Carmike Cinemas prices; Alliance One reverses course on profit-taking; Gymboree mixed

By Stephanie N. Rotondo and Paul H. Harris

Phoenix, June 10 – The secondary high-yield market was mixed in midweek trading, even as the equity market was seeing a rebound.

And in the high-yield primary market, Carmike Cinemas, Inc. priced Wednesday’s sole dollar-denominated and fully junk-rated domestic bond deal, a $230 million issue of eight-year senior secured notes at par to yield 6%.

Other primary action came from Sealed Air Corp., which set price talk on its $850 million equivalent offering of senior notes that will include a dollar-denominated and a euro-denominated tranche, and Alere, Inc., which began a roadshow for a $425 million offering of eight-year senior subordinated notes.

Back to the secondary market, a rally came as oil producer BP reported that the U.S. had beaten Russia as the top oil and gas producer, and OPEC said the current oversupply of the commodity was easing.

However, OPEC also noted in a report out Wednesday that its members had increased production in May.

Additionally, the Energy Information Administration reported a large drawdown of U.S. crude stockpiles. The news sent oil prices upward, though profit-taking brought them down from the day’s highs.

Of the day’s dealings, Alliance One International Inc.’s debt was retreating from the previous day’s highs. The bonds had jumped 4 to 5 points on Tuesday after the tobacco distributor released earnings.

In other earnings news, Gymboree Corp. put out its numbers late Tuesday. Come Wednesday trading, the bonds were unchanged to slightly weaker.

In the commodity space, coal continued to dive, just one day after federal circuit court judges dismissed a lawsuit aimed at preventing the implementation of new rules from the Environmental Protection Agency.

Carmike comes tight

Carmike Cinemas priced Wednesday's sole dollar-denominated junk bond deal, a $230 million issue of eight-year senior secured notes (B1/BB), at par to yield 6%.

The yield printed at the tight end of the 6% to 6¼% yield talk.

That yield talk came on top of early guidance.

J.P. Morgan, Macquarie and RBC were the joint bookrunners for the debt refinancing deal.

Sealed Air dual-currency deal

Sealed Air set price talk on its $850 million equivalent two-part offering of senior bullet notes (B1/BB).

The deal includes dollar-denominated notes due September 2025 that are talked to yield 5 5/8% to 5¾%. Joint global coordinator Morgan Stanley will bill and deliver. BNP Paribas is also a joint global coordinator. BofA Merrill Lynch, Citigroup, Goldman Sachs and JPMorgan are the passive bookrunners.

In addition, Sealed Air is selling euro-denominated notes due September 2023 that are talked to yield in the 4¾% area, plus or minus an eighth of a point. Joint global coordinator BNP Paribas will bill and deliver for the euro-denominated notes. Morgan Stanley is also a joint global coordinator. BofA Merrill Lynch, Credit Agricole, Goldman Sachs and JPMorgan are the passive bookrunners.

Tranche sizes remain to be announced.

Books close at 9 a.m. ET on Thursday, and the debt refinancing deal is set to price thereafter.

Alere starts roadshow

Alere began a roadshow on Wednesday in New York for a $425 million offering of eight-year senior subordinated notes (expected ratings Caa1/CCC+).

Preliminary guidance has the offer coming together with a yield of 6½% to 6¾%.

The roadshow moves to Boston on Thursday, and the deal is expected to price later that day.

JPMorgan, Goldman Sachs, DnB NOR and RBC are the joint bookrunners for the debt refinancing deal.

Grupo Antolin prices notes

In the European primary market session, two deals priced.

Grupo Antolin Dutch BV priced a €400 million issue of seven-year senior secured notes (B1/BB-) at par to yield 5 1/8%, in the middle of the 5% to 5¼% yield talk.

Deutsche Bank, Banca March, Bankinter, BBVA, BNP Paribas, CaixaBank Banco, Sabadell, Santander and SG CIB were the joint bookrunners for the acquisition financing.

CMA CGM taps 7¾% notes

France-based container shipping services company CMA CGM SA priced a €175 million add-on to its 7¾% senior notes due Jan. 15, 2021 (B3/B-) at 99.5 to yield 7.858%, on top of price talk.

BNP Paribas was the sole bookrunner. Credit Agricole, HSBC, ING, SG and UniCredit were the joint lead managers.

The company plans to use the proceeds to redeem notes maturing in 2017 and 2019.

Outflows

The cash flows of the dedicated high-yield funds were negative on Tuesday, according to a market source.

High-yield exchange-traded funds saw $170 million of outflows.

Asset managers saw $155 million of outflows.

With Tuesday in the book, the weekly reporting period that started with the June 4 open and ended with Wednesday's close has seen the dedicated high-yield funds disgorge $2.1 billion of cash, with the lion's share, $1.65 billion, being drained from the ETFs.

Activity among the high-yield ETFs was mixed on Wednesday, with some buying and some selling, according to a trader who tracks their activities closely.

Market ends mixed

Market indicators were mixed Wednesday, despite a rebound across the equity markets.

The KDP High Yield index drifted down to 70.77, with a 5.61% yield, from 70.84, with a 5.58% yield. The CDX North American Series 23 High Yield index meantime rose over a quarter-point to 106.59 bid, 106.66 offered, according to a market source.

Signs of strength could be seen, however, in Tenet Healthcare Corp.’s $1.9 billion of 6¾% notes due 2023 – a deal that priced June 2 at 99½ to yield 6.832%. A trader said the issue was the most actively traded in the high-yield space, seeing the notes rise over half a point to 101 3/8.

Profit-taking in Alliance One

Alliance One International’s 9 7/8% notes due 2021 gave up some gains in Wednesday trading, as profit-takers took advantage of a decent jump on Tuesday.

One trader called the bonds a point lower at 90. Another trader echoed that level, calling the issue “a touch lower.”

On Tuesday, Alliance One reported earnings that resulted in a 4- to 5-point boost in the debt.

For the fourth fiscal quarter ended March 31, total sales and operating revenue rose 19.9% to $738.1 million. Operating income increased nearly 40% to $40 million.

Net income was $3.8 million, or 4 cents per share. That compared to a net loss of $17.1 million, or 18 cents per share, the year before.

For fiscal 2015, total sales and operating revenues declined 12.3% to $2.07 billion. The decline was due in large part to a 10.9% decrease in volumes and a 3.6% decline in average sales prices.

Operating income fell 7% to $110.8 million.

Still, net loss narrowed to $15.4 million, or 17 cents per share, from $86.7 million, or 99 cents per share, the previous year.

As of March 31, available cash and credit was $813.2 million, including $143.8 million in cash and $669.4 million in credit.

Gymboree’s loss widens

Gymboree’s 9 1/8% notes due 2018 were “pretty much in line with where they had been,” a trader said Wednesday, following the company’s earnings release.

He quoted the issue at 45½ bid, 46 offered.

However, another trader called the notes a quarter-point weaker at 45¾.

Late Tuesday, the San Francisco-based children’s clothing retailer reported the results of its first fiscal quarter. For the quarter ended May 3, Gymboree saw net sales improve to $276.1 million from $272 million the year before. Same-store sales, however, were flat.

Adjusted EBITDA came to $15.6 million, which compared to $22 million for the same quarter of 2014.

Despite the improvements in sales and EBITDA, net loss widened to $23 million from $13.4 million.

Looking toward to the remainder of 2015, Gymboree said it expects adjusted EBITDA for the full year to be $95 million to $105 million. The company believes it will have sufficient liquidity through the year and will be able to service its debt as well as handle growth.

And speaking of growth, the company intends to shutter 30 to 40 stores over the course of the year, while opening 12 new ones.

Coal trades weak

Investors continued to have no love for coal bonds in Wednesday trading.

A trader said Murray Energy Corp.’s 11¼% notes due 2021 slipped a quarter-point to 89½.

In Alpha Natural Resources Inc. paper, the trader saw the 6¼% notes due 2021 dipping a like amount to 11¼, as the 9¾% notes due 2018 dropped almost a point to 15¼.

The trader deemed the 7½% notes due 2020 unchanged at 19.

In Peabody Energy Corp. debt, the trader saw the 7 7/8% notes due 2026 at 41¾, a gain of about half a point, he said. But the 6¼% notes due 2021 declined a deuce to 44, and the 6½% notes due 2020 weakened 1½ points to 45½.

The 6% notes due 2018 meantime closed off over 2 points at 58 3/8, the trader reported.

At another desk, a source pegged Peabody’s 6½% notes at 45½, a loss of nearly 2 points on the day.

And, yet another trader said Alpha Natural’s 7½% second-lien notes “continued to drift lower,” falling to an 18½ to 19 context.

On Tuesday, three circuit court judges deemed a lawsuit brought by Murray and other coal companies – as well as 14 coal-producing states – against the government premature, given that the EPA rules have yet to be finalized.

The EPA first proposed the rules back in June. Once they go into effect, the rules – aimed at reducing greenhouse gas emissions – could close plants, hinder the construction of future plants and slow U.S. coal demand.

That news came on the heels of reports out on Monday that sector peer Walter Energy Inc. could file for bankruptcy as soon as this month.

© 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.