Upsized XM, Affinion deals, downsized Sensata price; Marsh Supermarkets up on buyout bid

By Paul Deckelman and Paul A. Harris

New York, April 21 - XM Satellite Radio Holdings' two-part senior note offering took flight on Friday, high yield syndicate sources said - amid sufficient demand to solidly upsize the deal by one third of its original size. Also being upsized, albeit only slightly, was Affinion Group's offering of 91/2-year senior subordinated notes.

On the other hand, Sensata Technologies BV's two-part offering, which earlier in the week was heard to have been downsized, with a portion of the planned bond borrowing shifted over to bank debt, indeed priced in that truncated form - but Sensata proved to be nothing less than sensational in secondary dealings, with both tranches firming smartly from their issue price.

Among established secondary issues, investors were buying Marsh Supermarkets Inc.'s bonds the way shoppers at the Indianapolis-based grocery chain's roughly 280 stores in the Midwest snap up the 10-for-$10 sale items on double-coupon days, spurred on by the news that the company has agreed to be purchased by an affiliate of Sun Capital Partners for $88 million.

From out of the distressed-debt precincts came word that Foamex International Inc.'s subordinated bonds - which soared on Wednesday and continued to firm on Thursday - were once again better bid for in Friday's dealings.

XM Satellite upsizes to $800 million

The high-yield primary market saw just under $1.5 billion of dollar-denominated issuance price Friday in four tranches.

Friday's biggest chunk of issuance came from XM Satellite Radio, which priced an upsized $800 million two-parter (Caa2/CCC).

The Washington, D.C.-based satellite radio company priced a $600 million issue of eight-year fixed-rate notes at par to yield 9 ¾%, wide of the 9 3/8% to 9 5/8% price talk.

XM Satellite Radio also priced a $200 million issue of seven-year floating-rate notes at par to yield three-month Libor plus 450 basis points, in the middle of the three-month Libor plus 437.5 to 462.5 basis points price talk.

UBS Investment Bank, JP Morgan, Bear Stearns & Co., Citigroup and Credit Suisse were joint bookrunners for the debt refinancing transaction which was upsized from $600 million.

Sensata multiple-times oversubscribed

Also pricing a two-parter was Sensata Technologies which completed a downsized $750 million equivalent transaction.

Both tranches came at the tight end of price talk and saw healthy demand, according to an informed source who said that the order books were multiple-times oversubscribed.

The Attleboro, Mass., supplier of engineered sensors and controls priced a $450 million issue of eight-year senior notes (B2/B-) at par to yield 8%, at the tight end of the 8% to 8¼% price talk.

The company also priced a €245 million issue of 10-year senior subordinated notes (Caa1/B-) at par to yield 9%, again at the tight end of the price talk, which was 9% to 9¼%.

Morgan Stanley, Banc of America Securities and Goldman Sachs & Co. were joint bookrunners for the acquisition financing.

The bond transaction was decreased to $750 million from $900 million, with the company shifting $150 million to its term loan.

Affinion comes inside price talk

Finally on Friday, Affinion Group priced a $355 million issue of 11½% 9.5-year senior subordinated notes (Caa1/B-) at 98.586 to yield 11¾% on Friday, inside the 12% area price talk.

The sale generated $349.98 million of proceeds.

Credit Suisse and Deutsche Bank were the bookrunners for the debt refinancing deal from the Norwalk, Conn., direct marketer of membership, insurance and package enhancement products.

Week's issuance tops $2.5 billion

Tallying Friday's five tranches, the market saw slightly over $2.54 billion of dollar-denominated issuance price during the post-Easter week, less than the $3.14 billion which priced during the four-session pre-Easter week.

Year-to-date issuance at the Friday close stands at just over $43.1 billion in 116 dollar-denominated tranches, as the 2006 primary market runs further ahead of 2005 in terms of dollar amount: at the April 21, 2005 close, slightly less than $34.6 billion had priced in 134 tranches.

The week ahead

Heading into the final market week of April 2006, the primary market expects to see $1.05 billion of dollar-denominated issuance as well as €2.031 billion of euro issuance.

At Friday's close only one of the seven tranches expected to price during the April 24 week had been officially talked, sources said.

• P.H. Glatfelter Co. has talked its $200 million offering of 10-year senior unsecured notes (Ba1/BB+) at 7¼% to 7½%. The Credit Suisse-led deal is expected to price Tuesday.

Also expected to price before Friday's close are:

• NPC International Inc.'s $200 million of eight-year senior subordinated notes (Caa1/B-) via Merrill Lynch & Co. and JP Morgan;

• Saxon Capital Inc.'s $150 million of eight-year senior notes (B2) via JP Morgan;

• Activant Solutions Inc.'s $175 million of 10-year senior subordinated notes (Caa1/CCC+), led by Deutsche Bank, JP Morgan and Lehman Brothers; and

• Cumulus Media Partners LLC's $325 million in two parts via Merrill Lynch & Co., Goldman Sachs & Co., Deutsche Bank, UBS Investment Bank and Banc of America Securities.

Also expected to price is Nordic Telephone Company Holdings ApS's €2.031 billion equivalent multi-tranche offering of senior notes (B2/B/B+) in a transaction led by Deutsche Bank Securities, JP Morgan, Barclays Capital, Credit Suisse and The Royal Bank of Scotland.

Sensata jumps in trading

When Sensata's new 8% notes due 2014 were freed for secondary dealings, the new bonds were seen initially trading at 101.25 bid, well up from their par issue price earlier in the session.

By the end of the day, a trader said, the bonds were still holding at that level, while its 9% euro-denominated notes due 2016 were doing even better, having zoomed to 102 bid, 102.75 offered.

At another desk, the 8s were seen at 101.375 bid, 101.625 offered.

A trader there meantime saw Affinion's new 11½% notes due 2015 at 100.5 bid, 101.5 offered, well up from their 98.586 issue price earlier in the day. A second trader saw those bonds at 100.75 bid, 101.5 offered, while yet another trader also saw the bonds offered at 101.5.

The latter trader meantime said that "right off the bat," the new XM Satellite 9¾% notes due 2014, which priced fairly late in the day, traded up to 100.5 bid, 101 offered, while the satellite broadcaster's floating-rate notes due 2013 were seen at 100.5 bid, 101.25 offered.

Another trader saw the XM 93/4s finishing at 100.75 bid, 101.25 offered, while the floaters closed at 100.5 bid, 101 offered.

Among recently priced issues, Chemtura Corp.'s new 6 7/8% notes due 2016 were being quoted at 100.375 bid, 100.625 offered, up from Wednesday's issue price at 99.452.

Marsh strong

Back among the established issues, Marsh Supermarkets' 8 7/8% notes due 2007 were seen by a trader to have jumped six points on the session to 98.5 bid, 99 offered. He attributed the sharp rise to the release late Thursday of takeover news about the company, which operates almost 120 supermarkets and about 160 convenience stores under its own Marsh name and under several other nameplates - LoBill, O'Malia, Village Pantry and Arthur's Fresh Market Stores - on its home turf in Indiana and in neighboring Ohio.

Sun Capital, a private investment firm specializing in leveraged buyouts of market-leading companies, has agreed to purchase all outstanding Marsh shares for $11.13 per share in cash. Marsh has agreed to not seek any alternative transactions before May 11, while its shareholders consider the Sun Capital buyout offer.

The agreement with Sun is the apparent culmination of a process which began last year, when the company's board - in the face of mounting losses - created a special directors' committee and hired Merrill Lynch & Co. to evaluate strategic alternatives, including the possible sale of the whole company.

In February, Marsh announced plans to close some of its stores and trim some jobs from its headquarters staff, in an effort to make itself more attractive to potential buyers.

Florida-based Sun Capital's prospective purchase of the venerable Marsh - a fixture in the Hoosier State since the early 1930s - is the latest in a series of shakeups in the industry, which has been bedeviled by low profit margins and fierce competition from both within the industry, and from new entrants from outside like the giant mega-retailer Wal-Mart Stores Inc., which has grafted supermarket-like sections onto its superstores and has moved into many markets where it competes with traditional supermarkets.

That competitive pressure helped to push Albertson's Inc., one of the three biggest national supermarket operators, into agreeing to be acquired by SuperValu Inc. in a $12.6 billion transaction expected to close in June. The Great Atlantic & Pacific Tea Co. Inc., the parent of the historic A&P chain, some months ago agreed to sell its profitable Canadian operations and use the proceeds to get rid of debt and to roll out a new "fresh market" concept which it hopes will help it to regain the position it once held as the leading name in the industry. Meantime, Winn-Dixie Stores Inc., pressured by Wal-Mart's encroachments and having difficulty competing against its traditional supermarket rivals as well, is currently reorganizing under Chapter 11.

Winn-Dixie keeps adding

Winn-Dixie's 8 7/8% notes due 2008 - which had pushed upward on Thursday, helped by the news that the bankruptcy court overseeing the Jacksonville, Fla.-based supermarket operator's restructuring had granted the company a 70-day extension of the time during which it exclusively has the right to file a plan of reorganization and solicit stakeholder support - continued to rise on Friday.

A trader quoted those notes at 83.5 bid, 84.5 offered, which he called a two-point rise, although other traders saw a more conservative gain, since they had seen the notes move up to an 83 bid context on Thursday.

Besides the exclusivity news, the trader also noted the continued progress the company has made in closing and selling off unprofitable operations - since its filing last year, Winn Dixie has announced some 326 store closings, envisioning a restructured operation of about 587 units in its core market areas.

Foamex up again

From out of that distressed-debt area came word Friday that Foamex International's 9 7/8% senior subordinated notes were continuing on a seemingly unstoppable tear which caused them to rise more than 30 points during the week. The driver behind the amazing rise in the bankrupt Linwood, Pa.-based foam rubber products producer's junior bonds seems to be expectations that the company would report strong monthly operating results.

A trader saw those 9 7/8s at 85 bid, 88 offered - well up from levels in the mid-70s previously. And those levels, in turn represented a sharp rise from levels around 50 bid at which those bonds had started the week.

Another trader saw the bonds at 85 bid, 87 offered; although he did not estimate the size of Friday's gain, he did observe that the notes were "up 30 points-plus on the week." He meantime saw the company's 10¾% senior secured notes due 2009 - which were already trading well above par on the assumption that those bonds will be money-good when the restructuring process runs its course - at 109.5 bid, 110.5 offered, which he called unchanged.

Another trader also pegged those senior bonds in a 109.5 bid context, although he saw them up a point, but saw far bigger gains in the subordinated bonds, which he suggested had firmed to bid levels in the 90-82 area from 73 bid, 75 offered previously. He termed the giant rise the bonds took during the week as "kinda wacky."

"People think the bonds will be worth par" - or at least near it - the first trader said in assessing the suddenly improved state of the 9 7/8s - which just a few months ago had actually been trading at single-digit levels.

Even Foamex's badly battered Pink Sheets-traded shares (FMXIQ) were getting into the act on Friday, more than doubling in value - actually, up 111.76%, or 76 cents, to $1.44 - on relatively robust volume of 5.787 million.

In a late-Thursday filing with the U.S. Bankruptcy Court for the District of Delaware, Foamex did indeed report good results, with $18.09 million of operating income for March on sales of $142.76 million. That was up from $11.14 million of operating income on sales of $114.64 million in February.

Net income for March was $4.21 million compared to $4.48 million in February.

Ford steady after earnings

In the automotive sphere, the big news of the day was Ford Motor Co.'s first-quarter earnings - but they seemed to have little impact on the Number-Two U.S. carmaker's bonds, the results having pretty much come in about where they had been expected to land.

A trader saw Ford's benchmark 7.45% notes due 2031 unchanged at 72.5 bid, 73.5 offered, while another trader had them at 72.75 bid, 73.25 offered, down one-quarter point. He also saw the 7% notes due 2031 of the carmaker's financial arm, Ford Motor Credit Co., up ¼ point at 87.75 bid, 88.25 offered.

Visteon Corp.'s 8¼% notes due 2010 were up perhaps half a point at 84.5 bid, 85.5 offered, although the 7% notes due 2014 of the Van Buren Township, Mich.-based automotive parts supplier - a former Ford unit - were unchanged at 77.5 bid, 78 offered.

Ford reported a net loss of $1.19 billion (64 cents per share) - a sharp deterioration from its year-ago first-quarter profit of $1.21 billion (60 cents per share). It was Ford's biggest quarterly loss since the fourth quarter of 2001, when the carmaker took a $5 billion red-ink bath. In the latest period, the loss was largely due to Ford's having taken $2.5 billion in charges connected with its "way forward" internal restructuring effort, which will see the closing of 14 plants in North America, and the elimination of as many as 30,000 jobs over the next several years.

GM little moves

There was no repetition Friday of Thursday's General Motors Corp.-led advance, which followed release of the world's biggest automaker's quarterly results. While GM continues to wallow in the red, market sources said that loss was not as bad as had been expected. That gave GM's bonds, and those of its General Motors Acceptance Corp. financing arm, a solid boost, and many other automotive names came along for the ride.

On Friday, however, GM's bonds, and GMAC's were seen rangebound, with a trader quoting GM's flagship issue, the 8 3/8% notes due 2033 at 73.75 bid, 74.25 offered, up ¼ point, while GMAC's 8% notes due 2031 were off ¼ point at 94 bid, 94.5 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.