Dave & Buster's prices, new Clear Channels gain; Burlington, Claire's ahead; Ahern plunges

By Paul Deckelman and Paul A. Harris

New York, Feb. 16 - Dave & Buster's, Inc. came to market on Wednesday with a quickly-shopped offering of zero-coupon discount notes that raised $100 million of proceeds for the restaurant and entertainment company. The bonds came too late in the session for an aftermarket, traders said.

However, they did see Tuesday's mega-deal from Clear Channel Communications, Inc. actively trading around about a point above where the Texas media company's transaction came to market.

High-yield syndicate sources heard price talk emerge for the Claire's Stores, Inc. and Burlington Coat Factory Warehouse Corp. deals, which could price Thursday anytime after the retailers' respective order books are closed; Burlington was heard to have upsized its deal.

Nexeo Solutions LLC - the new name for Ashland Inc.'s distribution unit - was heard by sources to be preparing a $200 million subordinated note offering to help fund the leveraged buyout of the operation by private-equity player TPG Capital.

In the overseas markets, South African retailer Edcon Pty. Ltd. announced plans for a euro-denominated offering of secured notes

And from out of the East came word that Chinese property development company Country Garden Holdings had priced a $900 million offering of seven-year notes.

Away from the new deals, traders saw a generally firmer secondary market, although activity was muted as participants started to gear up for the coming long holiday weekend.

One of the biggest volume movers of the day - and easily the biggest in terms of price change - was Ahern Rentals, Inc., whose bonds nosedived after the depressed heavy-equipment rental company skipped the Feb. 15 interest payment on those bonds.

The primary market news volume picked up a bit on Wednesday.

Two junk issuers - each one bringing a single, dollar-denominated tranche - raised a combined total of $995 million.

Also there were price talk announcements and deal announcements.

Country Gardens upsizes

China's Country Garden Holdings priced an upsized $900 million issue of 11 1/8% seven-year senior notes (Ba3/BB-) at 99.405 to yield 11¼% on Wednesday.

The yield printed on top of price talk that was revised downward from the 11 3/8% area. Originally the deal was planned at $750 million.

Goldman Sachs & Co., J.P. Morgan Securities and Deutsche Bank were joint bookrunners. Goldman Sachs will bill and deliver.

The Hong Kong-based property developer plans to use the proceeds for general corporate purposes and to fund existing and new property projects.

Dave & Buster's discount notes

Meanwhile Dave & Buster's raised $100 million by issuing five-year senior discount notes via its holding company, Dave & Buster's Parent, Inc.

The zero-coupon notes priced at 55.313 to yield 12¼%.

There was no price talk.

J.P. Morgan Securities LLC and Jefferies & Co. were the joint bookrunners for the quick-to-market deal.

The Dallas-based restaurant and entertainment company plans to use the proceeds to pay a dividend to its stockholders, or to repurchase a portion of Dave & Buster's Parent's common stock.

Burlington upsizes, sets talk

Setting the stage for what promises to be a reasonably busy Thursday, Burlington Coat Factory upsized its offering of eight-year senior notes (Caa1/CCC/) to $450 million from $400 million, and set price talk at 10% to 10¼%.

The company will use $300 million of the proceeds to fund a distribution to its equity holders. The $50 million amount of the bond upsizing will be used to increase that dividend from $250 million.

The Burlington, N.J.-based company will also use proceeds to redeem its 11 1/8% senior notes due 2014 and its 14½% senior discount notes due 2014.

Goldman Sachs & Co. is the left lead bookrunner. J.P. Morgan Securities LLC, Bank of America Merrill Lynch and Wells Fargo Securities are the joint bookrunners.

After Wednesday's upsizing, the bond deal remains sized $50 million below the similarly structured $500 million offering that the discount retailer pulled last November.

At the time that original offering was withdrawn the notes had been talked to yield in the 10% area.

Hence the new deal, while smaller, comes with a slightly higher range of price talk.

Claire's Stores price talk

Also on deck for Thursday is Claire's Stores, which talked its $400 million offering of eight-year second-lien notes (Caa3) with an 8¾% to 9% yield.

Credit Suisse Securities, J.P. Morgan Securities LLC and Goldman Sachs & Co. are the joint bookrunners for the debt refinancing deal.

In addition to Burlington Coat and Claire's Stores, a drive-by deal could be in the offing for Thursday, according to a syndicate official who declined to furnish an issuer name.

Nexeo for next week

Looking beyond the upcoming three-day Presidents Day holiday weekend in the United States, a calendar began to take shape for the final full week of February.

Nexeo Solutions plans to price a $200 million offering of seven-year senior subordinated notes during the middle part of the week ahead.

Bank of America Merrill Lynch, Citigroup and Barclays Capital will be the joint bookrunners.

Proceeds from the deal will be used to help fund TPG Capital's acquisition of Ashland Inc.'s chemical distribution business, which will be named Nexeo Solutions.

The LBO financing also includes an $840 million credit facility.

Edcon plans two-parter

Elsewhere, South Africa's Edcon plans to price €400 million equivalent of seven-year senior secured notes during the week ahead.

The notes are expected to be offered in dollar and euro denominations.

Goldman Sachs & Co. and Deutsche Bank are the global coordinators and joint bookrunners. Barclays Capital and Morgan Stanley are joint bookrunners.

The Johannesburg-based dry goods retailer plans to use the proceeds to refinance existing debt and hedging obligations.

Dave & Buster's an aftermarket no-show

Traders said that the new issue from Dave & Buster's came to market too late in the session for any kind of aftermarket activity, and also noted the relatively small size ($180.79 million) of the issue as another factor militating against there being much secondary dealings in the zero-coupon bonds.

Clear Channel deal edges up

Several traders saw Clear Channel Communications' new 9% priority guarantee notes due 2021 moving up a little on Wednesday from the late levels they had achieved on Tuesday, after the San Antonio, Texas.-based media company's $1 billion offering had priced at par.

A trader who saw the bonds as having gone home around the 101 bid area late Tuesday saw "the bulk of the trading today" around 101¼ bid. Towards the end of the day, he saw the bonds trading between 101 1/8 and 101 3/8, leaving them mostly at that 101¼ price.

A second trader saw the bonds a little firmer, quoting them going home at 101 3/8 bid, 101 7/8 offered.

Yet another trader located them at 101¼ bid, 101½ offered, which he said was "up slightly versus last [Tuesday] night."

Among the company's existing bonds, which had been mostly firmer ahead of the new deal, a market source saw Clear Channel's 6 7/8% notes due 2018 having lost 1 1/8 points on the day to end at 73 3/8 bid.

Nothing doing in Claire's

A trader said that he saw "no activity" in Claire's Stores' existing bonds.

Another said he said he had "not seen anything in them since Monday" - just an odd lot trade in its 9 5/8% notes due 2015. He saw a smallish (600 bonds) trade at 103 "so that's kind of the range. Nothing going on there - they're waiting for the pricing."

Indicators mostly steady

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index up 1/8 point on Wednesday to end at 104 5/8 bid, 104¾ offered, after having been unchanged on Tuesday.

The KDP High Yield Daily index meantime gained 4 basis points on Wednesday to close at 75.99, after having risen by 6 bps on Tuesday. Its yield came in by 1 bp for a second consecutive session on Wednesday, to 6.66%.

The Merrill Lynch High Yield Master II index posted its fourth consecutive gain on Wednesday, firming by 0.051%, on top of Tuesday's 0.039% advance.

That lifted the index's year-to-date return to 3.087% - yet another new peak level for 2011 - from Tuesday's finish at 3.034%, the previous high for the year so far.

Advancing issues made it two in a row over decliners on Wednesday, leading them by a better than seven-to-six margin, widening their advantage seen on Tuesday of just a couple dozen issues out of the more than 1,400 which traded.

Overall activity, represented by dollar-volume levels, rose by 6% on Wednesday, after having jumped by 34% on Tuesday from the previous session's level.

A trader said that Wednesday's session produced a "sort of a barbell" market, in terms of ratings levels.

He said that the Trace system showed "a lot of activity in crossover paper," such as SLM Corp., Anadarko Petroleum Corp. and Owens Corning; Sallie Mae's 8% notes due 2020, for instance, were busily traded and seen down a point at 105¾ bid.

At the other end of the spectrum, meanwhile, he saw a fair amount of activity in distressed credits such as OPTI Canada and Ahern Rentals.

"As far as the rest of the market goes, the CCC to BB 'plain vanilla' junk bonds are pretty much at their highs, and at their current tight spreads. Most accounts are still getting cash in, so they're not wanting to sell paper. The secondary market has this really picked-over look to it, so it's in the calendar that they're spending their money, and they're holding off on selling things because they keep getting cash in.

He also noted the numbing effect on the market of several conferences going on this week, notably the Deutsche Bank small and mid-cap conference that was taking place on Tuesday, Wednesday and Thursday, as well as Goldman Sachs' technology and internet conference - Stifel Nicolaus was meantime holding a similar get-together - and transportation conferences by BB&T and, again, Stifel Nicolaus. "That's just kind of adding to the slowness."

On top of that, traders noted that Junkbondland, like the rest of the U.S. financial markets, was heading into the Presidents Day holiday weekend, which will see what officially is a full session on Friday, although for all intents and purposes, it might as well not be, followed by a full market shutdown on Monday.

"It was pretty quiet today," a trader said, noting that even though it was only Wednesday, "people are starting to leave early for the long weekend."

A second trader said "it's probably going to get worse [Thursday] as people start drifting out in the afternoon and guys don't come in on Friday or take half days. Then next week is a short week, and people will find excuses for it to be slow next week."

A wild ride for Ahern

Among specific names, a trader saw Ahern Rentals' 9¼% notes due 2013 fall sharply on the news that the Las Vegas-based heavy-equipment rental company had not made the scheduled Feb. 15 coupon interest payment on the bonds, although the paper later came off the floor to finish above its lows for the day - but still well down from where they were trading before the news of the missed coupon.

He saw the notes plunge, to levels "down in the 20s and the 30s," although he opined "I don't think they ever traded in the 20s." While they were quoted down there, he said "trading started to happen in the lows 30s," around 32-33. He saw the bonds firm off those lows to finish the day trading at bid levels around 40 or 41, "but they were still down 15 points on the day."

He said that that was "a big mover on the downside," though while he saw "decent volume," he cautioned that "it's not a big deal" - only $237 million are outstanding - "but it's down 15 solid points."

"It was one of the ugly ones of the day," he added.

A second trader saw the bonds last traded around 40 bid, which he called down 16 points on the day. He said that before that, the bonds trade as low as 32 bid. "You had a couple hundred trade down there, and then you had a couple million trading at 34, as they were working their way back up to 40.

"A missed coupon - that will usually do it" in ensuring that a bond gyrates around at sharply lower levels, he said.

A market source at another desk saw Ahern approaching $20 million traded, making it one of the more active high yield issues of the session. He quoted the bonds going out around 35½ bid, down a full 20 points from prior round-lot levels at the start of the week.

Dean does better

A trader said that Dean Foods Co.'s bonds - which had eased on Tuesday ahead of the early-Wednesday release of the Dallas-based dairy products company's fourth-quarter and 2010 earnings - "snapped back a bit," as its results were not quite as bad as expected. The 7% notes due 2016 were seen up a point around 95.

A second trader saw the bonds - which on Tuesday had dropped to around 94 bid, down 1¼ points on the day - trading on Wednesday trading between 95 and 96 before going out at 95, a 1 point gain.

"Anything that that weakens up here on bad news - unless it's something like a coupon not getting paid," a la Ahern - "it's going to go back up again because somebody's going to add to their position at a cheaper level."

Another trader quoted the 7s up 1½ points on the day at 95½ bid "on pretty good volume." He saw its 9¾% notes due 2018 likewise trading up at 104 bid.

He said that he "keep[s] hearing that fund managers are accumulating the stock."

Dean's New York Stock Exchange-traded shares, which had retreated on Tuesday ahead of the numbers, rose by 65 cents, or 6.64% on Wednesday to close at $10.44, on volume of 24.1 million shares, more than triple the norm.

While Dean posted a net loss of $20.7 million, or 11 cents per share, in the fourth quarter, versus a year-earlier profit of $50.3 million, or 27 cents per share, analysts noted that excluding one-time items such as various earnings charges, Dean earned 15 cents per share, a penny or two above Wall Street's expectations.

Rite Aid on the rise

A trader said that Rite Aid Corp.'s 9½% notes due 2017 were up a point on the day at bid levels around 90-901/4. He saw no fresh news out on the Camp Hill, Pa.-based Number-Three U.S. drugstore retailer, which is struggling to hold its own against larger competitors Walgreen Co., CVS Caremark Corp. and Wal-Mart Stores Inc.

A second market source quoted those bonds up 2 points on the day at 91.

OPTI shows improvement

Elsewhere, a trader said that OPTI Canada Inc.'s 7 7/8% senior secured second-lien notes and 8¼% senior unsecured notes, both due 2014, "seem to have stabilized" in a bid range around 47-48, with "a good amount of trading in that."

He saw the bonds starting off unchanged and staying around there for much of the day, but by the end of the day, they were closer to 48-481/2, which he said was up ½ point to 1 full point, on "good volume."

Another trader saw OPTI's bonds up by perhaps a point, quoting them at 48½ bid.

A market source at another desk pegged the 7 7/8s up 1¼ points on the day at 48¼ bid.

There was no fresh news out on the troubled Calgary, Alta.-based energy company, whose joint venture with Nexen Inc., owned 35% by OPTI and 65% by Nexen, has had trouble reaching its production targets for extracting bitumen from the oil sands there and converting the gooey, viscous crude grade into commercially viable light, sweet crude oil.

A&P is up

Also from out of the distressed-debt precincts, a trader saw Great Atlantic & Pacific Tea Co. "doing better earlier today," with the bankrupt Montvale, N.J.-based supermarket operator's 11 3/8% senior secured notes due 2015 finishing up around 97½ bid. He called that up around a point from the 961/2-97½ context at which the bonds began the day.

He saw A&P's busted convertible issues - its 5 1/8% notes slated to mature in June and its 6¾% notes due 2012, which now trade like deeply distressed unsecured junk bonds instead of converts because of A&P's nearly worthless stock - up ½ point on the day at 35 bid, 37 offered.

Another trader saw the 11 3/8s at 96¾ bid, 97½ offered, which he said was "a little bit better than [Tuesday] - between ½ and ¾ point improved. He said that the bonds "have been sort of creeping up," going from 951/2-96 on Monday to 96-96¾ on Tuesday and 963/4-97½ on Wednesday.

"I don't know how much trading has been going on, but they've been moving up a little bit."

Investors apparently ignored the news that A&P's chief financial officer, Brenda Galgano, had resigned from the company, effective March 27, which was contained in a regulatory filing late Friday but was not otherwise announced by the company; Galgano will become CFO of New Jersey-based nutritional supplements retailer Vitamin Shoppe Inc. effective April 4, the latter company announced Wednesday.

Auto names in neutral

A trader said that the 8 3/8% benchmark bonds due 2033 of Motors Liquidation Co. - the new name for the old General Motors Corp. following the latter's bankruptcy reorganization - were pretty much unchanged on the day at 35½ bid, 36 offered, noting that the bonds "have been in that range" for the last few sessions. He saw "a decent amount of trading."

Another trader saw the "old GM" bonds down ¼ point at 35 bid, 36 offered, while seeing GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031unchanged on the day at 108¾ bid, 109¾ offered.

© 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.