Mohegan, Wackenhut, two more price deals; Beverly up on asset sale

By Paul Deckelman and Paul A. Harris

New York, July 1 - As the fuse leading up to the Fourth of July break continued to burn Tuesday, terms on four deals were heard during the session in the high yield primary - chief among them Mohegan Tribal Gaming Authority's $330 million issue.

As could be expected, activity on the secondary market side of the high yield fence was restrained - both on a count of the market's overall pre-holiday lassitude, and the continued focus on the still-busy new-issues sector. Some activity was heard in healthcare names, with Beverley Enterprises Inc. debt firmer as the company announced a pair of asset sales, and HealthSouth Corp. continuing a rise noted on Monday.

But the primary market was clearly where it was at on Tuesday, as Connecticut-based Indian gaming operator Mohegan spun the wheel on its $330 million issue of six-year senior subordinated notes (Ba3/BB-). The notes priced at par to yield 6 3/8%. The offering, proceeds from which will go to fund the authority's pending tender for its $300 million of 8 ¾% senior subordinated notes due 2009, came at the tight end of the 6 3/8-6 5/8% price talk, via Bank of America Securities and Citigroup.

Boca Raton, Fla.-based private jailer Wackenhut Corrections Corp. priced an offering of $150 million of 10-year senior notes (B1/B) at par to yield 8 ¼%

Proceeds from the BNP Paribas/Lehman Brothers-led deal will be used to help fund the repurchase of 12 million shares of common stock from Danish security company Group 4 Falck, which reportedly has agreed to sell back its stake in Wackenhut. The corrections company will also use some of the proceeds from Tuesday's bond sale to refinance the existing credit facility.

The new Wackenhut paper came at the tight end of the 8 ¼%-8 ½% price talk.

Cascades Inc., the Quebec-based paper company, priced a $100 million add-on to its existing 7 ¼ % senior notes due Feb. 15, 2013 (Ba1/BB+) at 104.5, late Monday, with details emerging during Tuesday's session. The notes, via Citigroup, came with a yield to maturity of 6.608%, and a yield to worst of 6.489%.

The original $450 million deal priced at par on Jan. 31, 2003, so Cascades walked away from Tuesday's transaction with a substantially better interest rate.

And from the eurobond market, HeidelbergCement AG priced an upsized offering of €700 million (from €600 million) of seven-year senior notes (Ba1/BB+) at par to yield 7 5/8%.

Deutsche Bank Securities, Citigroup and Royal Bank of Scotland were joint bookrunners.

According to a syndicate source, the price talk on HeidelbergCement had tightened to 7 5/8% area from 7 1/2-7 ¾% before the deal priced on Tuesday.

And as the dust settled on Tuesday's four completed junk bond deals, the stage was set for the remainder of the holiday-abbreviated week, during which market observers say they expect three deals to price.

Most conspicuous among the triumvirate, in terms of size, is Vivendi Universal's €1.1 billion (equivalent) of senior notes (B1/B+) in dollar and euro tranches, which is expected to price on Wednesday via Goldman Sachs.

Price talk of 6 1/4-6 ½% was heard Tuesday on the offering by the European media giant, which will use the proceeds to refinance the €$1.3 billion credit facility entered into in Jan. 2003 by Societe d'Investissement pour la Telephonie (SIT), a wholly-owned and consolidated subsidiary of Vivendi Universal.

One source looking over the prospective new Vivendi deal Tuesday told Prospect News that seeing as how Vivendi's bonds are trading around 6.50%, "it makes sense to grab the money while they can and run."

Cincinnati Bell Inc., formerly Broadwing Communications Services, Inc., rang in with price talk in the 7 ½% area on its upcoming offering of $300 million of 10-year senior notes (B2); that issue is also expected to price on Wednesday via Credit Suisse First Boston, Banc of America Securities and Goldman Sachs.

Also on trajectory to complete a transaction on Wednesday is Dulles, Va. rocketeer Orbital Sciences Corp. Price talk of 8 ¾%-9% emerged Tuesday on its $135 million of eight-year senior notes (B+), which will come to market via Banc of America Securities.

Finally on Tuesday, a capital markets source told Prospect News that aircraft parts-maker TransDigm Inc., which will reportedly be acquired by Warburg Pincus LLC, is headed to the high yield market with $300 million of eight-year senior subordinated notes (B3/B-). No timing or syndicate names were heard.

Traders said that secondary market activity, such as it was, was "all new-issue stuff on the break," in the words of one, with most of that centered in the new Mohegan 6 3/8% senior subordinated notes due 2009. He saw those bonds, which had priced at par, initially firm a little to 100.25 bid, 100.75 offered - but by the time half an hour had elapsed after they broke, the nascent advance stalled and "the price slowly went back down."

Another trader saw the Mohegans just head back down to around their par issue price and go no further.

Several traders queried had not seen the smaller Wackenhut, Cascade or HeidelbergCement deals as having broken by the time things were wrapped up.

Among recently priced new deals, a trader saw the Jacuzzi Brands Inc. 9 5/8% notes due 2010, which had priced at par on Monday, still floating around the same 102.675 bid, 102.875 offered context into which the bonds had moved Monday after their pricing, with bonds hard to come by.

And he pegged Arch Western Resources Inc.'s 6 ¾% senior notes due 2013 at 102 bid, 102.5 offered; the coal company's bonds priced at par on June 19.

At another desk, a market source quoted XM Satellite Radio Holdings Inc.'s 12% senior secured notes due 2010 as essentially unmoved on the session, at 98.5 bid, even as the Washington-based satellite radio broadcaster reported that as of the end of the second quarter, it had 692,253 subscribers, having added 209,178 new customers during the quarter. That keeps XM well ahead of rival satellite broadcaster Sirius Satellite Radio Inc., which recently announced that it had reached the 100,000-customer mark.

XM sees itself on track to have at least one million subscribers getting its service by the end of the year. Its shares jumped $1.41 (12.83%) in Tuesday's Nasdaq dealings to close at $12.40.

Back among the established issues, Beverley Enterprises' 9 5/8% notes due 2009 were seen having gained more than two points to end at par, while its 9% notes due 2006 were also at par, up a point or so on the day.

The Fort Smith, Ark.-based nursing home operator announced a pair of sales of non-core assets over the past two days; late Monday, it announced the all-cash sale of 18 skilled nursing facilities and two assisted living centers to Aurora Healthcare LLC, although it did not say how much money would be involved. Beverley said the facilities being sold are the first group to be sold under Beverly's previously announced strategy of divesting those nursing homes that account for a disproportionately high share of patient care liability costs.

And on Tuesday, it announced the cash sale of CareFocus, a network of 20 licensed home care agencies in North Carolina, but again did not specify how much it expected in proceeds from the transaction . Beverley said the business, which provides personal care services and private-duty nursing, is not aligned with the company's long-term strategic plan.

Equity investors were equally pleased with the deals; Beverley's shares rose 50 cents (14.29%) in New York Stock Exchange dealings Tuesday to $4 even.

From that same sector, HealthSouth Corp. - whose bonds had firmed on Monday after the troubled Birmingham, Ala.-based operator of diagnostic imaging centers and outpatient rehabilitation facilities said it would meet with its creditors and stockholders next Monday in New York to outline its preliminary business plan and to provide current financial projections for the next twelve months - continued to coast upwards.

A market source pegged the company's 6 7/8% notes due 2005 as having firmed several points to the 83 bid level, while its 8 ½% notes due 2008 strengthened to 81.

At another desk, HealthSouth' 7 3/8% notes due 2006 were also seen in the 83.5 area, up at least four points on the session.

And the company's shares, which trade in the over-the-counter market, were 22 cents better (42.31%) at 74 cents, on heavy volume of more than 26 million.

The rise in Beverley and HealthSouth may have resulted in some sector sympathy for Tenet Healthcare Corp.; its 6 3/8% notes due 2011 were up nearly two points, at 94.75.

But apart from such isolated names, things were seen as slow in the run-up to the Fourth of July holiday, which will see the junk market wind down at 2 p.m. ET on Thursday and be closed all day Friday.

"Things just died around 1 p.m. (ET) and have been that way ever since," said one late-afternoon trader. "Everyone is just getting out of town."

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