Bally bonds nosedive on warning; General Cable, Coventry price; funds see $25 million inflow

By Paul Deckelman and Paul A. Harris

New York, March 15 - Bally Total Fitness Holding Corp.'s 10½% notes due 2011 slid badly in late dealings Thursday, after the Chicago-based fitness club operator said that it is looking at restructuring its $827 million of debt - and might be forced into a bankruptcy filing if it cannot do so.

That livened up a session which for the most part had been proceeding quietly, with many issues locked within narrow trading ranges. A trader noted the impact of "March Madness," with much attention in trading rooms diverted to telecasts of the college basketball playoffs.

A high yield portfolio manager said that the broad market traded higher on Thursday.

Meanwhile the primary market, trailing a Wednesday session that saw the biggest burst of issuance thus far in 2007, had three issuers pricing four tranches of notes to raise a combined total of slightly less than $530 million of proceeds, on Thursday.

General Cable Corp. priced a $325 million two-part offering, and those new bonds were seen having moved up a little from their par issue price when they were freed for aftermarket activity.

In follow-up news, Freeport McMoRan Copper & Gold Inc.'s record-breaking $6 billion of new bonds continued to firm smartly, adding to the already-sizable gains which the Phoenix-based mining company's new bonds had notched during their initial aftermarket trading on Wednesday.

Funds are back in the black

And as activity was trailing off for the day, market participants familiar with the weekly high yield mutual fund flow numbers compiled by AMG Data Services of Arcata, Calif., told Prospect News that in the week ended Wednesday, $25.4 million more came into those weekly-reporting funds than came into them.

It was the first weekly inflow after two straight weeks during which a total of $33.7 million more left the funds than came into them, including the $11 million outflow in the previous week, ended Wednesday March 7. Those two weeks of outflows had followed eight straight weeks of inflows since the start of the year, totaling some $856 million, according to a Prospect News analysis of the AMG figures.

The latest week's infusion extends year-to-date inflows to slightly more that $853.2 million among the funds that report to AMG on a weekly basis.

Meanwhile the funds that report on a monthly basis saw $100,000 of outflows during the most recent period, leaving year-to-date flows among the monthly reporters at $2.360 billion.

Hence year-to-date aggregate flows, which tally both the weekly and monthly reporters, stood at $3.212 billion.

Inflows have now been seen in nine weeks out of the 11 since the beginning of the year. In 2006, outflows were seen in 34 weeks out of 52, totaling $2.998 billion, according to the Prospect News analysis said. Inflows were seen in 18 of those weeks, largely concentrated in the latter part of the year.

The figures exclude distributions and count only those funds that report on a weekly, rather than on a monthly, basis.

General Cable prices $325 million

General Cable priced $325 million of senior notes (B1/B+) in two tranches on Thursday.

The Highland Heights, Ky., wire, fiber optic and cable products company priced a $200 million tranche of 10-year fixed-rate notes at par to yield 7 1/8%. The yield came 12.5 basis points inside of the 7¼% to 7½% price talk.

Meanwhile General Cable priced a $125 million tranche of floating-rate notes at par to yield three-month Libor plus 237.5 basis points, at the tight end of the Libor plus 250 basis points price talk.

Goldman Sachs was the bookrunner for the debt refinancing and general corporate purposes issue.

Centene prices $175 million

Centene Corp., meanwhile, priced a $175 million issue of seven-year senior notes (Ba3/BB) at par to yield 7¼%, on top of price talk.

Banc of America Securities was the left bookrunner. Wachovia Securities and Merrill Lynch & Co. were joint bookrunners.

The St. Louis health care company will use the proceeds to refinance debt and for general corporate purposes.

BevMo's $30 million PIK notes

BevMo Intermediate Holdings, Inc. (HoldCo), the parent of Beverages & More, Inc., priced a non-rated $30 million issue of 13% senior secured PIK notes at 98.00 to yield 13.531% on Thursday, via Jefferies & Co.

No formal price talk had been set.

Proceeds will be used to repay a promissory note and make a distribution to the stockholders of HoldCo.

On Feb. 16 Beverages & More, Inc., the operating company, priced a $100 million issue of five-year senior secured notes (Caa1/CCC+) at par to yield 9¼%.

BevMo is a Concord, Calif.-based retailer of alcoholic beverages and related products in the Western United States.

Hawker massively oversubscribed

Hawker Beechcraft Corp. has restructured its notes offer and downsized it to $1.1 billion from $1.2 billion.

Meanwhile the Wichita, Kan., aircraft manufacturer set price talk on the deal which is expected to price on Friday.

The company plans to sell $800 million of senior notes (B3/B-) split between fixed-rate notes talked at the 8¾% area and PIK toggle notes talked 37.5 bps behind the senior fixed-rate notes.

In addition Hawker Beechcraft plans to sell a downsized $300 million tranche of 10-year senior subordinated notes (Caa1/B-). The tranche, which was downsized by $100 million, is talked at 125 basis points behind the senior fixed-rate notes.

The company shifted $100 million of proceed to its bank loan from the senior subordinated notes tranche and abandoned a proposed tranche of senior floating-rate notes.

Goldman Sachs & Co., Credit Suisse, Citigroup and Lehman Brothers are joint bookrunners for the acquisition financing.

A buy-side source said that the deal is a blowout, with the order book as much as 10-times oversubscribed.

Freeport bonds keep rising

When the new General Cable bonds were freed for secondary dealings, the 7 1/8% notes due 2017 were seen having moved up to 100.75 bid, 101.25 offered from their par issue price, while the floating-rate notes due 2015 firmed to 100.5 bid, 101 offered, also up from par.

But the standout performer among the newly priced deals remained Freeport McMoRan, whose two new tranches of fixed-rate debt pushed up about 1½ points from their respective par issue prices in initial dealings Wednesday, while its floating-rate note tranche was up around a point from par after it was freed.

The bonds "did well last night [Wednesday], and did even better this [Thursday] morning," a trader said.

The 8 3/8% senior notes due 2017 opened at 102.5 bid, 103 offered, and went up "right off the bat," the trader said, finishing the session at 103.25 bid. Its 8¼% notes due 2015 firmed slightly from 102.25 bid, 102.875 offered at the opening to 102.75 bid, 103.25 offered, with the floaters going from 101.5 bid, 102.5 offered at the opening to 102 bid, 102.75.

TRW Automotive's new dollar-denominated 7% notes due 2014 and 7¼% notes due 2017, each of which had priced Wednesday at levels between 98 and 99 bid, but then proceeded to move about half a point lower for each, were seen moving around in a 98-98.5 context, which a trader called "about where they had priced."

Bally gets bopped

Back among the outstanding issues, Bally 10½% bondholders should have heeded the warning about watching out on the Ides of March. After a pretty uneventful session, those bonds - which had closed on Wednesday around 100.5 - began sliding in active afternoon size trading, first to around the 85 level, before ultimately going home at 89.25 after closing out the session in hectic activity.

Bally's 9 7/8% notes scheduled to mature a month from now, on the other hand, were little changed, investors apparently believing that the bonds will be money good next month. They actually rose a bit, to 96.5 bid, from about 95 at Wednesday's close.

"I think all of us had been waiting to see something on them," a trader noted.

The company, in a filing with the Securities and Exchange Commission, said that it would not be able to file the 10-K annual report for 2006 with the SEC that was due on Thursday, and said it did not know when that report might be filed. The company announced plans to write off as much as $37 million in asset values because it overestimated how long memberships taken out by customers would last.

It said that it had hired Jefferies & Co. as a financial advisor - and warned that if it were unable to satisfactorily restructure its debt it might have to consider a Chapter 11 filing.

Bally is looking at a pending maturity of its 9 7/8% notes on April 15.

"We were hoping they would have some sort of resolution on that piece [of debt] sooner than now," the trader said, "because it became short-term debt once we rolled into this year."

The trader said that "people had thought that even if they have trouble with the 9 7/8% subordinated notes, that the 10½% senior notes would be fully covered. Obviously, people may not feel like that any more.

"In general, we have been waiting - and expecting to hear more out of this company, sooner than now."

Subprime situation eases

Elsewhere traders detected a little bit of an easing in the market angst over the meltdown of the subprime mortgage lending industry, whose sudden recent collapse had dragged both stocks and bonds of affected companies lower.

A trader saw troubled subprime leader Fremont General Corp.'s "a little bit better bid today," with the Santa Monica, Calif.-based financial services company's 7 7/8% notes due 2009 firmed to 90.5 bid, 91.5 offered, up from the 88.5 bid, 90 offered seen on Wednesday.

However, homebuilders - whose industry is inextricably linked to the health of the mortgage industry - continued to struggle. Beazer Homes' 10-year debt widened out to about 320 basis points over comparable Treasuries from 300 bps over previously.

A trader saw Standard Pacific lower in the wake of a Moody's downgrade. The company's 7% notes due 2015 lost a point to 91 bid, 92 offered, while Technical Olympic USA's 10 3/8% notes due 2012 were down 2 points at 85 bid, 86 offered.

However, K. Hovnanian Enterprises' 6 3/8 notes due 2014, which had fallen Wednesday, rebounded to 92.75 bid, up more than a point on the day.

Rebounding Remy

Remy International Inc.'s bonds were seen several points improved on Thursday, although a trader said "I don't know what's going on there."

He saw the Anderson, Ind.-based automotive electrical systems manufacturer's Delco Remy 8 58% notes due 2007 having moved up to 75 bid, 76 offered from prior levels at 72 bid, 74 offered, while its 11% notes due 2009 and 9 3/8% notes due 2012 were each likewise up 3 points at 19 bid, 20 offered and 18 bid, 19 offered, respectively.

The company was recently reported to be trying to arrange a new workout loan that could end up being a debtor-in-possession financing if Remy is not able to reach a consensual out-of-court restructuring with its bondholders.

It had previously announced the hiring of the Rothschild investment banking firm as a financial advisor to help pursue deleveraging transactions.

According to published reports, several major institutional and hedge fund lenders have gotten restricted and are talking to Remy about the funding, although those talks at this point are in their preliminary stages.

Elsewhere in the automotive arena, a trader saw Dana Corp.'s 6½% notes due 2008 two points better on the day, at 76.5 bid, 77.5 offered, against a backdrop of the bankrupt Toledo, Ohio-based parts manufacturer turning to the courts this week in an effort to terminate labor contracts and retirement benefits for employees represented by the United Auto Workers and United Steelworkers.

The trader meantime saw no movement in bankrupt Troy, Mich.-based components manufacturer Delphi Corp.'s 6.55% notes due 2006, still hovering around 111 bid.

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