United Surgical, iPCS, Innophos deals price; Tembec gyrates; Mirant gains

By Paul Deckelman and Paul A. Harris

New York, April 11- United Surgical Partners International Inc. was heard by high yield syndicate sources to have priced a downsized $440 million two-part offering of 10-year senior and senior subordinated notes on Wednesday. Traders said that the new bonds firmed respectably when they were freed for aftermarket action.

Also pricing somewhat earlier in the session was a quickly shopped $66 million offering of five-year notes from Innophos Holdings Inc.

And late in the day, iPCS Inc. made its first visit to the junk market in three years, selling $475 million of senior secured six- and seven-year notes in a two-part drive-by offering.

On the calendar, KAR Holdings Inc. was heard to have downsized its coming two-part mega-deal. USI Holdings Corp. was hitting the road to market its $425 million two-parter to prospective investors, while Cimarex Energy began shopping a $300 million issue of 10-year bonds around.

In the secondary arena, apart from the movement of the new United Surgical bonds, Tembec Inc.'s paper was bouncing around at mostly lower levels, apparently hurt by the surging Canadian dollar, which will cut into the problem-plagued company's ability to sell its wood products in the United States or other non-Canadian markets.

Mirant Corp.'s bonds were meantime better as investors gave a second look to the Atlanta-based power generating company's statement last week announcing that it was seeking strategic alternatives.

United Rentals Inc. - whose bonds had gyrated around at mostly higher levels Tuesday as that company embarked on its own exploration of strategic alternatives before coming off their highs to end only modestly higher - continued to pull back on Wednesday.

Wednesday's primary market session saw three issuers price a total of five tranches to raise a combined total of slightly more than $970 million of proceeds.

Meanwhile new offerings were added to the forward calendar.

iPCS a blowout

Wireless services provider iPCS priced $475 million of senior secured floating-rate notes in two tranches on Wednesday.

The Schaumburg, Ill.-based Sprint PCS Affiliate of Sprint Nextel priced a $300 million tranche of first-lien notes (B1/B-) at par to yield three-month Libor plus 212.5 basis points, at the tight end of the Libor plus 225 basis points area price talk.

The company also sold a $175 million tranche of second-lien toggle notes (Caa1/CCC) at par to yield three-month Libor plus 325 basis points, on top of the price talk. The toggle notes feature a 75 basis points coupon step-up should the issuer elect to pay the coupon in kind.

Banc of America Securities was the left lead for the quickly shopped debt refinancing and dividend funding deal. UBS Investment Bank was the joint bookrunner.

An informed source told Prospect News that the deal was "a total blowout."

United Surgical downsizes

Elsewhere United Surgical Partners International priced a downsized $440 million two-part 10-year senior subordinated notes transaction (Caa1/CCC+).

The Dallas-based owner-operator of surgical facilities priced a $240 million tranche of fixed-rate notes at par to yield 8 7/8%, at the tight end of the 9% area price talk.

The company also priced a downsized $200 million tranche of toggle notes at par to yield 9¼%, on top of price talk that had the toggle notes pricing 37.5 basis points behind the fixed rate notes.

Citigroup, Bear Stearns & Co., Lehman Brothers and UBS Investment Bank were joint bookrunners for the deal to fund the LBO of the company and refinance related debt.

The toggle notes tranche was downsized by $40 million, with that amount of the financing being shifted to the company's term loan, where there is phenomenal demand, according to an informed source.

Waning interest

Sources have lately told the Prospect News primary market desk that interest in toggle notes may be waning.

A source who watched the United Surgical Partners deal, which saw its toggle tranche downsized by $40 million, was not inclined to argue with this assertion on Wednesday afternoon.

One reason for the declining popularity of toggle notes, according to a high yield investor, is that when a company elects to make a PIK payment, as opposed to a cash payment, its leverage increases.

Innophos drives through

In drive-by action Wednesday, Innophos Holdings priced a $66 million issue of five-year senior unsecured notes (existing ratings B3/B-) at par to yield 9½%, on top of price talk.

Credit Suisse ran the books for the debt refinancing deal from the New Jersey-based manufacturer of specialty phosphates.

KAR/Adesa downsizes, sets talk

KAR Holdings downsized to $1.025 billion from $1.1 billion its three-part offering of high-yield notes, shifting $75 million of the financing to its bank loan.

Meanwhile the Westchester, Ill., automotive specialty salvage services provider set price talk and timing for the deal.

A $150 million tranche of seven-year senior floating-rate notes (B3/CCC) is talked at Libor plus 375 to 400 basis points.

A $450 million tranche of seven-year senior fixed-rate notes (B3/CCC) is talked at 8¾% to 9%.

Meanwhile a downsized $425 million tranche of eight-year senior subordinated notes (Caa1/CCC) is talked to price 125 basis points behind senior fixed-rate notes. The subordinated notes offering was downsized from $500 million.

The notes are expected to price on Friday afternoon.

Goldman Sachs & Co., Bear Stearns & Co., UBS Investment Bank and Deutsche Bank Securities are joint bookrunners for the LBO deal.

USI launches

USI Holdings Corp. will start a roadshow on Tuesday for its $425 million offering of high-yield notes in two tranches.

The Briarcliff Manor, N.Y., distributor of insurance and financial products and services is offering $225 million of seven-year senior notes (B3/CCC) and $200 million of eight-year senior subordinated notes (Caa1/CCC).

Goldman Sachs & Co. and JP Morgan are joint bookrunners for the deal to fund the LBO of the company and refinance related debt.

Cimarex brings 10-year paper

Tulsa, Okla.-based oil and gas exploration and production company Cimarex Energy will begin a roadshow on Thursday for its $300 million offering of 10-year senior notes (existing B1/confirmed BB-).

JP Morgan and Lehman Brothers are joint bookrunners for the debt refinancing deal.

Peermont brings rand deal

South African gaming firm, Peermont Global, will begin a roadshow on Thursday for a ZAR 5.866 billion equivalent offering of euro- and South African rand-denominated notes.

Citigroup is the sole bookrunner for the acquisition deal.

The offering is comprised of Peermont Global's ZAR 4.979 billion equivalent (approximately €520 million) tranche of euro-denominated seven-year senior secured notes (B3/B).

In addition Peermont Global II (Pty) Ltd. plans to sell a ZAR 887 million tranche of non-rated eight-year senior PIK notes.

According to a market source, Peermont is considered an emerging markets issuer but the notes will be marketed to both emerging markets and high yield accounts.

United Surgical notes trade up

When the new United Surgical Partners bonds were freed for secondary dealings, a trader said that both the 8 7/8% senior subordinated notes and the 9¼% senior subordinated toggle notes, both due 2017, had moved up to 101 bid, 101.5 offered from their respective par issue price earlier in the session.

The trader said that there was no trading in the Innophos 9½% seniors due 2012 since "it was such a small deal" at only $66 million that "it was pretty much put away."

Meanwhile, the new iPCS deal made its debut too late in the session for any kind of aftermarket activity.

Tembec tumbles as loonie flies

Back among the established issues, Tembec's 8 5/8% 2009 bonds were seen down as much as 3 points on the day to 66.5 bid, 67.5 offered, a market source said, but then came partly back from those lows later in the session.

A trader saw the bonds ending down 2 points at 67 bid, 68 offered, citing "the strength of the Canadian dollar," which shot up to a four-month high against the U.S. dollar.

The Canadian unit jumped to its high of C$1.1398 to the U.S. greenback from C$1.1468 at Tuesday's close on the strength of firmer commodity prices, especially oil, a major Canadian export, and stronger-than-expected March jobs data coming out of Ottawa.

The stronger dollar, however, is a drag on export sales by Canadian companies such as Tembec, the Montreal-based forest products company. Tembec, like such sector peers as Abitibi-Consolidated Inc. and Bowater Inc., has struggled to bring its overhead in line with lagging sales as the U.S. homebuilding industry - a major user of Canadian lumber - has reduced its orders in view of slower homesales.

Another source saw the Tembec bonds at one point get as good as 70 - albeit in small-sized trades - climbing from early lows around 66.5 but still ending at 67, down 1¼ point on the day

Mirant is a mover

Elsewhere, Mirant's bonds were "a big mover today [Wednesday]," a trader said, "up a lot."

He saw the company's 8½% notes due 2021 at 103.5 bid, up from 101.75 on Tuesday, and asserted that "a good size traded in that."

Another trader concurred that Mirant was up about 2 points across the board, with the Mirant Americas Generation Inc. 8.30% notes due 2011 ending at 105 bid, 106 offered.

"A couple of days ago, they came out saying that they were looking at strategic alternatives, including the possible sale of the company," the trader explained, adding that "initially, when that came out a couple of days ago, the bonds dropped on the assumption that [such a sale transaction] would be an LBO," which would likely harm Mirant's credit metrics, since the buyer would load the company up with debt.

However, the trader continued, "people are speculating that it might be a strategic buyer, as opposed to private equity," which pushed the bonds up a deuce across the whole capital structure.

A market source saw those MAGI bonds up better than 3 points, ending at 105.75 bid.

United Rentals retreat continues

United Rentals' bonds - which on Tuesday had jumped to gains of as much as 4 points on the news that the Greenwich, Conn.-based equipment rental firm will explore strategic alternatives, only to surrender most of those gains later in the day on profit-taking and in reaction to a several major ratings agencies eyeing the credit for a possible downgrade, again on leverage concerns - were seen continuing to ride that negative momentum wave on Wednesday.

A trader called the company's 7¾% notes due 2013 down ½ point at 103 bid, 104 offered, while at another desk, its 7% notes due 2014 were down 1¼ points at 102.25 bid.

Mrs. Fields' cookie crumbling?

The first trader also saw Mrs. Fields' Famous Brands LLC's 11½% notes due 2011 off a point at 82 bid, 84 offered, citing a published report that speculated about the possibility that the Salt Lake City-based baked goods maker might have trouble making its next coupon payment. That payment comes due in mid-September.

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