Terex sells 10-year issue, Berry Plastics prices add-on; Huntsman up on earnings in quiet session

By Paul Deckelman and Paul A. Harris

New York, Nov. 10- Terex Corp. was heard by high-yield syndicate sources Monday to have priced a $300 million offering of 10-year notes, with proceeds slated for debt repayment, including an outstanding issue of bonds. Berry Plastics Corp. meanwhile came to market with an $85 million add-on issue to its existing 10¾% notes due 2012.

Secondary activity was very light - one trader called it one of the lightest days of the year - not surprising, given the fact that The Bond Market Association has recommended the market be closed Tuesday for Veterans' Day, although the industry group did not call for its customary pre-holiday early close on Monday. Most bonds were quoted anchored in a narrow range around where they had traded on Friday, although there were a few significant exceptions. One was Huntsman International, whose bonds firmed on the Houston-based chemical company's better third-quarter numbers and its plans to cut costs.

The investment banks turned out two completed junk bond transactions during the opening session of the Nov. 10 week. And, as sources began forecasting when market activity took up, post-Labor Day, heated conditions in the high yield continue to pave the way for quick-to-market deals.

Terex priced a drive-by $300 million of 7 3/8% 10-year senior subordinated notes (B3/B). The paper priced at 99.110 to yield 7½%, which was at the wide end of the 7¼%-7½% price talk.

Credit Suisse First Boston and Citigroup were bookrunners on the Westport, Conn. diversified manufacturer's deal.

Tom Gelston, Terex director of investor relations, characterized the Monday drive-by as an "opportunistic financing," and added that with regard to timing the company had been advised by its investment bankers that "now is a pretty good time to go."

Terex announced it will use proceeds from the Monday bond sale to call the remaining $200 million of 8 7/8% senior subordinated notes due 2008 and to prepay $100 million of term loans.

Gelston also specified that Terex also has outstanding issues of 9¼% notes due 2011, and 10 3/8% notes due 2011, neither of which is presently callable.

In addition to Terex, the session also saw terms emerge from Berry Plastics Corp., which priced an $85 million principal amount add-on to its 10¾% senior subordinated notes due July 15, 2012 (B3/B-). The deal priced at 112, resulting in an 8.169% yield.

The sale generated $95.2 million of proceeds for the Evansville, Ind. manufacturer of plastic containers, drink cups and housewares.

Price talk on the deal, led by JP Morgan and Goldman Sachs & Co., was 111.5-112.

The Monday session also provided news of roadshow starts for a pair of 10-year deals.

The roadshow starts Wednesday for Pinnacle Foods Corp.'s offering of $150 million of 10-year senior subordinated notes. JP Morgan and Deutsche Bank Securities will run the books on the acquisition financing from the Cherry Hill, N.J.-based manufacturer and marketer of frozen foods, pickles, condiments and barbecue sauce.

The note sale will help fund the $485 million acquisition of the company by JPMorgan Partners and C. Dean Metropoulos from Hicks, Muse, Tate & Furst Inc.

And the roadshow is expected to begin late in the present week for J. Ray McDermott, SA's $200 million of 10-year senior secured notes, with pricing expected during the Nov. 17 week.

Morgan Stanley is bookrunner for the offering from the subsidiary of New Orleans-based energy services company McDermott International Inc.

Word also surfaced during the session, via press releases, on a pair of companies that intend to bring deals.

Imax Corp. announced that it intends to bring a seven-year senior notes offering, although no size, timing or syndicate names were disclosed.

The Toronto-based giant-screen movie company added that the deal will complete its financing initiative begun in 2001 to address the repayment of its 7 7/8% senior notes due December 2005, of which $153 million remains outstanding.

And Concentra Operating Corp. announced in a Monday press release that it intends to sell a $30 million add-on to its 9½% senior subordinated notes due Aug. 15, 2010.

The company expects the Rule 144A deal to be completed during the fourth quarter of 2004, although no syndicate names were disclosed.

The Addison, Tex-based provider of services designed to contain healthcare and disability costs priced the original $150 million priced at par on Aug. 5, with Credit Suisse First Boston and Citigroup running the books.

Finally on Monday price talk of 8 7/8% area emerged on Tekni-Plex's $200 million of 10-year second priority senior secured notes (B2/B-), which are expected to price on Wednesday afternoon.

Lehman Brothers and Citigroup are running the books for the deal from the Somerville, N.J.-based packaging products manufacturer.

There wasn't much trading seen in recently issued bonds on Monday, in keeping with the generally quiet tone of the whole of the secondary. MSW Energy Holdings II's new 7 3/8% senior secured notes due 2010 were being quoted at 100.5 bid, up slightly from their Friday issue price at par.

Among the existing bonds, Huntsman's 10 1/8% notes due 2009 were seen having firmed smartly to 99 bid from Friday's levels around 96.5, "a pretty good move," a trader observed, after the company reported third quarter EBITDA of $170 million, which includes $10.7 million in restructuring charges and losses on the sale of accounts receivable.

By contrast, second quarter pro forma EBITDA was $136.3 million, including restructuring charges and losses of $53.7 million. Pro-forma year-ago third-quarter EBITDA was $210.5 million, which included $16 million of restructuring charges and losses on the sale of accounts receivable.

While the latest quarterly figure represented a retreat from year-ago EBITDA, Huntsman noted that it "stabilized in the third quarter relative to second quarter at a time when earnings in our industry generally have been soft. We believe this reflects the strength of our differentiated product portfolio and our vigilance in managing costs as the chemical industry remains in the trough of the cycle," the company's statement said.

Perhaps of even greater import than the third-quarter figures was Huntsman's announcement that it plans to cut fixed costs by $200 million over the next 18 months.

It said that each of its six business segments - Polyurethanes, Advanced Materials, Performance Products, Pigments, Base Chemicals and Polymers - "has developed cost reduction plans to meet the overall minimum $200 million goal."

Huntsman said it also plans to reduce costs by increasing the use of shared services across its businesses, and expects to make additional announcements of site consolidations and headcount reductions in the near future.

Apart from Huntsman, "it was kinda quiet," a market source said - an assessment echoed by a trader at another shop, who declared that "nothing got done. Maybe we had 10% of the inquiries we normally get. Everything that was going to get done got done by about 10:30 or 11 a.m. [ET]. Today was one of the slowest days of the year."

There was some activity seen among volatile distressed issues, including Revlon Consumer Products Corp., whose 8 5/8% notes due 2008 were seen having improved by as much as four points on the session, to levels around 53 bid. There was no fresh positive news out on the struggling New York-based cosmetics maker that would explain the rise, although it should be noted that at such distressed levels, the bonds are volatile and frequent swings of a couple of points up or down during a session are not unusual.

Collins & Aikman Products Co.'s bonds were seen higher, after having retreated last week on the news that the Troy, Mich.-based automotive components supplier had either A) voluntarily given up two contracts to supply parts for Chrysler mid-sized vehicles because the company considered them unprofitable, or B) had been stripped of the contracts by Chrysler because the automaker is dissatisfied with C&A's performance.

Collins & Aikman's 10¾% notes due 2011 were quoted by a trader as having firmed to 84 bids, 86 offered from 83.25 bid, 84.25 offered on Friday, while its 11½% notes due 2006 improved to 74 bid, 76 offered from 73 bid, 75 offered.

At another desk, the volatile 111/2s were seen as having risen two points on the session, to 76 bid. But another market source saw those bonds unchanged around 74, while the 103/4s were a point better at 84.5.

The market source saw a small bump upward in Terex Corp.'s 8 7/8% senior notes due 2008, which are to be taken out using the proceeds of Terex's new bond issue that priced Monday (see Tenders and Redemptions elsewhere in this for more details). He quoted the existing Terex notes as having firmed to 104.75 bid, the level at which the bonds are expected to be taken out.

He saw "no big move" in the debt of El Paso Corp., despite the Houston-based natural gas pipeline company's having reported that it lost $146 million (24 cents per share) in the third quarter - a wider loss than the year-ago $69 million (12 cents per share) of red ink.

Excluding one-time items, El Paso lost $6 million (one cent per share), versus the year-earlier net income of $54 million (nine cents per share).

El Paso's 7 5/8% notes due 2010 were seen holding steady at 98.75 bid.

AK Steel Corp.'s bonds "finally are catching a bid" a trader said, noting that while the Middletown, Ohio-based steel producer's stock had recently been firming smartly from lows it had hit after reporting weak numbers and shaking up its top management, the bonds had pretty much stayed where they were.

He noted that the company's shares were up almost 82% from where they had been in late September, closing at $3.20 on Friday - a far cry from their $1.78 on Sept. 26. "Finally," he said, the bonds are following the stock up, with the 7¾% notes due 2012 two points better at 69 bid, 70 offered and the 7 7/8% notes at 71 bid, 72 offered, also up a pair. He added, "It's about time."

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