Portola Packaging, UAP Holding price; HealthSouth continues firming

By Paul Deckelman and Paul A. Harris

New York, Jan. 20 - The high yield primary market, without missing a beat, picked up on Tuesday right where it left off at the end of Friday's abbreviated pre-holiday session as Portola Packaging ,Inc. and UAP Holding Corp. priced deals.

Secondary dealings following the three-day Martin Luther King Day holiday break were seen as generally quiet, although HealthSouth Corp. continued the uptrend seen in Friday's truncated dealings on news the embattled Birmingham, Ala.-based outpatient services provider had refinanced a long-overdue convertible issue.

The two deals pricing in Tuesday's week-opening session in the high yield primary market combined for a total of slightly over one-quarter of a billion dollars.

Meanwhile the new deal pipeline continued to build, as sources have predicted it would, in the face of the perceived strong cash positions on the part of high yield investors.

"The market is still pretty healthy," commented one sell-side official, not long after Tuesday's close.

"We are seeing some build-up on the forward calendar," the source added.

"There were a lot of deals that could have gotten done in December, but were not done then, probably because by the time they got going the league tables were already pretty much finalized.

"I think we saw most of those deals get done during the first two weeks of January.

"For the present we are looking for people to take advantage of these very favorable rates and perhaps do add-on deals.

"I don't have any names to give you, but we could see deals from virtually anyone with bonds that are callable."

Portola, UAP Holding seal deals

During Tuesday's session San Jose, Calif. plastic container manufacturer Portola Packaging, Inc. sold $180 million of eight-year senior notes (B2/B-) at par to yield 8¼% via JP Morgan and UBS Investment Bank.

The deal priced inside of the 8½% area price talk.

Also on Tuesday UAP Holding Corp., the parent of Greeley, Colo.-based United Agri Products, sold $125 million face of 8.5-year senior discount notes at 65.992 to yield 10¾%,

The sale, via underwriter UBS Investment Bank, generated $82.49 million of proceeds, upsized from $62.3 million.

And UAP came at the tight end of the 10¾%-11% price talk.

Timing firms on four offerings

Meanwhile the opening session of the holiday-abbreviated Jan. 19 week generated timing news on four pending transactions.

The roadshow runs Jan. 22-29 for Petro Stopping Centers LP's $215 million of eight-year senior secured notes.

Banc of America Securities will run the books on the refinancing deal from the El Paso, Tex.-based owner-operator of truck stops.

The roadshow starts Wednesday for Thermadyne Holdings Corp.'s $165 million of 10-year senior subordinated notes (B-). The Credit Suisse First Boston-led deal is expected to price mid-week during the week of Jan. 26.

The St. Louis company, which manufactures cutting and welding products and accessories, will use the proceeds to refinance debt.

The Gateway City also figures into the deal from Atlantic Broadband Finance, LLC, which started a roadshow Tuesday for $150 million of 10-year senior subordinated notes (Caa1/CCC+).

Quincy, Mass.-based Atlantic Broadband, a multiple system cable operator, will use the proceeds to help fund the acquisition of cable TV assets from St. Louis-based Charter Communications, sponsored by Abry Partners.

Merrill Lynch & Co. is the bookrunner.

And the roadshow is set to run Jan. 22-26 for an offering from Head NV's HTM Sport/Freizeitgerte AG. They will sell €125 million of 10-year senior notes (B2), which are expected to price on Jan. 27.

Citigroup will run the books on the refinancing deal from the wholly owned subsidiaries of Rotterdam-based manufacturer and marketer of sports equipment Head.

Portola shoots up in trading

When the new Portola Packaging 8¼% senior notes due 2012 were freed for secondary dealings, the new bonds shot right up to around 104 bid, 104.5 offered from their issue price at par, and were quoted going home at that exalted level. Several traders mentioned that the issue had been 12 times over-subscribed.

"There was pretty decent buying interest there," a trader said, but he noted that after the bonds had firmed up to around 104, no one stepped up [to take it] above that."

The trader theorized that nobody was desperate enough for the San Jose, Calif.-based plastic container manufacturer's bonds beyond that point because "the word that we're hearing is there's going to be plenty of paper and packaging paper coming. I guess there's a few deals on the slate."

The new UAP discount notes priced too late in the session to have been freed for secondary dealings, a trader said.

He noted that a number of other recently priced new deals seemed well bid for, quoting Premier Entertainment Biloxi's 10¾% notes due 2012, now hovering at 106.75 bid, 107.75 offered, up handsomely from their 98.684 issue price last week.

Other newbies performing well now that they are in secondary include New ASAT (Finance) Ltd.'s 9¼% notes due 2011 at 104.5 bid, 105 offered; Communications & Power Industries' 8% notes due 2012 at 104.25 bid, 105.25 offered; Elizabeth Arden Inc.'s 7¾% notes due 2014 at 103.75 bid, 104.75 offered; Station Casinos Inc.'s 6½% notes due 2014 at 103 bid, 103.5 offered; and Exco Resources Inc.'s 7¾% notes due 2011 at 102.75 bid, 103.25 offered, all of them up from their par issue prices.

Back among existing issues, HealthSouth's 10¾% notes due 2008, which on Friday had been heard trading up to a range of about 102.5-103.5, on news that the company had gotten financing to finally paid off its defaulted 3¼% convertible subordinated notes that matured on April 1, firmed again on Monday to as high as 105 bid, traders said.

Its 7 5/8% notes due 2012 were seen at 99.5 bid, 100.5 offered, while its 6 7/8% notes due 2005 were at par bid, 101 offered, about a point or two above Friday's levels across the board.

HealthSouth is still trying to bounce back from problems that surfaced last year, including allegations of massive accounting fraud and liquidity concerns, and although officials from their hired turnaround specialists, Alvarez & Marshal, reportedly said Tuesday that the amount of fraudulent entries on the company's books could be much greater than originally thought, they also projected that the company will remain financially viable and healthy.

Alvarez & Marshal told investors at a company meeting that as much as $3.8 billion to $4.6 billion might have to be restated - well above the $2.5 billion that company officials estimated last year.

However, they said that even with all of that going on, HealthSouth expects to generate revenue of nearly $4 billion in 2004 and $650 million in EBITDA.

Elsewhere, Lucent Technologies Inc. bonds were quoted firmer, getting a belated boost from the strong earnings reported Friday by one of the tech sector bellwethers, Juniper Networks Inc.; a trader saw the Murray Hill, N.J.-based telecommunications equipment maker's 7¼% notes due 2006 firmer at 105.5 bid and its 6.45% bonds due 2029 likewise improved at 86.5. Rival telecom equipment maker Nortel Networks 6 1/8% notes due 2006 were also improved, at 107 bid.

Terms on Votorantim, Bank Mandiri coming

In emerging market action, terms were heard on Voto-Votorantim Overseas Trading Operations III Ltd., which sold $300 million of 7 7/8% senior notes due Jan. 23, 2014 (B1/B+) at 99.489 on Friday Jan. 16 to yield 7.95%, via ABN Amro and UBS Investment Bank.

The issuer is a São Paulo, Brazil-based conglomerate with operations in cement, pulp and paper, aluminum, zinc and nickel, chemicals, frozen concentrated orange juice, energy and banking.

Meanwhile market sources told Prospect News on Tuesday a potentially sizable new sovereign issue from the Philippines is generating some buzz in the emerging markets.

One source said the Philippines is expected to show up with an offering of at least $800 million.

And PT Bank Mandiri is expected to show up with a dollar-denominated issue of emerging markets corporate bonds sometime during the second quarter of 2004.

The Indonesian bank sold an upsized $300 million of five-year bonds (B3/B-/B) in April 2003 via Credit Suisse First Boston and UBS Warburg.

Precise structure of the bonds, as well as precise timing, remain to be determined. However the market source said that Madiri is not expected to show up before the completion of an Indonesian sovereign deal that is also said to be in the works.

© 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.