Ply Gems, Parker, Securus deals price; Tenet, Charter, Delta gain

By Paul Deckelman and Paul A. Harris

New York, Aug. 18 - The high-yield primary sphere was percolating on Wednesday, with Parker Drilling Co., Ply Gem Industries Inc. and Securus Technologies Inc. all heard to have priced new deals during the session. The Ply Gem deal was an up-sized add-on to an already existing series of bonds, while the Securus - which was re-worked into a secured seven-year issue from an unsecured eight - was downsized.

In the secondary market, Tenet Healthcare Inc.'s bonds were seen higher, possibly due to the progress the Santa Barbara, Calif.-based hospital operator seems to be making in selling off non-core operations. It was reported to be getting down to brass tacks with the potential buyer of two Massachusetts hospitals.

Charter Communications was also better, although there was no immediate word why, while Delta Air Lines Inc.'s bonds were gaining altitude, on hopes the beleaguered air carrier can come to terms on a pay cut proposal with its pilots, and restructure it big debt load.

In what syndicate sources billed as likely the last truly active session of summer 2004 - barring surprises - the primary market watched as three issuers completed transactions on Tuesday.

The total take was $435 million of proceeds.

Shortly after the close one investment banker said that although investor attention is presently a scarce commodity - because the investors themselves have become scarce - surprises cannot be completely ruled out.

"It's still possible to do things if for some reason people think the market is good on a given day," the sell-side official said. "You might be able to do a deal for a company that's well known to the market - a homebuilder or a gaming name.

"But nothing that requires full marketing is going to get done."

However, another banker from a different high yield syndicate desk made a more absolute pronouncement.

"Everyone's gone out of the city," said the source speaking from the 212 area code.

"There's not much until after Labor Day. From that point, though, there are announced transactions."

Parker Drilling at wide end of talk

With just three issuers pricing deals, Wednesday's action was something of a smorgasbord: one floating-rate deal, one fixed-rate and one add-on.

Parker Drilling Co. sold $150 million of six-year senior floating-rate notes (B2/B-) at par to yield three-month Libor plus 475 basis points, at the wide end of the three-month Libor plus 450-475 basis points price talk.

Lehman Brothers and Banc of America Securities ran the books debt refinancing transaction from the Houston-based diversified oil well drilling services provider.

Ply Gem upsizes add-on

Meanwhile Kearney, Mo. home improvement products manufacturer Ply Gem Industries, Inc. priced upsized its add-on deal by $30 million and priced it toward the middle of talk.

The company completed a $135 million add-on to its 9% senior subordinated notes due Feb. 15, 2012 at 100.25. Price talk was 100-100.75 and the deal was increased from $105 million.

The transaction results in an 8.94% yield to worst and an 8.952% yield to maturity.

UBS Investment Bank, Deutsche Bank Securities and JP Morgan ran the books for the acquisition financing.

Securus restructures

Finally, in a restructured, downsized transaction, Securus Technologies, Inc. sold $154 million of 11% seven-year senior secured notes (B2/B+) at 97.651 to yield 11½%.

The sale generated $150.4 million of proceeds.

Price talk was for a yield of 11%-11¼%.

The issue was downsized from $190 million and the seven-year senior secured structured replaced a previously announced eight-year senior note structure.

Earlier in the session Moody's Investors Service assigned a B2 rating to the restructured notes. That lifted the rating from the previous structure's B3.

Moody's commented that the upgrade "reflects the incremental enhancements made to this level of the capital structure from the originally proposed structure Moody's rated on July 29."

Interestingly the Moody's ratings release also stated: "In the current structure, the senior notes benefit from the introduction of a more junior layer of debt in the form of $40 million of 17% senior subordinated notes due 2014 (unrated)."

Some market sources told Prospect News that they had been anticipating hearing terms on this $40 million subordinated tranche. However at press time no terms had appeared.

Credit Suisse First Boston and Morgan Stanley ran the books deal from the Denver-based security services provider.

Also anticipated on Wednesday were terms from the MQ Associates, Inc. (MedQuest) $85 million proceeds eight-year senior discount notes offering (Caa1/B-) via JP Morgan.

The market heard 11¾%-12% on Tuesday. However market sources who spoke to Prospect News well after the Wednesday close reported that no terms had been seen.

Two for the euro pipeline

Although, as predicted, no roadshow starts were heard during the Wednesday session, two names from the European high-yield universe were heard joining the pipeline of future deals.

Royal Vendex KKB NV plans to sell €350 million of bonds during the third quarter of 2004.

ING and Citigroup will have the books on the acquisition financing being brought by the Netherlands department store owner.

Also German plumbing fixtures manufacturer Grohe AG plans to sell €335 million of bonds in the third quarter of 2004.

Credit Suisse First Boston and Citigroup will run the books for the LBO deal.

Ply Gem, Parker unchanged in trading

When the new Ply Gem 9% senior subordinated add-on notes due 2012 were freed for secondary dealings, "they struggled right out of the box," a trader said, and ended up going nowhere, ending at 100.25 bid, 100.375 offered. The notes had priced earlier in the session at 100.25.

Parker Drilling's floating-rate notes due 2010 were seen at par bid, 100.5 offered, unchanged from their par issue price and "a typical floater break," a trader cynically said.

The new Securus 11 ½% notes due 2011 were priced too late in the session for any kind of aftermarket activity.

Also too late in the session to affect trading was the news that affiliates of The Blackstone Group will acquire Prime Hospitality Corp. in a $790 million deal that includes assumption of the Fairfield, N.J.-based lodging company's debt. The companies said that as part the transaction Prime Hospitality will begin a tender offer and consent solicitation for its $178.7 million principal amount of outstanding 8 3/8% senior subordinated notes due 2012. Those notes, a trader said, had most recently been quoted at 105.75 bid, 106.75 offered but the name, he said, "doesn't really trade around."

Tenet up after news report

Back among names which were in fact trading around on Wednesday, the trader said that Tenet Healthcare's bonds were all up, especially its recently issued 9 7/8% notes due 2014, "which move around more than the others."

He saw those notes firm to 102.375 bid, 102.875 offered from 101.75 bid, 102.25 offered, as Tenet "continues to hold to its plan" of getting rid of non-core assets. Earlier in the year, Tenet announced its intentions of unloading about a quarter of its then nearly 100 hospitals nationwide.

The trader noted a report in the Boston Herald that said Tenet "has moved into negotiations with potential buyers" of its MetroWest Medical Center and Worcester Medical center, both in central Massachusetts.

The paper said the "most likely candidate" to buy the hospitals is Nashville, Tenn.-based proprietary hospital operator Vanguard Health Systems, although it acknowledged that Tenet executives wouldn't comment on potential bidders and Vanguard Health Systems officials couldn't be reached for comment.

The news report did not put an expected price tag on the deal.

The trader saw other Tenet bond popping up as well on the hospital sale negotiations news, with the company's 5 3/8% notes due 2006 at par bid, 101 offered; its 5% notes due 2007 at 99.75 bid, 100.75 offered; its 6 7/8% notes due 2011 at 87.75 bid, 88.75 offered; and its 7 3/8% notes due 2013 at 91.75 bid, 92.75 offered, all up perhaps half a point to a point.

But another trader was a little more wary about attributing any Tenet rise to the Massachusetts news.

While the bonds were "a little bit firmer" Wednesday, he called reports of progress in the asset-sale effort "continued news, sort of status quo news" that has "already been priced in," rather than anything capable of moving the market.

"I think the asset sales are part of the reason why the bonds are trading where they are right now," he said, "that and the fact that the company has said they're turning the thing around."

He noted that "their numbers were not great - they were OK, but not great - but the fact that they're getting asset sales done and are getting reasonable multiples for their properties is an encouraging sign.

"It's positive news - but it's not going to be moving the bonds. I think the news. I think the asset sales are already figured in" to the bond prices. "It's good news - but it's not like a surprise. It's already sort of built in."

Another trader pegged the 9 7/8s a point better, at 102.5 bid, 103.5 offered, calling them "a little better - but nothing major."

Charter gains

The trader also saw Charter bonds up, "and I would be curious to know why," he added, as he quoted the St. Louis-based cable TV operator's 8 5/8% notes due 2009 at 77.75 bid, 78.75 offered, both up about two points, and its 9.92% notes due 2011 at 77.5 bid, 78.5 offered, a 2½ point gain. "I don't see any news on them," he reiterated.

Another trader agreed that while Charter was up some two to 2½ points, "I don't understand why," except perhaps for the continued market fascination with rumors that have principal owner Paul Allen pumping new money into the beleaguered cabler. Those rumors - which had Allen teamed with billionaire tech investor Mark Cuban - resurfaced earlier this month, gave the bonds and the stock a little pop, but then fizzled out quickly.

Still, he noted, Allen, who made his billions as co-founder of Microsoft Corp., "has more money than God - or at least, more money than just about anyone else, outside of Bill Gates."

Charter's 8 5/8% notes due 2009 were quoted at another desk at 78.25 bid, up more than a point on the session.

Delta rises as talks near

And Delta Air Lines' notes were seen up solidly anywhere from three to six points across the board as the Atlanta-based airline operator headed into Thursday talks with its unionized pilots, hoping to wring more pay cut concessions from by offering them equity in response to their earlier demand, according to published reports.

Delta was also seen getting ready to begin restructuring its debt, seeking consent from the holders of its secured aircraft-backed certificates to the company's buying and holding the notes, this giving it more flexibility, it said, and increasing its chances of being able to restructure outside of bankruptcy.

Delta's benchmark 7.70% notes due 2005 were quoted by several traders as having pushed up to 44 bid, 46 offered from prior levels at 38 bid, 40 offered. Its 7.80% notes due 2009 rose to 32 bid, 33 offered from 28 bid, 29 offered on Tuesday, while its 8.30% bonds due 2029 improved to 29 bid, 30 offered from prior levels at 25 bid, 26 offered.

Delta's 8% convertible notes added 4 points to 35.5 bid, 36 offered and the 2.875% convertibles rose 5.25 points to 40 bid, 41 offered on the day's events. Convertible bondholders were "pumped up," as one trader put it, on speculation that debtholders will end up owning the airline.

Delta's New York Stock Exchange-traded shares meantime were up 48 cents (13.37%) to finish at $4.07, on volume of 13.5 million, about two-and-a-half times the average daily handle.

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