HCA plans $5.7 billion deal; Level 3 slates offering; AMR flies on tender news

By Paul Deckelman and Paul A. Harris

New York, Oct. 24 - HCA Corp. on Tuesday outlined its plans to sell $5.7 billion of new bonds in a multi-part bond deal which will be part of the Nashville, Tenn.-based hospital operator's previously announced leveraged buyout transaction.

Also in the new-deal arena, Level 3 Communications Inc. announced plans for a $400 million eight-year bond deal, and the Broomfield, Colo.-based telecommunications company's existing bonds were seen a bit easier. The company also came out with third-quarter earnings, posting a narrower net loss from a year ago.

And Metro PCS Wireless was heard by primary market players to have downsized its upcoming offering of eight-year notes, which is expected to price on Thursday. Price talk on the deal also emerged.

Tuesday's secondary market saw a rise in AMR Corp.'s bonds, which traders attributed to the news that the Fort Worth, Tex.-based airline giant is tendering for a number of series of bonds, debentures and medium-term notes, including its most widely-traded issue.

A high yield syndicate official said that the market had been mixed during the Tuesday session.

Meanwhile in the primary market one deal priced - a $500 million issue from Supervalu Inc. - while the forward calendar continued to take on heft.

Supervalu prices $500 million

Eagan, Minn.-based supermarket operator Supervalu Inc. was Tuesday's sole issuer.

The company sold a $500 million issue of eight-year senior notes (B1/B/expected B+) at par to yield 7½% in a drive-by deal that came at the wide end of the 7 3/8% to 7½% price talk.

Merrill Lynch & Co., Banc of America Securities and Credit Suisse were joint bookrunners for the debt refinancing.

Level 3 drive by

The Oct. 23 week's anticipated issuance ballooned on Tuesday with two companies appearing with drive-by deals that are expected to both be completed by Thursday's close.

Level 3 Financing, Inc. talked its $400 million offering of eight-year senior notes (B2/CCC-) at 9¼% to 9½%.

The quick-to-market capital expenditures and acquisition funding deal via Merrill Lynch, is expected to price on Wednesday.

Cablecom plans €300 million

Coming into the euro market, sans roadshow, is Cablecom Luxembourg SCA, which announced on Tuesday that it plans to price a €300 million offering of 10-year senior notes (expected ratings B3/CCC+) on Thursday via JP Morgan.

The cable communications services company, which operates primarily in Switzerland, will use the proceeds to refinance debt.

MetroPCS downsizes

MetroPCS Wireless has downsized to $900 million from $1.1 billion its offering of eight-year senior notes (Caa2/CCC+), electing to raise the $200 million difference in the bank loan market.

The company has talked the notes at 9¼% to 9 3/8%, and expects to price them on Thursday.

Bear Stearns & Co., Merrill Lynch and Banc of America Securities LLC are joint bookrunners.

Elsewhere with regard to deals that have been traveling the investor roadshow route, Michael's Stores, Inc. was rumored to have upped price talk and introduced covenant changes to its $1.075 billion two-part deal.

A market source told Prospect News that the Texas specialty retailer upped talk on its $750 million offering of eight-year senior notes (B2/CCC) to 10% from the 9¾% area.

Meanwhile according to the source, the talk on Michael's Stores proposed $325 million tranche of 10-year senior subordinated notes (Caa1/CCC) remained at the 11¼% area.

Pricing is expected Wednesday.

The road ahead

Two companies announced roadshow starts on Tuesday.

MediMedia USA, Inc. will start a roadshow on Wednesday for its $150 million offering of eight-year senior subordinated notes (Caa1/CCC+), via Goldman Sachs.

Also Paris corporate travel services company Carlson Wagonlit Travel, Inc. will begin a roadshow on Wednesday for a €285 million offering of 8.5-year senior floating-rate notes (expected ratings B2/B-) via JP Morgan.

Both deals are expected to price next week.

HCA $5.70 billion to launch next week

Finally, Hercules Holding II, LLC (HCA Inc.) is expected to launch bond offerings totaling $5.70 billion next week, according to an informed source.

The deal is anticipated to include $4.2 billion of senior secured second-lien notes with expected maturities in 2014 and in 2016, and $1.5 billion senior second-lien toggle notes expected to mature in 2016, which will pay in kind for the first five years.

The company will also put in place a $16.80 billion credit facility via Bank of America, Citigroup, JP Morgan, Merrill Lynch, Deutsche Bank and Wachovia Securities.

Proceeds will be used to help fund the LBO by Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and company founder Thomas F. Frist Jr.

Hercules Holding was formed to carry out the merger.

Healthcare weak

In secondary news, a trader said that in the healthcare sector "some of the names were a little softer," amid continued investor concern about changes in government Medicare funding. One he mentioned was HCA, although its bonds had actually weakened several hours before the Tuesday evening announcement of the upcoming new mega-deal.

He saw the company's bonds "off by about a half [point] to a point," with its 6½% notes due 2016 trading at 79 bid, 80 offered, down from 80 bid, 81 offered last week. The company's shorter paper "is hanging in there, and the really short paper is getting taken out" as part of the LBO financing, "so obviously that's not in play anymore."

RJR up, Jean Coutu steady

Elsewhere, he saw tobacco giant RJ Reynolds Tobacco Holdings Inc.'s 7¼% notes due 2012 at 102.75 bid, 103.75 offered, which he called up ½ point, while Jean Coutu Group Inc.'s 8½% notes were at 96.5 bid, 97.5 offered, essentially unchanged. The Canadian retailer is in the process of selling its Eckerd drugstore chain to Rite-Aid Corp.

The bonds "were pretty much hanging in," he said. "It looks like they're not going to take them out" as part of the Eckerd sale to Camp Hill, Pa.-based drugstore chain operator Rite-Aid, although that's been going back and forth, obviously." Rite-Aid agreed to assume the bonds - much to the chagrin of Jean Coutu noteholders, who had anticipated a redemption of those bonds.

AMR climbs on tender

Elsewhere, AMR's 9% notes due 2012 were seen up 2 points on the session at 105 bid. Traders attributed the rise in the bonds to the announcement by the American Airlines parent company that it would tender for nearly two dozen series of debt, including the 9s, and the company's other widely quoted issue, the 9% notes due 2016. Those bonds were seen around the 104 bid area, having risen - like the 2012 9s - to the takeout level announced in the tender offer news release (see related story elsewhere in this issue).

Level 3 eases on debt issue

News that Level 3 plans to bring a new debt issue "put a little pressure on its [existing] bonds," a trader said, quoting the company's 10¾% notes due 2011 a little easier at 105.5 bid, 106 offered.

Another trader pegged those bonds at 105 bid, 106 offered going home, which he said was down from earlier levels at 105.75 bid, 106.75 offered.

At another desk, a market source quoted Level 3's 11½% notes due 2010 a quarter point lower at 104.5.

Besides its plans to issue the $400 million of new bonds, Level 3 reported a narrower third-quarter loss of $138 million (12 cents per share), well down from its year-ago red ink of $204 million (29 cents per share). The company's latest-period loss was smaller also than the 14 cents per share Wall Street was looking for.

The results were favorably impacted by the company's sale during the quarter of its Software Spectrum unit, which produced a gain of $33 million (three cents per share).

Also helping cut the loss were stronger revenues, which more than doubled to $875 million from $384 million a year ago on stronger demand for Level 3's internet protocol and voice communications services.

Trump, Wynn trade on Plaza reports

A trader saw some activity in the bonds of gaming operators Trump Entertainment Resorts Inc. and Wynn Resorts Ltd., fueled by news reports that the eponymous principals of the two companies - Donald J. Trump and Steve Wynn, last seen chatting together at Shea Stadium during the final game of the National League playoffs - may have been talking about more than just baseball that night. The Newark, N.J. Star-Ledger reported Monday that the two have been holding talks about the possible sale of a Trump property in Atlantic City to Wynn.

That report gave Trump's 8½% senior secured notes due 2015 a one point boost to 96 bid, 97 offered, he said, while Wynn's 6 5/8% first mortgage notes due 2014 ended unchanged at 97.5 bid, 98.5 offered.

The Star-Ledger reported that the Las-Vegas-based Wynn and Atlantic City-based Trump were talking about a possible sale of the Trump Plaza gaming resort, which is located on a 12-acre site at the foot of the Atlantic City Expressway where Wynn is interested in building his own casino resort. Such a deal could include a parcel of Wynn-owned land in Vegas being swapped to Trump.

The paper quoted a Trump spokeswoman calling reports of such a deal "not true" - but it said other knowledgeable people said that talks were in fact going on, although they were still in the preliminary stages and might fall apart.

The paper also said that The Donald is interested in building a residential tower in front of the largest of his three gambling palaces, the Taj Mahal.

If Trump and Wynn were to strike a deal, it would market a triumphant return by the latter gambling kingpin to the city he left nearly 20 years ago, vowing at that time to "never return." Wynn formerly owned the Golden Nugget casino in Atlantic City, but sold it in 1987 - a sale reportedly prompted by Wynn's frustration with gaming regulators in New Jersey.

Elsewhere in the gaming sector, the trader said that there were "some buyers" out there for MGM Mirage's 7¼% notes due 2017 in a 98.5 bid, 99.5 offered context.

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