼% - and my reaction to that was that they were wrong."

He said that looking at some of the company's other outstanding paper, "its 7 1/8% notes [due] 11/1/19, which were trading right around the 108½ level, which, if you look at it as a 4.87% [yield] to the 11/1/14 call, and it's a 5.72% [yield] to the 11/1/19 maturity, at a dollar price of 108. People were initially saying 5% isn't bad" as a yield on the prospective new notes.

"My reaction," he said, "was that 5% was through where this [existing] thing was trading on a yield to maturity. Why would anybody buy a 10-year, non-call-5-year B1/B- piece of paper, buying it through where seven-year paper is trading on an absolute worst-case basis?"

He continued "sure enough" - by noon [ET] on Tuesday, the price talk had backed up to a 5½% to 5¾% range, and at that point, "I guess the company just said [to the underwriters] 'you're out of your mind'."

The trader said that there were market rumors floating about that the banks went back to them with a prospective smaller deal than the original $1 billion - a 10-year bullet issue, at around 5 5/8% - "but the company wanted nothing to do with that."

He called the whole mess "a false step on the part of the underwriter(s). The company floated something that was unsalable - and there you have it."

While the books were closed at 3 p.m. ET on Tuesday and there were expectations that the deal might price after that, "people were all passing on it [Tuesday] throughout the day."

Burger King sizzles

Away from the new deals, a trader quipped that Burger King Holdings 9 7/8% notes due 2018 "were being flame-broiled today - they were on fire."

He saw the issue up by about 1 point in heavy trading to the 113 bid area, while its zero-coupon bonds due 2019 were "up a couple of points" to around the 76-76½ bid level

Another market source said that nearly $25 million of the 9 7/8s had changed hands on Wednesday, making it one of the busiest bonds in Junkbondland. He saw those bonds ending up 7/8 point at 113 after having gotten as good as 114 during the day.

At another desk the 9 7/8s were quoted at 113½ bid, but they called it up 1¾ points on the day.

The first trader said that the bonds had risen on the news that the Miami-based fast-food restaurant company - which had been taken private via a buyout back in October 2010 - will return to publicly traded status within a couple of months.

Private equity group 3G Capital - which took Burger King private in October 2010 - plans to merge it into Justice Holdings, a British investment firm co-founded by hedge fund titan William Ackman, in a $1.4 billion deal.

Shares of the merged company are expected to trade on the New York Stock Exchange - where Burger King used to trade - by around mid-year.

Market indicators turn lower

Apart from issues which had news out on them such as Burger King, Cengage or Crown Castle, traders saw a generally lackluster market, with a fair amount of people already absent, and they cited the upcoming market holiday - the Securities Industry and Financial Markets Association has recommended a noon ET closing for the U.S debt markets on Friday, and activity between now and then is expected to be even duller.

Statistical measures of junk market performance meanwhile headed lower on Wednesday after having been mixed on Tuesday.

A trader saw the Markit Group CDX North American Series 18 High Yield Index down by 3/8 point on Wednesday, ending at 96¼ bid, 96¾ offered, after having lost ¼ point on Tuesday.

The KDP High Yield Daily Index was down 10 basis points on Wednesday at 73.81, after having been unchanged on Tuesday. Its yield rose by 3 bps on Wednesday to 6.62%, after having been unchanged Tuesday.

And the widely-followed Merrill Lynch High Yield Master II Index fell on Wednesday by 0.079%, after having notched three straight sessions of gains before that, including Tuesday's 0.038% rise.

That left the index's year-to-date return at 5.176%, down from 5.259% on Tuesday, and down as well from its peak 2012 level of 5.361%, recorded on March 2.

Stephanie N. Rotondo contributed to this report

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.