Summit brings add-on; Fresenius restructures; T-Mobile rises; funds see $642 million inflows

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., Jan. 9 - In the primary market on Thursday, Summit Materials LLC priced an upsized add-on to its 10½% notes due 2020, and Fresenius Finance BV brought a restructured €750 million two-part offering.

The secondary high-yield market was again strong.

T-Mobile was a notable name of the day as the bonds pushed up almost a point. The gains came on the back of an announcement of a strategy aimed at poaching customers from other carriers. The company also said that it had gained 1.6 million new customers in the fourth quarter of 2013.

Meanwhile, Verso Paper Corp. debt continued to surge higher. Earlier in the week, the company announced a merger with sector peer NewPage Corp. The news resulted in immediate gains of up to 10 points. The debt has continued to climb at a sizable pace ever since.

Funds see $642 million inflows

Dedicated high-yield funds saw $642.31 million of inflows during the week to Wednesday, the first full week of 2014 to be reported, according to a sellside source who was citing a report from Lipper-AMG.

It almost exactly offsets the $643 million outflow reported for the week to the Jan. 1 close, most of which took place during the waning days of 2013.

Summit Materials upsizes, prices rich

Summit Materials and Summit Finance Corp. priced an upsized $260 million add-on to their 10½% senior notes due Jan. 31, 2020 (Caa1/B-) at 108.75 to yield 7.923% on Thursday, according to a syndicate source.

The deal was upsized from $210 million.

The reoffer price came at the rich end of the 108.25 to 108.75 price talk.

BofA Merrill Lynch was the left bookrunner. Citigroup Global Markets Inc., UBS Investment Bank, Barclays, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Blackstone were joint bookrunners.

Proceeds will be used to fund the acquisition of Alleyton and to refinance debt.

The issuer is a Washington, D.C.-based acquirer of heavy-side building materials companies in the aggregates, ready-mix concrete, cement, asphalt paving and construction industries.

Fresenius prices €750 million

Fresenius Finance priced a restructured €750 million two-part offering of non-callable senior notes (Ba1/BB+) on Thursday, according to market sources.

The deal included an upsized €300 million tranche of 2 3/8% five-year notes that priced at 99.647 to yield 2.45%. The tranche was upsized from €250 million. Earlier Thursday final price talk was set at mid-swaps plus 115 basis points to 125 bps, revised from earlier yield talk of 2¼% to 2½%.

In addition, Fresenius priced a downsized €450 million tranche of 3% seven-year notes at 98.751 to yield 3.2%. The tranche was downsized from €500 million. Final talk was mid-swaps plus 140 bps to 150 bps, revised from earlier yield talk of 2¾% to 3%.

The final spreads to mid-swaps were unavailable at press time.

Joint bookrunner Deutsche Bank will bill and deliver for the Rule 144A and Regulation S transaction. Barclays, Commerzbank, Credit Agricole CIB, SG CIB and UniCredit are also joint bookrunners.

The Bad Homburg, Germany-based provider of dialysis products and services plans to use the proceeds to partially repay or cancel the €1.8 billion senior bridge facility related to Fresenius' acquisition of 43 hospitals from Rhon-Klinikum AG.

Market strong again

The high-yield market was again strong during Thursday trading, as indicated by various market indexes.

The KDP High Yield Daily index ended at 74.75, with a yield of 5.5%. That compared to Wednesday's reading of 74.65, with a yield of 5.54%.

A market source noted that the CDX North American High Yield index was up a touch at 108 1/16 bid, 108 3/16 offered.

Recent deals were meantime ticking up with the market. A $350 million issue of 5½% notes due 2021 brought by Sabra Health Care LP and Sabra Capital Corp. on Wednesday was seen rising about half a point to par 7/8.

The deal priced at par but inched slightly upward in after-market dealings.

T-Mobile gains ground

T-Mobile bonds were moving on up Thursday after the company said late Wednesday that it would offer new customers up to $650 to change providers.

A trader saw the 6 1/8% notes due 2022 at 1033/4, up three-quarters of a point. Both the 6½% notes due 2024 and the 6.836% notes due 2023 were up a like amount at 103¼ and 1051/2, respectively.

At the Consumer Electronics Show in Las Vegas, T-Mobile's John Legere - the chief executive officer and a former AT&T executive who recently crashed a party of his former employer and was led out by security - said the wireless carrier would give new customers up to $650 to cancel their current contacts and change over. Additionally, Legere touted a 1.6 million increase in its subscriber base in the final quarter of 2013 alone. For the year, total additions came to 4.4 million.

T-Mobile's announcement comes a week after AT&T said it would give customers up to $450 to break their current contracts.

T-Mobile is moving away from the contract-based subscription that most carriers offer. Legere said 2013's subscriber additions indicate that the strategy is working.

"We will become famous for this in 2014," he said at the Vegas convention. "We're going to force the industry to change. I want every customer to have a complete choice. It's going to be a healthier industry."

Verso's surge continues

Verso Paper got another shot in the arm on Thursday as investors continued to react to news out earlier in the week regarding the company's merger with NewPage.

A trader said the 11 3/8% notes due 2016 jumped 8 points to 723/4, while the 8 3/8% notes due 2019 increased nearly 6 points to trade with a 58 handle.

Verso said on Monday that it will acquire Miamisburg, Ohio-based NewPage for $1.4 billion. NewPage shareholders will receive $250 million in cash, $650 million of new first-lien Verso debt to be issued at closing and a 20% equity stake in the company.

Memphis-based Verso has secured $750 million for the purchase. Those funds will be used for the cash portion of the sale and to refinance NewPage's $500 million term loan.

NewPage filed for bankruptcy in 2011 and exited in 2012. During that process, Verso made a bid for the company, but management maintained that it wanted to remain independent.

The value of the transaction was then valued at just over $1 billion.

Closing of the deal is expected in the second quarter.

In connection with the merger, Verso is exchanging the 8¾% notes and the 11 3/8% notes due 2016 for new second-priority adjustable senior secured notes and new adjustable senior subordinated notes.

Retail arena mixed

After declining on Wednesday, J.C. Penney Co. Inc. debt experienced a small rebound on Thursday.

One trader called the 5.65% notes due 2020 up over a point at 78. Another market source pegged the issue at 78 bid, up a point.

"There was a bit of activity, but the levels for the most part were unchanged," said a third trader. He saw the 5.65% notes trading around 78.

He also noted that the stock was "up a little bit."

The Plano, Texas-based retailer saw its bonds dipping on Wednesday after the company put out a release stating that it was "pleased" with its holiday sales, but it failed to provide any numbers to back up that statement. That caused already jittery investors some concern.

Meanwhile, RadioShack Corp.'s 6¾% notes due 2019 remained weak, with one trader deeming the debt off 1¾ points at 58. Another trader said paper was holding in in a 58 to 59 zip code.

As for Toys 'R' Us Inc., a trader called the 10 3/8% notes due 2017 off 3½ points at 831/4.

The toy store reported same-store sales for the period ended Jan. 4 on Thursday, showing a 1.8% gain overall in the United States. However, the company saw a 1.1% decline in international sales.

Elsewhere in the space, a trader said Claire's Stores Inc.'s 8 7/8% notes due 2019 fell more than 2 points to 991/2, while Logan's Roadhouse Inc.'s 10¾% notes due 2017 climbed up 1½ points to 691/4.

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