Revlon, Columbus price, Koppers, Unitymedia ahead; Ply Gem up on numbers, Blockbuster blasted

By Paul Deckelman and Paul A. Harris

New York, Nov. 13 - Friday the 13th is intimidating enough to make the superstitious stay home and hide under the covers, but there seemed to be little evidence of triskaidekaphobia afoot in Junkbondland on Friday, as Revlon Consumer Products Corp. and Columbus International, Inc. successfully priced new deals which swelled the week's total primary issuance in the dollar-denominated market to more than $4 billion, along with over €3 billion in euro paper.

When the new Revlon bonds were freed for secondary activity, they were heard to have firmed solidly to above par from their slightly discounted pricing level, while no one could discover any sign of Columbus in the aftermarket.

While that was going on, Koppers Inc. announced plans for a $300 million offering of senior notes, and high yield syndicate sources reported that the Pittsburgh-based chemical company would be hitting the road starting Monday to market that deal to potential investors.

Meanwhile, the day's big news on the merger and acquisitions front - that international broadband giant Liberty Global will acquire Unitymedia GmbH, Germany's second-biggest cable network, in a deal valued at $3 billion, or $5.2 billion including debt assumption - was having a ripple effect in the high yield universe, with Unitymedia expected to sell €2.5 billion equivalent of euro- and dollar-denominated bonds. That multi-tranche mega-deal is expected to price early in the coming week.

Among recently priced issues, traders saw such names as Antero Resources Finance Corp. and Inmarsat Finance plc trading above par, slightly up from their respective Thursday issue prices. However, Toys 'R' Us Property Co. II LLC's big new bond issue, which priced Tuesday at a discount of about 1½ points off par but which had moved up to par by Thursday, eased slightly from that peak level on Friday.

Among credits having no new-deal connections, Ply Gem Industries Inc.'s bonds got a big boost from the Cary N.C.-based building products maker's favorable third-quarter numbers, as well as management's announcements during its conference call with analysts and investors following the release of the numbers, of improvements in the company's liquidity picture.

While the quarterly numbers proved to be a boon to Ply Gem, they were a bust for Blockbuster Inc., whose bonds continued to slide Friday in the aftermath of those results.

Junk had a good tone on Friday, although cash bonds were largely unchanged on the day, according to a trader.

Meanwhile the high-yield primary market passed a quiet Friday, which featured just two new issues.

Columbus International plays to junk, EM accounts

Barbados-based Columbus International, Inc. priced a $450 million issue of five-year senior secured bullet notes (B2/B) at par to yield 11½% on Friday, according to an informed source.

The yield printed at the wide end of the 11% to 11½% price talk.

Both emerging markets accounts and high-yield investors participated in the deal, the source said.

Citigroup, Standard Bank and RBC Capital markets were joint bookrunners.

Proceeds will be used to fund capital expenditures and to prepay operating company debt.

The issuer is a Barbados-based undersea cable network services provider.

The par-pricing deal traded at 102½ bid on Friday afternoon.

Revlon on top of price talk

Also on Friday, Revlon Consumer Products Corp. priced a $330 million issue of 9¾% six-year senior secured notes (B3/B-) at 98.90 to yield 10%.

The yield printed atop price talk.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, Credit Suisse Securities and J.P. Morgan Securities Inc. were joint bookrunners.

The notes are secured by a second lien on term loan collateral.

Proceeds, together with other cash, will be used to fund a tender for $340.5 million of the company's 9½% senior notes due April 2011.

Revlon is a New York City-based cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and beauty care products company.

$4.5 billion week

With Columbus International and Revlon added to the tally, the Nov. 9 week saw more than $4.5 billion price in a dozen dollar-denominated junk-rated tranches, and nearly €3.5 billion in half a dozen euro-denominated tranches.

With only one full week remaining in November - the holiday-abbreviated Thanksgiving week begins on Nov. 23 - more than $133 billion proceeds of business has cleared the dollar-denominated junk bond market during the year to Friday's close, according to Prospect News data.

Unitymedia to bring €2.5 billion equivalent

The week ahead figures to be a busy one in the primary market, with $3.69 billion and €3.08 billion of slated issuance spread across a dozen tranches from 10 different issuers.

On Friday, dealers rolled out €2.5 billion equivalent of junk bond financing to help fund the acquisition of German cable firm Unitymedia by Liberty Global, according to a informed source.

Marketing of the notes commenced Friday and will continue on Monday. The notes are expected to price early in the coming week.

The deal includes the sale by Unitymedia Hessen GmBH of €1.9 billion equivalent of eight-year senior secured notes (B1/BB-) in tranches of €1.4 billion and $750 million.

In addition, Unitymedia GmBH is offering €600 million of 10-year senior unsecured notes (B3/B-).

Credit Suisse, Deutsche Bank Securities, Goldman Sachs, JP Morgan are joint bookrunners.

Koppers starts Monday

Also on Friday, Koppers Inc. and Koppers Holdings Inc. announced a Monday roadshow start for their $300 million of 10-year senior notes.

The roadshow wraps up on Thursday.

Goldman Sachs & Co., Bank of America Merrill Lynch, RBS Securities and UBS Investment Bank are joint bookrunners for the debt refinancing and general corporate purposes deal.

A busy week

Unitymedia and Koppers climb aboard an active calendar that already contained the following business which is expected to price by the Friday close:

• Clearwire Communications and Clearwire Finance, Inc. are roadshowing $1.45 billion of six-year senior secured notes through Tuesday, via J.P. Morgan, Bank of America Merrill Lynch, Morgan Stanley and Jefferies;

• Cloud Peak Energy Resources LLC and Cloud Peak Energy Finance Corp. figure to price a $600 million two-part offering of senior unsecured notes (10-year, non-call-five and seven-year, non-call-four) late in the week, via Morgan Stanley, Credit Suisse and RBC Capital Markets;

• JohnsonDiversey, Inc. will run its roadshow for $400 million of 10-year senior notes (expected ratings B3/B-) into the Thursday session, in a deal being run by left lead bookrunner Goldman Sachs, and joint bookrunners Citigroup, Barclays Capital, HSBC and J.P. Morgan;

• Landry's Restaurants Inc. finishes its roadshow for a $390 million offering of six-year senior secured notes (expected ratings B3/B), via Jefferies and UBS, on Friday;

• Jefferies is also helming the Altra Holdings, Inc. $200 million offering of seven-year senior secured notes (expected ratings B1/B+), along with joint bookrunners Bank of America Merrill Lynch and J.P. Morgan. The roadshow wraps up on Tuesday;

• Alliance Healthcare Services, Inc. expects to price its $200 million offering of seven-year senior notes next week, via Deutsche Bank Securities, Barclays Capital and Morgan Stanley;

• Stonemor Operating LLC is running a roadshow until Nov. 18 for its $150 million offering of eight-year senior notes, via Bank of America Merrill Lynch; and

• Poland's Central European Distribution Corp. is set to wrap up the roadshow for its €580 million equivalent dollar- and euro-denominated seven-year senior secured notes on Thursday. Goldman Sachs, Citigroup and Deutsche Bank Securities are joint bookrunners.

Revlon bonds sitting pretty

When the new Revlon 9¾% notes due 2015 were freed for secondary dealings, a trader saw those bonds as having firmed to par bid, 101 offered, while a second saw them trade up to 100½ bid, 100 7/8 offered.

Yet a third trader saw the new bonds get as good as a tight 100 5/8 bid, 100¾ offered.

That was well up from the 98.90 level at which the New York-based cosmetics maker's issue had priced earlier in the session.

Columbus bonds unseen

Several traders said that they had not seen any kind of aftermarket action in the new Columbus International 11½% notes.

One said that he "didn't think that we heard or saw boo" on the Bridgetown, Barbados-based international undersea cable operator's new issue.

Toys 'R' Us eases slightly

Among the issues which priced earlier in the week, Toys 'R' Us - the week's signature deal in the domestic junk market, at $725 million, upsized from the originally announced $650 million - was seen having come down a little from the highs it had hit on Thursday, when those 8½% eight-year senior secured notes had pushed up to par bid, 100½ offered, well up from the 98.573 level at which it had priced Tuesday to yield 8¾%.

After hitting par on Thursday, a trader saw the bonds Friday having traded at 99½ bid, par offered around midday, but then "having quieted down" with no trading seen after that.

Toys "got a little weaker," said another trader, who observed the issue having "settled in" around 993/4-99 7/8.

Inmarsat flies high

London-based communications satellite company Inmarsat's new 7 3/8% notes due 2017 were seen having gained altitude during the session, a trader seeing them going home orbiting around the 101 bid, 101¾ offered level.

That was up from 99.256, where the $650 million issue had priced on Thursday to yield 7½%.

A second trader quoted the new bonds at 101 bid, 101½ offered.

Antero issue quoted higher

Antero Resources' new 9 3/8% notes due 2017 were seen by a trader offered at 1003/4, although he said that it was "the first and only thing we saw" in the Denver-based energy exploration and production company's new issue on Friday.

A second trader saw a two-sided market in the bonds at par bid, 101 offered. Yet a third called them 100 5/8 bid, 101 offered going home, after having traded as tightly as 100 5/8 bid, 100¾ offered.

The company had priced its $375 million issue - which had been upsized from the original $300 million it announced and later, from an interim size level of $350 million - at 99.299, to yield 9½%.

New deal parade continues

A trader - noting the busy volume of new junk deals seen during the week, over $4 billion in dollar-denominated bonds and over €3 billion in euro paper, including such big deals as Fiat SpA's €1.5 billion, Smurfit Kappa plc's €1 billion and FCE Bank plc's €500 million, as well as the heavy slate of prospective new issues upcoming, including Clearwire Communications' $1.45 billion offering - marveled that "there's just so much in new deals" going around the market.

He said that "everybody and anybody who can get any sort of financing is coming in - because they're afraid that the door is going to close, and that's what it feels like."

Market indicators stay mixed

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index down ½ point at 93 bid, 93½ offered on Friday, after having been off ¼ point on Thursday. The widely followed market gauge thus ends the week about ½ point up on its 92½ bid, 93 offered level seen at the end of the previous week, ended Nov. 6.

Meanwhile, the KDP High Yield Daily Index was 4 basis points better on Friday at 69.58, after having been unchanged during Thursday's dealings. Its yield narrowed by 1 bp Friday to 8.63%, after having been unchanged the previous session. The index thus showed some modest improvement over its performance at the end of the previous week, when it stood at 69.41, with a yield of 8.68%.

In the broader market, advancing issues led decliners for a second consecutive session on Friday, by a ratio of four to three, an improvement over the mere handful of issues - less than two dozen out of the nearly 1,500 tracked - which had provided the victory margin the session before.

Overall market activity, as measured by dollar-volume, rose 6% from Thursday's pace.

Ply Gem pops on favorable numbers

Cary, N.C.-based building products maker Ply Gems' bonds were "the biggest gainer on the day," a trader said, "on really decent numbers."

"Holy s***," he exclaimed as he checked their day's end levels, "they're really moving up."

He saw its 9% subordinated notes due 2012 push up "at least 2½ to 3 points" Friday to 72½ bid, 75½ offered, while its 11¾% senior notes due 2013 jumped more than 4 points to 96½ bid, 96¾ offered.

Ply Gem "moved up nicely," a second trader said, seeing the 113/4s going home at 96½ bid, 97 offered, which he called a gain of more than 2½ points.

Although he said that 9s "were quoted higher," around 75-77 "but on no activity to speak of, since the trading was all odd-lots," he did say that back in the 113/4s, there was "plenty of activity, a lot of trading."

Yet another trader, who also saw the bonds up by several points, said that Ply Gem "was the big volume guy today," with over $43 million of the senior notes having traded.

The activity in its bonds took place after the company reported that third-quarter net income was $4.4 million, versus a year-earlier net loss before unusual items of $4.1 million; meanwhile, adjusted EBITDA for the 2009 third quarter was $57.6 million, up from $41.9 million for the third quarter of 2008.

Bondholders were also heartened after company executives reported during their post-numbers conference call that Ply Gem had increased liquidity by more than $44 million during the third quarter and has since further boosted its liquidity balance through the private placement of $25 million of 11¾% senior secured notes due 2013 (see related story elsewhere in this issue).

Bad reviews for Blockbuster

On the other hand, traders said that Blockbuster's bonds got hammered late Thursday, after the Dallas-based movie rental company reported poor third-period results, including a net loss of $116.8 million, or 60 cents per share, far wider than its loss of $17.8 million, or 9 cents per share, a year earlier. Excluding special items, Blockbuster lost 25 cents per share - more than twice the 10 to 11 cent loss Wall Street had expected.

Blockbuster also suffered a 14.4% decline in quarterly same-store sales - double what many analysts were expecting - as industry rivals delivering films using other business models than Blockbuster's traditional brick-and-mortar stores continue to erode its share of the market. These include Netflix Inc., which operates on-line and through the mails, or Coinstar Inc.'s ubiquitous Redbox kiosks. While Blockbuster is attempting to re-invent itself by adopting these alternate movie-delivery technologies, its progress has been slow.

Against that backdrop of bad news, the company's 9% notes, which a trader said had been trading as well as the lower 50s before the numbers came out, slid to 49½ Thursday, and on Friday, he said, they "got slammed today," trading down to around 45¼ bid, 45½ offered context, "easily down 5 or 6 points [from their pre-numbers highs]. They took no prisoners."

A second trader saw "a whole bunch" of the 9s trading, actually seeing them up a little on the day to the 46-47 range from early lows of 45-46 - but he acknowledged that they were well below where they had been on Thursday ahead of the earnings data.

AMD rise rolls on

Apart from numbers-driven issues, a trader saw Advanced Micro Devices Inc.'s 7¾% notes due 2012 having firmed a little more Friday, building on the gains notched Thursday on the news that bigger rival Intel Corp. had agreed to pay Sunnyvale, Calif.-based AMD $1.25 billion to settle the latter's lawsuit against Intel. In that suit, culminating years of legal battles, AMD had charged the bigger company with unfair competitive practices designed to shut AMD out of the computer-chip market.

That news had caused AMD's bonds to gain several points Thursday, to around 96¾ bid, the trader said, and he saw them going out on Friday at 97 bid, 97¾ offered.

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