Momentive, Complete Production price; Revlon up on financing, Houghton Mifflin on M&A

By Paul Deckelman and Paul A. Harris

New York, Nov. 29 - Momentive Performance Management priced a restructured, slightly downsized - but still almost $2 billion - multi-part mega-deal Wednesday, high yield syndicate sources said Wednesday. When the new bonds were freed for secondary trading, they initially rose slightly, but by the day's end were seen having fallen below the several tranches' respective issue prices, traders said.

Also pricing was an upsized offering for Complete Production Services Inc., whose new bonds firmed a little when they moved into the aftermarket.

The primaryside further saw pre-deal market price talk emerge on already scheduled deals for TNT Logistics and Chesapeake Energy Corp. while new offerings appeared from Buffalo Thunder Development Authority and United Auto Group Inc. - the latter a quickly shopped 10-year deal expected to price Thursday.

In the secondary arena, traders saw a rise in the bonds of Revlon Consumer Products Corp. on several financing-related announcements from its parent company, New York-based cosmetics maker Revlon Inc.

There was also a gain seen in the bonds of Houghton Mifflin Co. on the news that the Boston-based educational publishing house has agreed to be acquired by Irish educational software maker Riverdeep Holdings plc.

Ford Motor Co.'s bonds were about a point better, traders said, apparently given a boost by the news that some 38,000 of the carmaker's hourly workers had accepted its offers to take early retirement if they were eligible, or be bought out - putting Ford ahead of its stated goal of a 30,000-job headcount reduction in its domestic operations by 2008.

Also in the automotive sphere, Remy International Inc.'s bonds firmed smartly, although no one had seen any news about the troubled Anderson, Ind.-based maker of automotive electrical and electronic systems.

And another distressed name showing an even bigger gain was Winn-Dixie Stores Inc., whose bonds shot up nearly 20 points, traders said, in line with a jump in the recently restructured Jacksonville, Fla.-based supermarket company's newly issued stock shares.

A source from a hedge fund marked the broad high yield market unchanged approximately one hour before Wednesday's New York close.

Meanwhile the primary market saw over $1.5 billion of dollar-denominated issuance from two issuers, one of which upsized its deal while the other downsized.

Momentive cuts size, restructures

Momentive Performance Management (General Electric's advanced products business) priced a downsized, restructured $1.925 billion equivalent offering of high-yield notes in a four-part transaction on Wednesday.

The company priced $1.426 billion of eight-year senior notes (B3/B-) in three par-pricing tranches.

A $765 million tranche of cash-pay notes priced to yield 9¾%, 12.5 basis points beyond the wide end of the 9½% area price talk.

A $300 million tranche of senior toggle notes priced to yield 10 1/8%, on the wide end of talk that had the toggle notes pricing 25 to 37.5 basis points behind dollar-denominated cash-pay notes.

Also a €275 million tranche priced to yield 9%, on the tight end of the price talk that had the euro-denominated notes coming 75 to 100 basis points inside the dollar-denominated cash-pay notes.

Momentive also priced a $500 million tranche of 11½% 10-year senior subordinated notes (Caa2/CCC+) at 98.555 to yield 11¾%, 37.5 basis points beyond the wide end of price talk that had the subordinated notes coming 150 basis points behind the dollar-denominated senior cash-pay notes.

The subordinated notes offering was downsized from $595 million equivalent, with a proposed euro-denominated tranche being withdrawn.

Total issuance was downsized by $25 million to $1.925 billion from $1.950 billion. The remaining $25 billion of proceeds will be raised in the bank loan market.

JP Morgan, GE Capital and UBS Investment Bank ran the books for the LBO deal.

Complete Production upsizes

Meanwhile Complete Production Services priced an upsized $650 million issue of 10-year senior notes (B2/B) at par to yield 8%, on top of the price talk.

Credit Suisse ran the books for the debt refinancing which was upsized from $600 million.

The issuer is a Houston-based provider of specialized services and products for oil and gas companies.

Thursday-Friday picture

Meanwhile news circulated on deals expected to price during the remaining two sessions of the post-Thanksgiving week.

Chesapeake Energy talked its €400 million offering of senior notes due Jan. 15, 2017 (Ba2/BB/expected BB) at a yield in the 6 3/8% area.

The notes are expected to price on Friday morning, London time, via Barclays Capital, Credit Suisse, Deutsche Bank Securities and Goldman Sachs.

Elsewhere Angiotech Pharmaceuticals, Inc. talked its $325 million offering of seven-year senior floating-rate notes at Libor plus 325 to 350 basis points, with pricing expected on Thursday via Credit Suisse and Banc of America Securities.

Netherlands-based TNT Logistics (Louis No. 1 Plc) circulated price talk on its €730 million two-part notes offer on Wednesday.

The logistics company talked its €430 million tranche of eight-year senior notes (B2/B) at the 8½% area, and its €300 million tranche of 10-year senior subordinated notes (B3/B-) at 150 basis points area behind the senior notes.

Credit Suisse, Bear Stearns, Goldman Sachs & Co. and ABN Amro are joint bookrunners for the deal which is expected to price on Friday.

VWR re-talks, restructures

West Chester, Pa., scientific supplies distributor VWR International revised the price talk on its $350 million offering of $350 million offering of five-year senior floating-rate PIK notes (Caa1/CCC) on Wednesday.

The revision takes the talk to Libor plus 450 basis points at 98.50, from the previous talk of Libor plus 437.5 basis points area at 99.00 to 99.25.

In addition to the price talk revision, the company also restructured the coupon step-ups. There will be two 50 basis points step-ups, the first to take effect at the earlier of an IPO or 12 months from the date the the notes settle, which was the only step-up under the previous structure. The second step-up will take effect 12 months after the first step-up.

Banc of America Securities has the books for the deal which is expected to price on Thursday.

Calendar builds

Three more issuers unveiled bond deals during the Wednesday session.

Two of the three will come with full roadshows.

Hanesbrands Inc. will start a roadshow on Monday for its $500 million offering of senior notes (expected ratings (B2/B-) in two tranches: fixed- and floating-rate.

Morgan Stanley and Merrill Lynch & Co. are joint bookrunners for the debt refinancing.

Elsewhere Buffalo Thunder Development Authority, a special purpose vehicle of the Pueblo tribe of Pojoaque, N.M., began a roadshow on Wednesday for its $245 million offering of eight-year senior secured notes (B2/B) via Merrill Lynch.

Proceeds will be used to fund the development, construction and opening of a casino and related facilities under the Hilton brand in Santa Fe.

United Auto Group, Inc. plans to transact its $325 million offering of 10-year senior subordinated notes quick-to-market style on Thursday following an investor call.

JP Morgan has the books for the Bloomfield Hills, Mich.-based automotive retailer's debt refinancing deal.

Momentive bonds wax, then wane

When the new Momentive Performance Management bonds were freed for secondary dealings, a trader saw the company's 9¾% senior notes due 2014 firm slightly to 100.375 bid, 100.625 offered, while its 10 1/8% toggle seniors also due 2014 popped up to 100.5 bid, 101 offered, both from their respective par issue prices. The trader saw its 11½% senior subordinated notes due 2016 move up to 99.5 bid, par offered from a 99.55 issue price.

However, another trader, queried later in the afternoon, saw the bonds having come off those early highs and going home at 99.75 bid, 100.25 offered for both of the senior note tranches, and at 98.5 bid, 99 offered for the sub notes.

Complete Production holds early gains

The trader saw Complete Production's new 8% notes due 2016 at 100.5 bid, 101 offered at the end of the day, up from a par issue price.

Another trader pegged the new 8s at 100.375 bid, 100.625 offered.

A hedge fund source saw the new 8% notes due 2016 at 100.25 bid, 100.50 offered after trading as high as 100.50 bid, 100.75 offered.

Yet another trader said that the two new deals were "no great shakes" in the aftermarket, "but did pop." He said that overall, "not a lot was moving, except for the new deals."

Revlon prettier on funding news

Back among the established issues, a trader quoted Revlon's bonds "up a couple" of points, with its 8 5/8% notes at 97 bid, 98 offered, its 9½% notes due 2011 at 94 bid, 95 offered, and the parent holding company's 13% notes due 2007 at 97 bid, 98 offered.

Another trader saw both of the operating company issues up a point on the day, with the 8 5/8s at 98 bid, 99 offered and the 91/2s at 94 bid, 95 offered.

Revlon's New York Stock Exchange-traded shares were up nine cents on the day (5.92%) to $1.61, although volume of 2.1 million was about normal.

Revlon announced several steps aimed at enhancing its liquidity, shoring up its balance sheet and increasing its financial flexibility.

The company plans to replace its existing $800 million term loan with a new five-year $840 million term loan facility, and will extend its existing $160 million revolving credit facility through that same five-year maturity, and will amend its terms to obtain lower interest rate margins.

It will also raise $100 million via an equity rights offering and will use the proceeds to reduce its debt - $50 million to take out some of the 8 5/8% notes, and the remainder to pay down revolver borrowings.

Houghton Mifflin up on takeover

Houghton Mifflin's bonds were seen a little better on the news that Riverdeep Holdings will buy the textbook publisher for $1.75 billion, and will also take on or take out some $1.61 billion of the acquiree's debt.

A trader called Houghton Mifflin's 11½% notes due 2013 "the big gainer in the capital structure," up 4 points at 95 bid, 96 offered, while the company's other bonds were "up a point or so." Houghton's 8¼% notes due 2011 rose to 103.75 bid, 104.75 offered, the trader said, and its 9 7/8% notes due 2013 moved up to 108.75 bid, 109.75 offered.

Another trader saw the 81/4s at 104.25 and the 9 7/8s at 109.25 bid, both up a point on the day.

There were no quotes available on Riverdeep's 9¼% notes due 2011.

The bonds firmed even as the major ratings agencies all expressed some dismay with the announced transaction, with Moody's Investors Service, Standard & Poor's and Fitch Ratings all putting Houghton Mifflin's current ratings under scrutiny and warning of a possible downgrade.

Moody's for instance, warned that it might downgrade parent Houghton Mifflin LLC's B2 corporate family rating and the ratings on its several operating company note issues, including the Caa1 rating on the 111/2s, the B3 on the 9 7/8s, and the B1 rating on the 81/4s.

Xerox unchanged despite upgrade

In other ratings-related news, the announcement by Moody's that it had upped the Stamford, Conn.-based copier king Xerox Corp.'s ratings to Baa3 - investment-grade territory - didn't do very much for its bonds.

"It wasn't a surprise," said a trader, who saw Xerox's 7 1/8% notes due 2010 up perhaps ¼ point at 105 bid, 105.5 offered.

Another trader likewise saw Xerox's 7.20% notes due 2016 up just ¼ at 108.25 bid, 108.625 offered.

While Fitch also has Xerox rated as a high-grade credit at BBB-, S&P still gives its senior notes a junk-rated BB+.

Amkor up on takeover buzz

A trader saw Amkor Technology Inc.'s bonds about 2 points better across the board, with its 9¼% notes due 2016 rising to 99 bid, par offered.

The trader cited media-generated market speculation about whether the Chandler, Ariz.-based provider of packaging and testing services to the semiconductor industry might be a possible acquisition target.

That sector recently saw a giant nearly $6 billion bond issue from Firestone Acquisition Corp., as part of the financing for the $18 billion leveraged buyout of Austin, Tex.-based chipmaker Freescale Semiconductor Inc.

Ford firmer as buyout succeeds

Traders saw Dearborn, Mich.-based automotive giant Ford's bonds up around a point on the session, as the company said that some 38,000 hourly employees - almost half of its current 83,000-person unionized work force - had accepted its offers of hefty early retirement or buyout packages this year.

A trader saw Ford's flagship issue, its 7.45% notes due 2031, up a point at 79 bid, 80 offered, while another trader saw them up 7/8 point on the day at 78.875 bid, 79.375 offered. A market source saw the 7% notes due 2013 of Ford's financing arm, Ford Motor Credit Co., up about ½ point at 95.

Ford said that the 38,000 employees accepting the exit packages include about 6,000 at plants that Ford agreed to take back from its struggling former parts unit, Visteon Corp., earlier this year.

Ford will pay the workers who accepted the proposal between $35,000 and $140,000, depending on the employee's seniority, and which of eight plans - some of which mixed the cash offer with non-traditional incentives like college tuition - was selected. Ford will also give buyouts selected under one of three separate plans to about 10,000 of its salaried employees.

All of those retirement incentives will cost Ford a pretty penny - but the carmaker expects it to be a worthwhile investment in the future, hoping to save $5 billion annually. Such savings would come at a time when Ford is expected to otherwise burn through $17 billion of cash between 2007 and 2009.

Remy on a roll

Elsewhere in the automotive arena, Remy International's bonds were seen up 4 points on the day, a trader said - although there was no news seen out on the company. "It was just pushed up by better buyers," he said, quoting the parts-maker's 8 5/8% notes due 2007 at 81 bid, 82 offered.

Another trader quoted Remy's bonds up anywhere from 1 to 3 points, with the 8 5/8s up 3 points to 79 bid, 81 offered, its 9 3/8% notes due 2012 up 2 points at 29 bid, 31 offered, and its 11% notes due 2009 a point better at 32 bid, 34 offered.

Winn-Dixie booms as stock zooms

Outside of the auto world, Winn-Dixie Stores again wowed the distressed bond market as the Florida grocery chain's bonds skyrocketed to 91/91.5 on Wednesday from a 77-80 context Tuesday, in tandem with the stock, which shot up over 16%.

Heavy buying in the stock this week has sparked the surge in the bonds, as bondholders will get an equity distribution of 54.5 million of the company's 150 million authorized shares in its bankruptcy distribution. Winn-Dixie noteholders are getting 62.69 shares of new stock per $1,000 claim, for a recovery of 95.6%.

"Everyone is wanting some of this now. I think in the back of everyone's mind is the Kmart story," said a buyside market source. "We start with trying to get the bonds and that's getting more difficult, I guess because people are more willing to hang to them now. Then you go to the stock."

Traders on the equity side of the equation, however, suggested that as for the stock it may get easier to get hold as offers emerge to take profits in light of the spike. Indeed, the stock pulled back by 3% in after-hours action Wednesday to $13.73, after rocketing up by $2.03, or 16.75%, to $14.15 in the regular session. Some 3.39 million shares changed hands, versus 2.3 million traded Tuesday and the running average of 892,550.

"This is one of the most interesting stories in the marketplace right now," said an equity trader. "What with private equity buyout news, you could see where there would be rampant speculation of some big [private equity] firm snapping up a company like Winn-Dixie coming out of bankruptcy where they erased all the bond debt."

Ronda Fears contributed to this report

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