Upsized Bio-Rad, downsized Fisher Scientific among pricing deals; Calpine little moved on numbers

By Paul Deckelman and Paul A. Harris

New York, Aug. 6 - Bio-Rad Laboratories Inc. mixed up an upsized $225 million offering of 10- year notes Wednesday, although sector peer Fisher Scientific International Inc. ended up downsizing its own 10-year deal. Smack in the middle, Armor Holdings Inc. neither increased nor decreased the size of its 10-year placement but did price it wide of talk.

In secondary dealings, Calpine Corp. was among a number of high-yield issuers reporting quarterly earnings, but its bonds were little moved despite a swing into the red from a year-ago profit.

The investment banks paraded out $675 million of new issuance in four transactions during Wednesday's primary market session. However sources reported that the parade more resembled the forced march of "Back to Bataan" rather than the buoyant stride of "Seventy-Six Trombones."

Two of the four deals ended up downsized. Two came wide of price talk and a third came at the wide end of revised talk.

"It didn't look too good out there today," commented one sell-side official at session's end.

One upbeat note did rise above the din during Wednesday's somewhat weary procession of deals.

Bio-Rad Laboratories, based appropriately enough in Hercules, Calif., priced the day's largest deal - an upsized $225 million (from $200 million) of 10-year senior subordinated notes (Ba3/BB-) which came at par to yield 7½%. The Goldman Sachs-led transaction came in the middle of its revised talk of 7½% area, although that had been increased from 7 1/8%-7 3/8%.

Further back in the parade were three $150 million deals.

Armor Holdings sold that amount of 8¼% 10-year senior subordinated notes (B1/B+) at 98.336 to yield 8½%, wide of the 8% area price talk, via Wachovia Securities.

However while the $150 million was the amount Armor had announced, $150 million was the amount that Wednesday's remaining two issuers settled for.

Fisher Scientific downsized its offering to $150 million from $200 million and priced the 10-year senior subordinated notes (B2/B+) at par to yield 8%, at the wide end of the revised 7¾%-8% price talk. Initially the JP Morgan-run offering had been talked at 7¼%-7½%.

And GenCorp Inc. downsized to $150 million from $175 million its 10-year senior subordinated notes (B2/B+) and price them at par to yield 9½%. Price talk on that deal was 9% area, with Deutsche Bank Securities running the books.

One new marcher joined the high yield new issuance parade during Wednesday's session.

The roadshow starts Thursday for Oxford Automotive Inc.'s offering of $240 million eight-year senior secured second lien notes. It is set to price during the week of Aug. 11 via Lehman Brothers and Credit Suisse First Boston.

The market also developments on an emerging markets deal from Indonesian energy company Perusahaan Gas Negara. Tuesday's terrorist car bombing in Jakarta, Indonesia has caused a delay in the planned offering from its subsidiary, PGN Euro Finance 2003 Ltd., of $200 million of 10-year notes deal (B-), now expected to price during the week of Aug. 11.

Price guidance on the Credit Suisse First Boston-led deal is 7¾% area.

And Thursday's parade took shape during Wednesday's session, with price talk being heard on six junk bond deals.

Talk is 9½% area on Amsted Industries Inc.'s $275 million of eight-year non-call-four senior notes (B3/B), expected to price on Thursday via Citigroup and Banc of America Securities.

The talk is 10% on Norcross Safety Products LLC's $150 million of eight-year non-call-four senior subordinated notes (B3/B-) via CIBC World Markets and Lehman Brothers.

The price talk is 8 5/8% area on Sonic Automotive, Inc.'s $200 million of 10-year non-call-five senior subordinated notes (B2/B+) via Banc of America Securities, JP Morgan and Merrill Lynch.

Talk is 10%-10¼% on Tempur Pedic Inc.'s $150 million of seven-year senior subordinated notes (B3/B-) via Lehman Brothers and UBS Investment Bank.

Price talk also emerged Wednesday on a downsized and restructured offering from Panavision Inc. The deal was reduced to $250 million from $275 million.

Originally announced as a single fixed-rate tranche, Panavision's five-year non-call-three senior secured first lien notes (B3/B-) will now be comprised of two tranches: $175-$200 million of fixed rate notes talked at 11¼%-11½% and $50-$75 million of floating-rate notes talked at Libor plus 800 basis points area.

Credit Suisse First Boston and Bear Stearns are joint bookrunners on the deal.

And late in the session Prospect News learned from a syndicate source that price talk is Libor plus 800-850 basis points on Calpine Construction Finance Co. LP's $450 million second priority secured floating-rate notes due 2011, which are also expected to price on Thursday via Goldman Sachs.

According to the syndicate source the Calpine floaters are primarily being marketed to hedge funds, which goes with some market color heard earlier in the session on the plethora of floating-rate tranches in that have recently priced: Advanstar Communications Inc.'s $130 million, Dynegy Inc.'s $225 million, Calpine Corp.'s $500 million, Huntsman Advanced Materials' $100 million, Continental Airlines Inc.'s $100 million and Global eXchange Services, Inc.'s $105 million.

One sell-side official told Prospect News on Thursday that hedge funds, which play both sides of the leveraged market, bank loans as well as bonds, have been among the most active investors in these floating-rate notes. The traditional high yield accounts, said the source, are not really looking at the floaters.

When the new Fisher Scientific 8% senior subordinated notes due 2013 were freed for secondary market activity a trader saw them at 101.25 bid, 101.75 offered, up from their par issue price.

At another desk, a trader pegged the new Fishers going home at 101 bid, 101.5 offered.

He saw Bio-Rad's new 7½% senior subordinated notes due 2013 as having moved up to that same 101 bid, 101.5 offered level from a par issue price. And he quoted Armor Holdings' 8¼% senior subs due 2013 at 99 bid.99.5 offered, up from their 98.3359 issue price earlier in the session.

A trader studying other recently priced issues said that Hilcorp Energy's 10½% senior notes due 2010, which priced at par on Tuesday, as trading around 99.625 bid, 100.625 offered, while Concentra Operating Co.'s 9½% senior subordinated notes due 2010 were at 99.5 bid, 100.5 offered, with buyers "showing some interest".

By contrast, he said, Advanstar Communications Inc.'s 10¾% second priority senior secured notes due 2010, which priced at par on Monday, were at 99 bid, 99.75 offered, but with buyers "showing no interest. This one has been a turkey right out of the gate."

He also saw Eircom Funding ltd.'s new 8¼% senior subordinated notes due 2013, which priced at par on July 29, being offered at 101.

Back among the established issues, Calpine Corp. announced financial results for the second quarter that included a $23.4 million net loss (six cents per share), compared with year-ago earnings of $68.3 million (18 cents a share) .

Traders saw some initial volatility in response to the numbers, but little actual price movement when all was said and done.

One - who tersely replied "not really" when asked whether Calpine had moved around in response to the numbers - quoted Calpine's 8½% notes due 2011 as having lost half a point on the session to 69 bid, 70 offered. He saw Calpine's recently priced 8¾% notes due 2013 as having gone home at 87 bid, 89 offered on Tuesday, then having opened Wednesday at 85 bid, 86 offered, before creeping back up again to end-of-day bid levels in an 87-87.5 context.

Another market source saw the Calpine bonds quietly off a point, its 10½% notes due 2006 dipping to 89 and its 8¾% notes due 2007 closing at 74.25.

The San Jose, Calif.-based power generating company's announcement touted the fact that since the beginning of the year, it has either completed or announced more than $1.6 billion of "liquidity-enhancing transactions," such as asset sales, and has raised $3.8 billion to refinance and repay debt.

Others out with earnings included Corrections Corp. Of America, whose 9 7/8% notes due 2009 host a point to 108.5 bid; Service Corp. International, whose 7 3/8% notes due 2004 were unchanged at 101; and Star Gas Partners LP, whose 10¼% notes due 2013 were unchanged at 100.5.

Communications names reporting included Granite Broadcasting, whose 10 3/8% notes due 2005 were unchanged at 99.5 bid; Spanish Broadcasting, whose 9 5/8% notes due 2009 were half a point lower at 104 bid; Dobson Communications, whose 10 7/8% notes due 2010 stood pat at 102, and Sirius Radio, whose 15% notes and 14½% notes were both unchanged at 99. Late in the session, the satellite radio broadcasting company announced plans to offer commercial free background "elevator music" to business clients - a field currently dominated by Muzak Corp. Muzak's zero-coupon notes due 2010 were about a point lower, at 77.5.

A trader said that airline issues "got whacked," with Continental Airlines' 8% notes due 2005 losing altitude to end at 83 bid, 85 offered from Tuesday's close at 87, while Northwest Airlines' 9 7/8% notes due 2007 dropped from the mid-70s to 70 bid, 72 offered, possibly on news that one of the latter carriers' unions is suing Minnesota-based Northwest, claiming it had reneged on a pledge made 10 years ago to buy back preferred stock issued to the company's unions as part of an earlier labor cost-cutting deal.

Northwest says it legally can't buy the stock back and instead has begun paying a 12% annual dividend - which still initially comes out to lot less ($27 million versus $225 million) than the lump sum repurchase would have cost.

A market source said cable operators seemed lower across the board, quoting Charter Communications Holdings LLC's 8 5/8% notes due 2009 down a point at 73; Cablevision Systems' CSC Holdings 7 5/8% notes due 2011 a point down at 95.5 bid; the bankrupt Adelphia Communications Corp.'s 10 7/8% notes due 2010 two points down at 63 bid; and Mediacom Cable's 8½% notes due 2008 at 97, down a point.

Elsewhere, while there was a midday flurry in the shares of Six Flags Inc. - sparked, market sources said, by rumors that entertainment giant Disney Corp. might be interested in buying the amusement park operator, rumors quickly denied by a source close to The Mouse House. Six Flags' bonds had little to show for it, its 9½% notes due 2009 finishing off half a point at 92.25.

There was likewise nothing doing in the bonds of homebuilders, even as the stocks of those companies firmed handsomely after Toll Brothers reported report ed preliminary third-quarter results showing that contracts by the end of the quarter reached a company record $393 million with backlog reaching $2.49 billion, also a record. Toll Brothers' 7¾% notes due 2007 were unchanged at 102.

Overall, the market's tone showed some improvement from Tuesday, helped by a rebound in Treasuries - which had fallen on Tuesday on poor investor response to the government's three-year note sale - but a trader said that there just was "not a lot of activity." With the formerly high-flying junk market having recently taken some whacks, he said, "a lot of brokers were golfing. They just threw in the towel and hit the links."

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