Emmis up on tender news, Revlon off as chief quits; no deals price but NXP, Georgia Gulf set roadshows

By Paul Deckelman and Paul A. Harris

New York, Sept. 18 - Emmis Communications Corp.'s bonds pushed up around 2 points Monday on the Indianapolis-based broadcasting company's plans to tender for those bonds, in addition to its payment of a special dividend to shareholders.

On the downside, Revlon Consumer Products Corp.'s bonds were lower after the problem-plagued New York-based cosmetics company announced that its president and chief executive officer Jack Stahl had resigned and would be replaced by chief financial officer David Kennedy.

Automotive names continued to struggle, with Tower Automotive Inc. and Dura Automotive Systems Inc. especially losing ground.

Overall, a sell-side source marked the high-yield market lower against a backdrop of weakness in U.S. Treasuries on Monday.

Meanwhile, trailing Friday's historic volume of issuance - $4.993 billion of dollar-denominated new issuance, or an overall $5.921 billion in all currencies on an exchange-adjusted basis - Monday's primary market produced no new issues.

However Monday did see the roll-out of a pair of big deals - one sizable at $750 million, the other massive at €4.5 billion equivalent - both starting roadshows on Tuesday.

NXP's €4.5 billion deal

NXP BV in conjunction with NXP Funding LLC will begin a roadshow in Europe on Tuesday for its €4.5 billion equivalent multi-tranche notes offering.

NXP, the Netherlands based microchip manufacturer formerly known as Philips Semiconductor, plans to sell €3 billion equivalent in three tranches of senior secured notes (Ba2/BB+). These will include dollar- and euro-denominated tranches of seven-year floating-rate notes, and a dollar-denominated tranche of eight-year fixed-rate notes.

NXP also plans to sell €1.5 billion equivalent of dollar- and euro-denominated nine-year senior unsecured fixed-rate notes (B2/B+).

Tranche sizes remain to be determined.

Pricing is expected late in the Oct. 2 week.

Morgan Stanley, Deutsche Bank Securities and Merrill Lynch & Co. are joint bookrunners for the bridge loan refinancing related to the acquisition of 80.1% of Philips Semiconductors by Kohlberg Kravis Roberts & Co. with Bain Capital, Silver Lake Partners, Apax and AlpInvest Partners.

Georgia Gulf starts $750 million

Also beginning a roadshow on Tuesday is Atlanta-based chemical company Georgia Gulf Corp., with a $750 million two-part deal.

The manufacturer and marketer of chlorovinyls and aromatics plans to place a tranches of eight-year senior notes and 10-year senior subordinated notes.

Merrill Lynch & Co. has the books for the deal, which the company will use to fund an acquisition and repay related debt.

Too early to tell

When Prospect News asked a sell-side source whether Monday's softness in the market could be related to last Friday's massive new issuance, the source thought not.

Whether or not Big Friday, and the anticipated ramp-up in new issue volume expected in its wake, will begin to have an eroding effect on existing issues that trade in the secondary could begin to reveal itself as the above-mentioned NXP €4.5 billion equivalent roadshow begins to unfold.

"I think a lot of people are going to be tuned into the buzz around that deal," the official said.

McLeod talks secured notes

Information also circulated Monday on McLeodUSA Inc.'s $110 million offering of five-year senior second secured notes (B3/B-), which the company talked at a yield in the 10½% area.

The company will host the final investor call at 11 a.m. ET on Tuesday, with books closing shortly eafter.

Jefferies & Co. has the books for the debt refinancing and general corporate purposes deal from the Hiawatha, Ia.-based rural telecom which primarily serves business customers.

New bonds little moved

Traders said that the new paper which priced on Friday was pretty much tethered around those same levels Monday - which one trader in that context called "a typical slow Monday."

He saw Houston-based chemicals manufacturer Lyondell Chemical Co.'s new 8% notes due 2014 at 100.25 bid, 100.75 offered, and its new 8¼% notes due 2016 at 100.75 bid, 101.25 offered, which he pegged as "maybe 1/8 to ¼ point off" from where each series of bonds had ended on Friday after having earlier priced at par.

Another trader saw the Lyondell 10-years at a tight 100.875 bid, 101.125 offered, while Seagate Technology HDD Holdings (Cayman)'s new 6 3/8% notes due 2011 - which had priced Friday at 99.683 - were "a little weaker" at 99.25 bid, 99.5 offered.

As for the established issues, he said, "it all feels like the secondary finally caught up to the new issuance - the overwhelming supply that we've had for the last couple of days is just giving people more options out there to stick their cash into."

Not surprisingly, he said, "there's been a little bit of profit-taking - we've seen a fair amount of [upside] run on these things, on not huge volume and, Ford [Motor Co.] may have thumped the auto parts a bit."

Ford, autos still spinning wheels

The Dearborn, Mich.-based Number-Two domestic carmaker's flagship 7.45% notes due 2031 were down ¼ point at 76.25 bid, 76.75 offered, while its Ford Motor Credit Co. financing arm's 7% notes due 2013 were unchanged at 91.5 bid, 92 offered.

Ford's bonds meandered lower at the tail end of last week, with investors apparently not very impressed by the company's plans, unveiled late last week, to try to cut its cost structure down to size by offering its all of its United Auto Workers-represented hourly workers buyouts and early retirement packages, and saying it would cut an additional 10,000 white-collar jobs - about one-third of its professional, technical and administrative employees.

That sounds drastic - but analyst B. Craig Hutson of the Gimme Credit market research service noted Monday that "there was no change in the assembly plant capacity targets, which remain too high relative to demand."

Besides not going far enough in his cuts, the analyst also noted that Ford at this point still considers Ford Motor Credit a "core asset" which it wants to keep control of - even though "the sale of a majority stake in FMCC would benefit the finance unit's ratings, access to capital, and competitiveness. It would also provide much needed liquidity to fund Ford's costly restructuring plan."

"The whole auto sector was sloppy," a trader said, seeing names like Lear Corp., ArvinMeritor Inc. and Cooper Standard all down a point on the session - Lear's 8.11% notes due 2009 at 94.5 bid, 95.5 offered, Arvin's 8¾% notes due 2012 at 96.75 bid, 97.75 offered, and Cooper's 8 3/8% notes due 2014 at 75.5 bid, 76.5 offered.

Tower, Dura plunge

From out of the distressed automotive segment, the trader said that bankrupt Novi, Mich.-based vehicle frames maker Tower Automotive's 12% notes due 2013 "got mowed," dropping from Friday levels around 37 bid, 38 offered to lows Monday around 31 bid, 32 offered, before coming back a little and finishing at 32 bid, 33 offered - down 5 points on the day rather than 6 six points they had lost at their nadir.

Also lower Monday was Dura, whose Dura Operating Corp. bonds got clobbered last week on renewed bankruptcy speculation, which included market talk that the Rochester Hills, Mich.-based parts maker was having trouble getting lenders to give it favorable terms on debtor-in-possession financing, and worries about the company's relations with its vendors in the wake of an unfavorable court ruling.

A trader, seeing the company's 8 5/8% notes due 2012 falling as low as 60.75 bid, 61.75 offered from Friday levels around 63-64, said that the company "seems to be rapidly moving towards bankruptcy - or so people think."

He saw Dura's 9% notes due 2009 "weaker" at 9 bid, 11 offered.

Emmis gains on tender news

Apart from the autos, Emmis Communications' 6 7/8% notes due 2012 were seen by traders to have advanced about 2 points on the session to around par bid.

The bonds moved up, even though the company declared a special $4 per share dividend to be paid to its shareholders - something that would normally push bonds lower, since it implies either new borrowings to pay for the dividend (Emmis even said that the payment is contingent on lining up the necessary financing) - or paying it out of available cash that might otherwise be used for debt reduction.

In this case though, a trader pointed out, Emmis also announced plans to offer to purchase at par all of the outstanding 6 7/8% notes, so there was a reprieve for the bondholders, who took the bonds up to the par price at which the bonds are to be taken out.

Revlon CEO out, bonds off

Elsewhere, Revlon's bonds were off on apparent investor angst over the executive shakeup at the cosmetics maker.

Its Revlon Consumer Products Corp.'s 8 5/8% notes due 2008 fell about 1½ points on the day to 94.625, while its 9½% notes due 2011 were especially volatile, closing Friday around 90, opening Monday morning around 92.5 bid, and then dropping back later in the session to end at 87.375.

Revlon announced that Jack Stahl - the soft-drinks executive who was brought in from The Coca-Cola Co. to use his consumer products experience to give a facelift to the troubled beauty products maker, but who was never able to make it profitable - had resigned, to be replaced as president and CEO by David Kennedy, who up till how had been the company's chief financial officer.

Interestingly enough, Kennedy also has a Coca-Cola connection, having served in several different executive capacities with the giant soda company - where he worked with Stahl for a number of years - before joining Revlon in 2002 and quickly rising to be CFO.

While news of Stahl's departure was sudden, and was linked by news reports to his failure to return the company to profitability in his four years at the helm, Revlon sought to put the best face on the resignation. Its announcement quoting Stahl as saying that he was exiting to pursue other interests and that he "couldn't be leaving the company in better hands."

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