Goodyear, Reader's Digest, lead primary parade; existing Goodyear bonds firm

By Paul Deckelman, Paul A. Harris and Reshmi Basu

New York, Feb. 27 - Goodyear Tire & Rubber Co. was heard by high yield syndicate sources to have sold $650 million of new bonds in a two-part offering that one trader called a "super private placement" Friday - one of a slew of new deals to top off the week, with more than $2 billion of new paper clattering down the chute during the session, despite another weekly downturn in junk market liquidity - the third in four weeks.

Other issuers bringing deals to fruition Friday included The Reader's Digest Association Inc.; Pinnacle Entertainment Inc.; Nebraska Book Co. Inc. and its corporate parent, NBC Acquisition Corp., which priced separate tranches; Ainsworth Lumber Co.; and AMH Holdings Inc.

In the secondary market, news that Goodyear had finally priced a bond deal that originally was supposed to have been done back in late 2003 sent the Akron, Ohio-based tiremaker's existing bonds up several points, traders said on apparent investor relief that Goodyear was able to get its deal done amid suddenly more problematic market conditions.

The closing session of the Feb. 23 week saw nine tranches price in the high yield primary market for a total of $2.393 billion of dollar-denominated business.

Meanwhile the March new deal pipeline continued to build with three new offerings heard to be in the market.

Missing the halcyon days of January

"February was certainly not like January," reflected one sell-side official, speaking during the last trading session of the month.

"From a total return perspective February was probably half of what we say in January.

"And the $400 million-plus outflow that we saw yesterday was the third outflow in the past four weeks. That's one thing that people have to be focused on.

"Right now people just want to get their deals done. In the present situation, with the market a little shaky, they don't want to wait around."

Nine tranches price for $2.393 billion

Eight issuers who completed deals on Friday might have concurred with the sell-side source's market color.

Three issuers came in wide of price talk. Another four priced at the wide end of talk. And one priced tight to talk.

British engineering firm Invensys plc priced a downsized issue of £600 million equivalent in two tranches of seven-year senior notes (B3/B-). The deal was reduced from £650 million.

With Deutsche Bank Securities running the books, the company sold $550 million of 9 7/8% at 98.147 to yield 10¼% and €475 million of 9 7/8% notes, also at 98.147 to yield 10¼%.

Both tranches, which had each been talked at 9½%-9¾%, came well wide of their price talk.

AMH Holdings Inc. the Cuyahoga Falls, Ohio building products company, sold $446 million of 10-year senior discount notes (Caa1/B-) at a price of 57.907, resulting in an 11¼% yield to maturity.

The UBS Investment Bank-led deal came at the wide end of the 11%-1¼% price talk.

Nebraska Book Co. priced two issues of high-yield notes on Friday, according to market sources.

JP Morgan and Citigroup ran the books on both issues.

Nebraska Book Co. Inc., the operating company, priced a downsized $175 million of eight-year senior subordinated notes (Caa1/CCC+) at par to yield 8 5/8%, at the wide end of the 8½% area price talk.

NBC Acquisition Corp., the holding company, sold $77 million of senior discount notes (Caa2/CCC+) at 64.947 to yield 11%, far wide of the 10½% area price talk. The sale of the discount notes generated approximately $50 million of proceeds.

Vancouver, B.C.-based Ainsworth Lumber Co. Ltd. priced an upsized issue of $210 million of 10-year senior notes (B1/B+) at par on Friday to yield 6¾%.

The Goldman Sachs & Co.-led deal came at the tight end of the 6¾%-7% price talk, the session's only tight-to-talk deal.

Pinnacle Entertainment, Inc. sold $200 million of 8¼% eight-year senior subordinated notes (Caa1/CCC+) at 99.282 to yield 8 3/8%, at the wide end of the 8¼%-8 3/8% talk, via Lehman Brothers and Bear Sterns & Co.

Finally, Goodyear Tire & Rubber Co. priced a restructured $650 million issue of seven-year senior secured junior lien notes (B3/B) in a private placement.

The Akron, Ohio tire maker sold $450 million of 11% fixed rate notes at 99.413 to yield 11 1/8%, at the wide end of the 11% area price talk.

The company also sold $200 million of floating-rate notes at par, to bear an interest rate of six-month Libor plus 800 basis points.

JP Morgan, Citigroup and Credit Suisse First Boston were the placement agents for the Regulation D deal.

More offerings blow into March pipeline

None of the primary market sessions of the Feb. 23 week passed without at least one new deal added to the forward calendar. Friday's session saw two new offerings surface, while timing emerged on one that had been expected to appear.

A roadshow is set to begin mid-week during the week of March 1 for Beal Financial Corp.'s $500 million of 10-year senior secured notes (B1/BB-).

Friedman Billings Ramsey will run the books for the deal from the closely held bank headquartered in Dallas.

Trinity Industries, Inc. will start the roadshow Monday for $300 million of 10-year senior notes, which is expected to price on March 4 or 5.

JP Morgan and Credit Suisse First Boston will run the books for the Dallas-based diversified industrial company.

And timing was heard on Omega Healthcare Investors, Inc.'s offering. The $200 million of 10-year senior notes is expected during the week of March 1.

Deutsche Bank Securities and UBS Investment Bank will do the bookrunning for the Timonium, Md.-based real estate investment trust investing in long-term care industry.

AES Gener to roadshow $300 million

In emerging markets, AES Gener SA will launch a roadshow Wednesday for a $300 million offering of 10-year senior unsecured obligations (Ba3/BB+/BB).

The roadshow will hit the West Coast on Wednesday, the Midwest on Thursday, Boston on Friday, and the New York on the following Monday.

The deal is expected to price on March 9.

Proceeds will be used to repurchase and redeem its 6% U.S. convertible senior bonds due 2005, its 6% Chilean convertible bonds due 2005, its 6½% Yankee notes due 2006 and for working capital purposes

The Santiago, Chile-based power generating company is also selling $125 million of stock to shareholders and obtaining new bank debt of $75 million.

Goodyear, Reader's Digest up

After the new Goodyear bonds had priced, a trader said that he had heard the 11% senior secured notes due 2011 quoted at 103 bid, well up from their 99.413 issue price earlier in the session, although he described the deal as "some sort of super-duper private placement - Reg[ulation] D, so they're not trading much. I didn't see any trading in them."

Among other newly priced issues, he saw the Reader's Digest 6 ½% senior notes due 2011 having advanced to 101.25 bid, 101.75 offered from their par issue price. Ainsworth Lumber's new 10-year notes firmed to 100.75 bid, 101.25 offered from their par issue price. Pinnacle Entertainment's 8¼% senior subordinated notes due 2012, which had priced at 99.282, were little moved going home at, 99.5 bid.

At another desk, a trader said the new Pinnacle bonds had actually traded up to around par bid on the break, "but then they got weaker" and gave up most of the early gains to end up only slightly from their issue price.

Back among the existing, issues, Friday was a generally lackluster session - a trader said of the overall market that "even though all the indexes were up, the market feels heavy," especially in the wake of the latest mutual fund flow numbers from AMG Data Services; the closely watched gauge of junk market liquidity trends showed a $392 million net outflow in the week ended Wednesday - the third week out of the last four in which more money has left the funds than has come into them.

Existing Goodyear bonds jump higher

Against that somber backdrop, Goodyear was the standout performer Friday, its existing bonds "propelled" upward, in the words of one trader, following the successful pricing of its new deal. He saw Goodyear's outstanding 7.857% notes due 2011 having moved up to 85.5 bid, 86.5 offered by the close, a two point gain from their opening level.

Goodyear was "the biggest highlight," another trader said, quoting the 7.857% notes up three points on the session to around the 85.5 level and its 6 3/8% notes due 2008 as having jumped nearly three points, to 86.25 bid from 83.5 bid, 84.5 offered on Thursday. Goodyear's 6 5/8% notes due 2006 were quoted up about half a point or so at 94 bid.

The new deal, he said, "took the pressure off," since the bond issue was an important part of the company's financing efforts. Indeed, Goodyear was supposed to have brought the bond deal to market - and to have done a bank debt financing as well - late last year, but was forced to put off those transactions after the discovery of accounting problems in its European operations forced the company to delay issuance of financial reports, which in turn pushed the bank loan and bond deals off into the new year.

Of Goodyear, he said, "it's funny - they went down in the first place because the deal was announced and now they go up because there was a sigh of relief that the deal was done."

Another name which he saw having risen on investor expectations that a financing deal will be accomplished is Sea Containers Ltd., which is bringing a $150 million issue of 10-year notes to market.

He saw the Hamilton, Bermuda based international maritime, railroad and lodging company's bellwether 7 7/8% notes due 2008 as having risen to 101.5 bid from their previous levels at par, because "it looks like they're getting their deal done."

Calpine weakens more

On the other hand, the trader said Calpine Corp. notes "keep getting weaker" in the wake of the San Jose, Calif.-based independent power generator's failed effort this past week to bring $1.05 billion of new bonds to market, along with $1.3 billion of new bank debt.

He saw Calpine's 8½% notes due 2011 "trading down from like 77-78 to like 73-5. They're just having a problem getting that deal done."

After its announcement that it would not purse the financing at this time, Calpine later indicated that it expected to come back to the market in a few months' time and do the deal then.

The trader skeptically noted that "normally when you say that, the Street says 'what are you talking about?'"

Pride slips

On the earnings front, Pride International Inc.'s bonds "were down a little," after it released negative earnings results, a market source said, quoting the Houston-based energy services company's 9 3/8% notes due 2007 as having retreated to 102.5 bid from prior levels around 105. However its 10% notes due 2009 were only "down a little," to about 106.5 bid from 106.625 previously.

The company's New York Stock Exchange-traded shares meantime fell $2.70 (13.61% ), to $17.14, on volume of 13.1 million shares, nearly 14 times the norm.

Pride reported a quarterly loss of $38.5 million (28 cents a share), versus its year-earlier profit of $1.l2 million (one cent a share).

It said the loss includes a $34 million loss net of tax related to the construction projects and charges for receivables and executive retirements.

Titan higher

It was a totally different story for investors in Titan International Inc., which reported a sharply narrower fourth-quarter loss of $9.2 million (44 cents a share), versus $15.7 million (76 cents a share) a year ago. The Quincy, Ill.-based maker of metal wheels for the automotive industry said that orders surged in December, and continued on into the first quarter. It said that its volume of agricultural and construction back orders should lead to a first-quarter profit, following a loss of $5.9 million last year.

"Yesterday," you couldn't give the bonds away at 85," a trader said, "and today, they closed at 87.75, while the stock had a pretty good run."

Titan's shares jumped 99 cents (20.16%) to $5.90 in busy NYSE trading of 320,000 shares, about four times the usual turnover.

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