Nevada Power prices add-on; Stone Energy bringing deal; KCS Energy, Toys 'R' Us lower

By Paul Deckelman

New York, June 21 - Nevada Power Co. brought a quickly shopped $195 million add-on offering of general and refunding mortgage bonds to market Wednesday, primary market sources said.

The new-deal market also saw Stone Energy Corp. - which had said on Tuesday that it would do floating-rate debt to fund energy asset acquisition - in fact begin pitching a $225 million issue of new four-year bonds to potential investors, ahead of an expected Thursday pricing.

Details, meantime, emerged on Armor Holdings Inc.'s planned $400 million issue of 10-year notes, which hit the road on Wednesday, with pricing expected next week.

In the secondary market, traders noted that KCS Energy Corp.'s bonds were trading well below recent levels, blaming the slide on investor dismay with the coming acquisition of the company by Petrohawk Energy Corp. - which is also, incidentally, shopping a new bond issue around - because the merger is structured so that it apparently will not trigger the provision in the KCS bonds' indenture letting bondholders put the notes back to the company in the event of a change of control.

Toys 'R' Us Inc.'s bonds were also lower, even as the Wayne, N.J.-based toy retailing giant was lining up $1 billion of new secured bank financing, which will now take its place in the company's capital structure ahead of the bond debt.

Nevada Power came to market with a two-part drive-by deal totaling $195 million, adding on to two existing issues of general and refunding mortgage debt.

The Las Vegas-based utility company priced a $75 million add-on to the $250 million of existing 6½% series O general and refunding mortgage notes due May 15, 2018. The add-on notes priced at 96.537 to yield 6.931%. That brings the total issue size to $325 million. The original notes were sold in early May.

It also priced a $120 million add-on to the $250 million of existing 6.65% series N general and refunding mortgage notes due April 1, 2036, which had been sold in late March. The new notes priced at 92.647 to yield 7.255%. They bring the issue to $370 million.

The deal came to market via joint book-running managers Goldman Sachs and Deutsche Bank Securities.

Nevada Power - a wholly owned subsidiary of Sierra Pacific Resources - plans to use the proceeds from the offerings to fund the purchase any of its $162.5 million of 10 7/8% series E general and refunding mortgage notes due 2009 under its pending tender offer for the notes, scheduled to expire next week. It will use remaining proceeds to repay credit facility debt.

Stone Energy plans $225 million

Elsewhere, the forward calendar saw Stone Energy emerge with a $225 million four-year floating-rate note issue, which could price as soon as Thursday.

Junk market sources said the rapidly-shopped offering - the details of which only emerged on Wednesday morning - was presented to prospective investors via a mid-afternoon conference call. The deal is being brought to market by sole bookrunning manager Banc of America Securities.

The proceeds will be used to fund the Lafayette, La.-based independent oil and gas exploration and production company's purchase of Gulf of Mexico energy assets.

Stone said that if it does not complete its acquisition of those assets, it will use the funds to reduce existing credit facility debt.

Armor starts marketing $400 million

Details of another prospective new deal came to light on Wednesday as Armor Holdings was heard by high-yield syndicate sources to have hit the road to market its previously announced $400 million offering of 10-year notes to prospective investors.

The sources said that the roadshow for the senior subordinated notes deal will run through next Monday, with pricing expected on Tuesday via joint book-running managers Merrill Lynch & Co. and Wachovia Securities.

Armor, a Jacksonville, Fla.-based diversified manufacturer of branded products for the military, law enforcement and personnel safety markets, expects to use the proceeds from the new deal to refinance bank debt which it incurred to fund its acquisition earlier this year of Stewart & Stevenson Services, a rival Houston-based manufacturer of tactical vehicles.

FleetPride talks notes

Price talk emerged on FleetPride Corp.'s $150 million issue of eight-year senior notes, which could price Thursday. Syndicate sources said that the talk envisions a yield in the area of 11¼%.

That offering is being brought to market via joint book-running managers Banc of America Securities and Deutsche Bank Securities. It has been marketed to potential investors via a roadshow that started on June 12, as well as by an investor call this past Monday. The books are scheduled to close Thursday at 11 a.m. ET with pricing anticipated soon after.

Proceeds from the offering will be used to repay the senior unsecured bridge loan facility which partially financed the acquisition of the Woodland, Tex.-based distributor of aftermarket heavy-duty truck and trailer parts - the nation's largest such company, with 156 distribution branches in 36 states.

FleetPride announced earlier this month that Investcorp, Banc of America Capital Investors, and members of the company's management team had completed the acquisition of the company, on undisclosed terms, from an investor group led by Aurora Capital Group and including Brentwood Associates and certain pension and endowment funds.

SNF releases talk on euro deal

Price talk also emerged on French chemical manufacturer SNF SA's upcoming €140 million offering of euro-denominated seven-year senior notes. Junk bond syndicate sources said that the deal is expected to price to yield around 8%, possibly as soon as Thursday.

That price talk emerged about mid-way through a four-day roadshow aimed at marketing the prospective offering to potential investors in Europe. There were presentations in Paris on Monday and Tuesday and in London on Tuesday and Wednesday. The roadshow will wrap up with presentations Thursday in Frankfurt and Amsterdam. The books on the deal are expected to close at 12 p.m. ET Thursday, with pricing expected anytime soon after via book-running manager Calyon Securities and joint lead manager Banc of America Securities.

The company, headquartered in Andrezieux, France, produces specialty chemicals, such as water-soluble polymers. It plans to use the new-deal proceeds to help refinance existing debt, plus the buyout of one of two major shareholders by the other. Besides the bond deal, the financing will also include a €150 million two-tranche bank loan via Calyon, the sources said.

TransDigm dips in trading

Traders in the secondary market said that they had not seen any aftermarket activity in the new Nevada Power add-on issues.

Also among recently priced bonds, a trader said that TransDigm Inc.'s new 7¾% senior subordinated notes due 2014 were about half a point below Tuesday's par issue price during Wednesday's dealings.

Traders saw Stone Energy's existing bonds easier, even as the company's prospective new deal was being shopped around the markets, with a trader seeing its 6¾% notes due 2014 at 99.5 bid and its 8¼% notes due 2011 at 101, both down half a point.

A second trader said that the 81/4s had retreated to current levels from as high as 103 recently.

However, another trader saw the bonds unchanged on the day at 99 and 102.5, respectively.

KCS Energy drops

And a trader noted the fall-off in KCS Energy's bonds - a slide which comes as would-be acquirer Petrohawk Energy gets ready to sell $650 million of seven-year notes to help fund that acquisition.

KCS Energy's bonds, the trader said "are gonna be a mess," with its 7 1/8% notes due 2012 languishing at around 94 bid, well down from recent levels around 99.

"Based on the covenants, a change of control was supposed to change the bonds to a 101 takeout."

However, he said "the company is trying to disavow that" - and the bondholders reacted with dismay. High yield syndicate sources said when the deal emerged in the market that the acquisition transaction was not expected to trigger that change-of-control put provision.

"There could be a very serious lawsuit" on the part of the disgruntled KCS bondholders, he said - and raised the possibility that the controversy could hurt Petrohawk's efforts to bring its new deal to market.

"I doubt whether they'll get the deal done," he declared. "All of the bondholders are getting together - which could dramatically affect the Petrohawk [transaction].

"There's going to be a lawsuit," he flatly predicted. "I'll tell you one thing," he said of the upcoming new deal - "I don't know anybody who owns KCS that's going to buy it."

Another trader termed the company's efforts to say that the sale of KCS to another company would not trigger a change of control was "sneaky, and a way to get around the put" and said that is the reason the KCS bonds have traded off, sinking to 94 bid, 94.5 offered Wednesday from prior levels near par last week.

Toys weak on loan news

Elsewhere, the news of Toys 'R' Us' new secured financing threw something of a damper over its existing bonds. A trader saw the company's 7 7/8% notes due 2013 at 76.5 bid, 77 offered, which he pegged down two points on the day.

A market source at another desk quoted those bonds at a slightly higher level, 77.5 bid - but said that represented a 2½ point drop.

Another source said that the company's bonds were lower across the board, with its 7 3/8% notes due 2018 dropping to 62.5 bid from 73 and its 7 5/8% notes due 2011 off more than a point at 81.5. Its 8¾% notes due 2021 were down half a point at 94.

Toys 'R' Us said Wednesday in a filing with the Securities and Exchange Commission that its new $1 billion credit facility would consist of an $800 million senior secured term loan facility, and a $200 million asset sale facility, which would be reduced in the event that the company consummates specified asset sales prior to the closing date of the senior credit facility. The term facility would mature in six years and the asset sale facility would mature in two years.

Chiquita, Dole down

A trader said that Chiquita Brands International and rival produce importer Dole Foods "were getting hit, down half a point, ¾ point every day."

He attributed the slide to the companies' difficulties in Europe, quoting Dole's 8 7/8% notes due 2011 at 93.25 bid, 94.25 offered, well down from levels around 98 last week, while Chiquita's 8 7/8% notes were at 87.5 bid, 88 offered, also down several points over the course of several sessions.

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