Postmedia sells C$250 million notes on top of talk; Armtec, North American Energy rise

By Cristal Cody

Prospect News, Aug. 9 - Postmedia Network Inc. sold its offering of C$250 million of five-year senior secured first-lien notes on top of guidance on Thursday, an informed bond source said.

The company held a roadshow in the Canadian and U.S. markets earlier in the week for the high-yield deal.

Bond markets were mostly quiet ahead of Canada's key monthly job data release on Friday, sources said.

The Markit CDX Series 18 North American investment-grade index closed flat for a second day at a spread of 103 basis points.

The Markit CDX Series 18 North American high-yield index edged lower to 97.94 from 98.05.

In the secondary market, Armtec Holdings Ltd.'s five-year junk notes were trading slightly higher, according to a bond source.

North American Energy Partners Inc.'s five-year senior debentures also have edged up in trading this month.

Canadian government bonds ended the day with yields down 1 bp across the curve. The 10-year note yield closed at 1.81%. The 30-year bond yield fell to 2.34%.

Statistics Canada will release labor data on Friday. In economic data on Thursday, the agency said Canada's trade deficit widened to C$1.8 billion in June from C$954 million in May. Merchandise imports rose 2.3% and exports edged up 0.2% in June.

In other data, the new housing price index rose 0.2% in June, following a 0.3% increase in May, Statistics Canada said.

Postmedia sells C$250 million

In the day's primary action, Postmedia Network sold C$250 million of five-year senior secured first-lien notes (Ba3/B+/) at par to yield 8¼%, an informed bond source said.

The notes due Aug. 16, 2017 had been talked on Wednesday in the 8¼% yield area.

The issue priced as a private placement in Canada and under Regulation S and Rule 144A.

Scotia Capital Inc. and Morgan Stanley were the joint bookrunners. Co-managers were BMO Capital Markets Corp., CIBC World Markets Inc. and RBC Capital Markets Corp.

The deal's guarantors are Postmedia Network Canada Corp. and all existing and future restricted subsidiaries of the issuer.

The notes are non-callable for three years.

The issue has a 101% change-of-control put and an equity clawback for up to 35% of the original amount per year in the first three years at par plus the coupon.

The notes have a Canadian call at 100 bps over the Government of Canada benchmark and a special call for up to 5% of the original amount per year in the first three years at 103%.

The bonds may be redeemed in 2015 at par plus ¾ the coupon, in 2016 at par plus ½ the coupon, and in 2017 and thereafter at par.

Proceeds will be used to repay debt under the company's existing term loan facility.

The company, a subsidiary of Postmedia Network Canada Corp., is a Toronto-based newspaper publisher.

Armtec edges higher

Armtec's 8 7/8% senior notes due 2017 (/B-//DBRS: B) traded slightly higher at 71 bid on Thursday in the secondary market, a bond source said.

The notes were seen in July trading in the 67.5 area, a source said.

Armtec sold C$150 million of the notes on Sept. 15, 2010 at par.

Guelph, Ont.-based Armtec Infrastructure manufactures and markets industrial infrastructure products and engineered construction solutions.

North American Energy rises

North American Energy Partners' 9 1/8% senior debentures due April 7, 2017 were quoted on Thursday up 2 points from late July to 87 bid, a bond source said.

North American Energy Partners sold C$225 million of the debentures (B3/B) on March 26, 2010 at par.

The company is an Edmonton, Alta.-based provider of heavy construction, mining, piling and pipeline services in western Canada.

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