Nortek floaters, iStar preferreds price; Adelphia gyrates as plan filed

By Paul Deckelman and Paul A. Harris

New York, Feb. 25 - Nortek Holdings Inc. was heard by high-yield syndicate sources to have priced an upsized offering of floating-rate notes Wednesday; meantime, iStar Financial Inc. came to market with a preferred stock deal, and price talk emerged on two tranches of bonds being sold by Nebraska Book Co. Inc. and its corporate parent, NBC Acquisition Corp., possibly as early as Friday.

In secondary market dealings, Adelphia Communications Corp. bonds initially firmed after the bankrupt Greenwood Village, Colo.-based cable-TV operator filed its long-awaited reorganization plan, only to fall back from their highs later in the session on investor sentiment that the arrangement they ere being presented might not be as favorable as originally thought. And United Rentals Inc. bonds eased - and its stock nosedived - after the Greenwich, Conn.-based equipment rental company released its fourth-quarter results and projections for 2004.

As Wednesday's session got underway in the primary, sources reported a carry-over from the heaviness reported late Tuesday.

"It feels a little heavy," one sell-sider noted during the morning. "People have been more interested than in the past to see bids. Some names feel like they should be lower, but they still haven't traded, so the mark isn't there."

However by mid-session at least one source noted some improvement.

And as was true of Monday and Tuesday, one lone junk bond deal was priced during the session, although the calendar for the much of the remainder of February 2004's final week took shape and three roadshow starts were reported.

Wednesday's single transaction was an upsized $200 million six-year senior floating-rate note issue (B1/B+) from Kearney, Mo. building supplies firm Nortek Holdings, Inc.

The company increased the size of its deal from $150 million, pricing the notes at par, with an interest rate of six-month Libor plus 300 basis points.

Price talk on the deal lead by Deutsche Bank Securities and Bear Stearns & Co. was Libor plus 300 basis points.

Three more for the road

As had also been true of the first two sessions of the present week, the new issue calendar continued to take aboard passengers on Wednesday.

The roadshow starts Thursday for a $200 million high-yield bond offering from The Newark Group, a Cranford, N.J. paper and cardboard recycler. The company intends to sell 10-year senior subordinated notes with pricing expected to take place late in the March 1 week.

Wachovia Securities will run the books on the debt refinancing deal.

Meanwhile Cellu Tissue Holdings began a roadshow Wednesday for $160 million of six-year senior secured notes (expected ratings B2/B), which are expected to price on March 3, via JP Morgan.

The Hartford, Conn. manufacturer of specialty tissues and machine-glazed paper products will use proceeds from the sale to refinance bank debt and fund a dividend payment.

Also on Wednesday Eschelon Telecom started a roadshow for $100 million of six-year senior notes (CCC+), via Jefferies & Co. and Wachovia Securites.

The note are expected to be discounted to 85, and hence are expected to generate $85 million of proceeds. Pricing is expected to take place on March 8.

The company is a Minneapolis-based voice, data and Internet services provider to small and medium sized businesses in the Western U.S.

Late week shapes up with talk on 3 deals

Price talk of 9½%-9¾% emerged Wednesday on both tranches of Invensys' £650 million equivalent of seven-year senior notes (B3/B-), which are expected to price Friday via Deutsche Bank Securities.

The notes will be offered in dollar and euro tranches.

Meanwhile Nebraska Book Co. issued price talk on two note offerings that it has been marketing simultaneously - both of which are expected to price on Friday.

Price talk of 8½% area was heard on Nebraska Book Co., Inc. (the operating company)'s $190 million of eight-year senior subordinated notes (Caa1/CCC+).

Meanwhile price talk is 10½% area on NBC Acquisition Corp. (the holding company)'s $50 million proceeds nine-year senior discount notes (Caa2/CCC+).

JP Morgan and Citigroup will run the books on both tranches.

And talk was also heard on the Goodyear Tire & Rubber Co.'s Regulation D offering, a private-private deal.

Talk is 11% area on the company's $650 million of seven-year senior secured notes (B3), which are expected to price on Thursday.

JP Morgan, Citigroup and Credit Suisse First Boston are the placement agents.

iStar upsizes preferreds

iStar Financial Inc. priced an upsized offering of $125 million of Series I perpetual preferred shares, including the greenshoe, during Wednesday's session.

The New York City-based finance company, which focuses on the commercial real estate industry, sold five million $25.00 shares at par. The shares will yield 7½%, spot on the 7½% area price talk, with Bear Stearns & Co. running the books.

iStar will use the proceeds will be used to redeem $88 million of the company's 8¾% senior notes due 2008 at 108.75, with the remainder to fund working capital and possible debt repayment.

Nortek firms in trading

When the new Nortek floating-rate notes due 2010 were freed for secondary dealings, a trader saw them at 100.375 bid, 100.575 offered, up from their par issue price earlier in the session, but characterized trading in the new bonds as "not very exciting." Another source quoted them at 100.5 bid, 101 offered.

At another desk, AMC Entertainment Inc.'s new 8% senior subordinated notes due 2014, which priced last Thursday at par, were quoted at 99.625 bid, 100.125 offered.

Adelphia up, then eases

Back among the established bonds, Adelphia Communications' notes were seen having initially firmed after the company released news of its reorganization plan, but then fell back from those highs to end essentially unchanged, participants said.

"They were up two points," a trader said, "but then settled in down a point-and-a-half [from their highs], so net-net, they were only up half [a point]."

He quoted the company's 10 7/8% notes due 2010 as closing only slightly better, at 101.25 bid, 102.25 offered.

Another trader pegged Adelphia's 10¼% notes due 2011 as having initially traded up to 105.5 bid, 106.5 offered, but said that they came off that peak to go home at 103.5 bid, which he called essentially unchanged on the day. The high "would have been a nice gain, but they were unable to sustain it," he said.

Adelphia "reached its highs in the morning" following the release of the plan, a trader said, quoting its 10¼% notes due 2006, which had ended Tuesday at 101.5 bid, 103.5 offered, as having pushed up to 102 bid, 104 offered, before coming off that peak to finish at 90.5 bid, 100.5 offered.

He saw the 10 7/8% notes due 2010 as having initially firmed to 104.5 bid, 105.5 offered, up from Tuesday's 103.5 bid, 105.5 offered, before giving up their gains and then some to end at par bid, 101.5 offered. He saw Adelphia's 9¼% notes pushing up to 101 bid, 103 offered, before falling back to close at 99.5 bid, 101 offered, "lower than [Tuesday]."

Adelphia presented its reorganization plan to the U.S. Bankruptcy Court for the Southern District of New York in Manhattan. The plan envisions paying Adelphia's debtor-in-possession lenders and pre-petition bank lenders in full, in cash, while other creditors would get common stock and/or interests in a litigation trust which will pursue lawsuits against members of the founding Rigas family, who are accused of having looted several billion dollars from the company, as well as against Adelphia's former auditors, Deloitte & Touche, and against financial institutions involved in the co-borrowing litigation. Since Adelphia is still sorting through the claims, recovery has not yet been calculated but the litigation trust interests are seen having a value that is, at best, uncertain.

United Rentals a little lower

Elsewhere, United Rentals' bonds were seen down a little in the wake of its fourth-quarter earnings, while its stock "got smashed," in the words of a trader, plummeting $3.68 (18.34%) to $16.38, on New York Stock Exchange volume of 6.1 million shares, more than 13 times the normal turnover.

However, the decline in the bonds was nowhere near that dramatic. A market source quoted the equipment rental company's 7% notes due 2014 down two points on the session, at 93.5 bid while its 7 ¾% due 2013 were off a point, at 98.25 bid. Another market source saw United Rentals' 6½% notes due 2012 off about half a point on the session, at 98.5 bid.

United Rentals reported a sharply wider fourth-quarter net loss of $305.1 million ($3.96 per share), versus year-earlier red ink of $2.09 million ($2.33 per share). On an adjusted profit-basis, however, the company earned $15.1 million (15 cents a share) in the latest quarter, nearly double the $8.2 million (nine cents a share) it posted a year ago.

But even that better figure missed the consensus estimate of Wall Street analysts of adjusted earnings of 16 cents a share. And further spooking investors was the company's projection that 2004 adjusted income would likely come in around $1 to $1.10 a share, while analysts are on record as expecting about $1.15. The lackluster guidance assumes flat private non-residential construction levels and lower interest expense due to recent refinancings, coupled with higher rental rates and contractor-supply sales growth.

Calpine steady

A trader saw Calpine Corp. bonds pretty much unchanged Wednesday, a day after they had traded around on news that the San Jose, Calif.-based independent power producer was pulling the plug on its planned offering of $1.3 billion of new bank debt and $1.05 billion of new junk bonds.

In the preceding several sessions, Calpine bonds had been "quite active in anticipation of the deal, But [on Wednesday], activity in Calpine hit a wall. It was the least amount of Calpine that I've seen traded in two weeks."

He quoted Calpine's 8½% notes due 2011 unchanged at 75.5 bid, 76.5 offered.

At another desk, though, its 8½% notes due 2010 were off nearly three-quarters of a point, at 91.75 bid.

Level 3 comes back somewhat

A market source saw Level 3 Communications Inc. bonds, which recently have been on the slide along with the telecom and tech names in general, after their earlier runup, as having gained a point on the day.

"They got whacked [Tuesday] and this week," he said, but they came back.

He saw the Broomfield, Colo.-based telecommunications fiber optic network operator's benchmark 9 1/8% notes due 2008 a point better, at 82.

Goodyear active

A trader described Goodyear Tire & Rubber Co. as "actively quoted," in anticipation of the Akron, Ohio-based tiremaker's planned offering of $650 million of new senior secured notes due 2011. Goodyear's 8 5/8% % notes due 2011 moved up to 83 bid, 84 offered during the session before deflating from those levels to end at 81 bid, 82 offered, "pretty much unchanged."

The trader said that the overall market "had some upward momentum around midday," but added that "it seemed to dissipate as the day wore on."

Another trader agreed that Wednesday was "a treading-water day," but said that on the whole, "everything was up. The indexes were up, spreads were static, and stocks were able to hold their gains, as [Fed Chairman Alan] Greenspan had some pretty friendly things to say about the economy."

Wednesday was "pretty boring," but Thursday, he said, might see more activity, with a slew of companies scheduled to release earnings reports.

Emerging markets expected to step up

An emerging markets sell-side source who spoke to Prospect News on Wednesday more or less confirmed the market color heard from a trader on Tuesday.

The emerging markets, the senior sell-side official said, have been grinding higher following the lows it hit last Friday.

"Last Friday was all over the place," the sell-sider said. "Brazilian bonds were down three or four points. But Friday ended up okay.

"Normally it's Brazil that is moving one way or the other, and to a lesser extent Venezuela

"It has been slowly grinding back, but it's still well wide of where it had been at its tight levels. But it has come back a lot."

IDBI prices

Industrial Development Bank of India (IDBI) priced its split-rated $300 million five-year deal (Baa3//BB+) at a spread of 185 basis points, according to the source.

That was the wide end of the 180-185 basis points price talk.

The bonds came with a coupon of 4¾%, and priced at 99.653, with JP Morgan running the books on the Regulation S-only deal.

The official attributed the "wide-end-of-talk" execution to the choppiness in the market.

"We don't have many issuers that are split-rated in our market, these days," the official added.

"The deal priced tight, but India is sort of the flavor of the month right now.

"Since it was a Reg. S-only deal you could describe it as a 'low key trade.' And with India and south Asia you have a somewhat different type of investor-base than the one you might encounter in the Latin American market."

In the wake of IDBI's deal, Prospect News learned of another company from India about to begin marketing its deal.

The roadshow starts Thursday in Singapore for National Thermal Power Corp.'s $200 million seven-year bond offering (BB), with subsequent stops in Hong Kong on Friday, and in London on Monday.

Merrill Lynch and ABN Amro are the underwriters.

As with IDBI, the new deal, being brought by the largest power generating utility in India, is a Regulation S-only offering.

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