Ticketmaster, HSN price downsized deals; Georgia Gulf gains on settlement; Sprint still runs

By Paul Deckelman and Paul A. Harris

New York, July 16 - Ticketmaster and HSN, Inc. priced downsized offerings of eight-year notes on Wednesday - the first two of a trio of deals from subsidiaries of IAC/InterActive Corp. that are tapping the junk bond market to fund their pending spin offs from media and transaction services mogul Barry Diller's far-flung empire. Still to come is a similarly sized and tenured offering from Interval Acquisition Corp.

Secondary market traders meantime saw some activity in the new bonds priced Tuesday by Intelsat Corp.

Among the more established issues, Georgia Gulf Corp.'s bonds were seen firmer in the wake of a settlement of a dispute with a major bondholder, which withdrew a claim that an event of default had occurred on one series of the company's notes - a claim that potentially could have triggered similar claims against its other outstanding bonds as well.

Sprint Nextel Corp.'s bonds - which had firmed on Tuesday on a news report that that South Korean telecommunications operator SK Telecom was in talks aimed at acquiring the Number-Three U.S. wireless carrier - were seen having mostly continued to rise in Wednesday's dealings, although several issues were seen having ended lower.

Dole Food Co. Inc.'s bonds, and those of competitor fruit and vegetable importer Chiquita Brands International Inc., rose on the news that the European Union will accept a compromise on banana imports to soothe a long-running dispute with Latin American and African, Caribbean and Pacific nations.

General Motors Corp.'s bonds, those of its automotive financing arm, GMAC LLC, and paper from those two companies' respective rivals - Ford Motor Co. and Ford Motor Credit Co. - were all seen higher, a day after GM executives outlined an ambitious program of measures aimed at letting the top U.S. car and truck maker ride out the current auto market downturn and eventually return to profitability.

An investment banker said that the broad high-yield market was ¼ to 3/8 point better on Wednesday.

Meanwhile the primary market generated approximately $538 million of proceeds as two of three deals related to spin offs of entities from IAC/InterActiveCorp were priced.

Ticketmaster and HSN

Ticketmaster priced its downsized $300 million issue of eight-year senior notes (Ba3/BB) at par to yield 10¾% on Wednesday.

The yield was printed 25 basis points beyond the wide end of the 10¼% to 10½% price talk.

The company initially launched $400 million of the eight-year notes, but shifted $100 million of the proceeds to its term loan B.

JP Morgan, Merrill Lynch & Co. and Banc of America Securities LLC were joint bookrunners.

Meanwhile HSN, Inc. priced a slightly downsized $240 million issue of 11¼% eight-year senior notes (Ba2/BB) at 99.352 to yield 11 3/8%.

The yield on the HSN deal was printed 37.5 basis points beyond the wide end of the 10¾% to 11% price talk.

Banc of America Securities LLC, JP Morgan and Morgan Stanley were joint bookrunners.

Buy-side sources told Prospect News that the dealers initially sought to generate interest in HSN in the mid-to-high 9% range. However interest in the bonds failed to materialize in that area.

Several high-yield accounts have lately told Prospect News that the junk primary market is not the place to be right now when there are bargains to be had in the secondary market.

One money manager from a high-yield mutual fund continues to shop in the bank loan market where paper is secured and coupons are at least agreeable.

However another money manager, this one with an interest in junk bonds and stocks, told Prospect News on Wednesday that the high-yield primary market is not all that forbidding.

This investor reasoned that the bad news is concentrated in the automotive names, with respect to junk, specifically, and to financials with respect to the capital markets as a whole.

Away from those concentrated pockets of bad news, high-yield defaults, though rising, remain low from an historical perspective.

Junk is apt to widen, this investor conceded. However, for issuers looking to raise cash the primary market remains open, provided those issuers are willing to pay.

Interval Acquisition for Thursday

With the Ticketmaster and HSN deals having cleared Wednesday, only one of the trio of IAC/InterActiveCorp spin off financings remains to be completed.

Interval Acquisition Corp. set price talk on Tuesday for its $300 million offering of eight-year senior notes (B1/BB) at 10¾% to 11%.

Morgan Stanley is the left bookrunner for the deal which is expected to price on Thursday. Barclays Capital and Wachovia Securities are joint bookrunners.

New Intelsat bonds trade around

A trader saw the 9¼% notes due 2014 priced Tuesday by a unit of Intelsat, the Bermuda-based satellite communications company, trading at 97.25 bid, 98.25 offered. Another trader quoted those bonds at 97 bid, 98 offered, versus what he said was a par pricing level for the $580 million of new paper.

The traders did not see any activity in the other tranche of the two-part issue, consisting of $658 million of 9¼% notes due 2016, which was also heard by some in the market to have priced at par. Intelsat is issuing the bonds to replace bridge loan debt used to partially fund the leveraged buyout of the company.

Market indicators edge upward

Back among the established issues, a trader said that the widely followed CDX junk bond performance index was up 3/8 point on Wednesday, quoting it at around 92 5/8 bid, 92 7/8 offered. The KDP High Yield Daily Index rose by 8 bps to end at 70.86, while its yield tightened by 1 bp to 10.60%.

In the broader market, advancing issues led decliners by a not-quite five-to-four margin. Activity, represented by dollar volume, rose about 10% from the levels seen in Tuesday's session.

A trader said that although the junk market seemed better, "we weren't doing very much."

A second trader said "truthfully, everything was equities," with junk market participants again for the most part hugging the sidelines while they watched the latest gyrations in the stock market, which this time were largely to the upside, spurred on by strength in the financials sector after Wells Fargo & Co. reported better-than-expected numbers and Merrill Lynch & Co. Inc. announced plans for a multi-billion-dollar asset sale.

"I'm looking at the bonds that we track," he said, "and they're [mostly] unchanged. It's weird. Everyone was just mesmerized by the tape" reporting the movements in equity land. "I don't think high yield guys believe it [the scenario that an improved stock market means it's safe to trade junk again]. I just don't see the momentum here today at all. In the traditional high yield market today, [much] stuff did not move."

On the other hand, yet another trader said that, if anything, junk market denizens may have been overly influenced by the good feelings that the equity markets were awash in on Wednesday, with the bellwether Dow Jones Industrial Average zooming 276.74 points on the day, or 2.52%, to 11,239.28, and other, broader indexes also up solidly.

"It seems like some people are thinking that there's a new world ahead, with the recent euphoria in the equity market," he observed "I saw several [junk] sellers pull out." However, he added that he "didn't see as many buyers necessarily jump in."

That having been said, though, he estimated that "eight out of 10 offerings were either jacked or pulled altogether. So there was definitely very little, if any, urgency to sell any paper in here."

Georgia Gulf gyrates after settlement

Georgia Gulf's bonds were seen bouncing around at slightly higher levels after the late-Tuesday announcement by the Atlanta-based chemical manufacturer that it had reached a settlement with a major bondholder who last month had filed a notice of default relating to its 7 1/8% notes due 2013.

A market source saw no trading in the 7 1/8s themselves, which had last traded in late June around the 77 bid region. However, there was some trading in the company's other two issues, its 9½% notes due 2014 and its 10¾% notes due 2016; had the settlement not been reached and the notice of default not withdrawn, the alleged default in the 7 1/8s may have triggered cross-default provisions under the indentures of the other two bond issues, potentially making them immediately due and payable as well. Georgia Gulf has $100 million of the 7 1/8% bonds outstanding, $500 million of the 91/2s and $200 million of the 103/4s.

A trader saw the 10¾% notes "definitely up a couple of points" in the wake of the late-Tuesday announcement, seeing them push up to the 51 level before going home at 49.875 bid, up more than 1½ points from Tuesday's close, while its 9¼% notes rose to 71.375 from around 70.5 on Tuesday. A second trader saw the latter bonds at 71 bid, 72 offered.

At another desk, the 103/4s were seen up more than 2 points at 50.5.

A market source saw the 91/2s - which had been trading around 74 bid at the beginning of the month, only to fall below 70 last week but then end at 70.5 on Tuesday - as having moved back above the 71 level Wednesday, up a point on the session. The 103/4s meantime had been trading as high as the lower 60s last week, only to plunge as low as 48 bid on Tuesday. They got as good as 52 bid in Wednesday's dealings before coming down from that peak to settle around just under 50, but still up nearly 2 points on the day. The 103/4s were clearly the more busily traded of the two, with a number of round-lot transactions.

Georgia Gulf's New York Stock Exchange-traded shares had slid badly on Monday but then shot up by 26% in mostly late-session trading on Tuesday after news of the bondholder settlement filtered through the financial markets. They were up another 5 cents, or 1.88% on Wednesday, to close at $2.71. Volume of 797,000 shares was a little more than the usual turnover.

As trading was winding down on Tuesday, the company announced that it had entered into a settlement agreement with Sandelman Partners LP, a New York-based hedge fund with about $4 billion of assets under management that owns 44% of the outstanding 7 1/8s. Sandelman had submitted a notice of default on June 6, claiming that Georgia Gulf's borrowings under its senior credit facilities had exceeded the level permitted under the bonds' indenture. The hedge fund asserted that the company was earning less than double its required interest payment amounts, allegedly putting it into default. Georgia Gulf vigorously contested the bondholder's allegations and filed a complaint with the Delaware Court of Chancery, asking for a declaratory judgment saying that it was not in default.

As part of the settlement, which includes withdrawal of the notice of default and the dismissal of all related litigation, Georgia Gulf will pay $1.4 million to cover Sandleman's legal fees and will solicit the consent of the 7 1/8% bondholders to amend the relevant covenants in the notes' indenture and provide a waiver of any defaults. It will pay $1.5 million in consent fees to gain the bondholders' consent, subject to its senior bank facility lenders approving the amending of the bond indenture and payment of the consent fee.

Georgia Gulf said that Sandelman and another bondholder, who together hold a majority of the notes, have delivered their consents to the indenture changes as part of the settlement agreement.

Sprint Nextel rise continues

Sprint Nextel bonds were seen mostly up for a second straight session, as both that company and SK Telecom would not deny a Tuesday news report that the two were in talks that that could lead to SK acquiring Sprint. However, neither did either of them confirm the report.

A market source saw its 6% notes due 2016, which had gyrated around on Tuesday at mostly higher levels before ending pretty up a little around 86, as having risen perhaps ¼ to ½ point Wednesday to the 86.25 level in active large-block trading, including several transactions of as much as $5 million. The company's Sprint Capital Corp. unit's 8¾% bonds due 2032 were pegged up about ½ point at 94 bid, though on very active dealings. On the other hand, the Sprint Capital 6 7/8% bonds due 2028 were seen down a point at just under 82.

A trader also saw the 8¾% long bonds up ½ point to 94, on "big volume - it could be as much as $20 or $30 million," but saw the 2016s "essentially unchanged" at 86 bid in "very active" dealings. And he actually saw the company's 6.90% notes due 2019 down ¼ point at 87 bid, while its 6 7/8% notes due 2013 nosed downward to 81.75 bid from levels around 82.5 "a couple of days ago. I'm frankly surprised by those closing results - but they are what they are."

However, while at least some bond investors still appeared to be receptive of the acquisition scenario, first reported Tuesday afternoon on CNBC, stockholders seemed more influenced by news stories appearing elsewhere which said Sprint and SK - which share the same technology platform, known as CDMA - were not talking about a merger transaction at all, but were merely discussing ways of leveraging their technological similarities in an alliance or perhaps a strategic partnership. Sprint's NYSE-traded shares, which had jumped 9.44% on heavy volume on Tuesday, lost 35 cents, or 3.87% on Wednesday, to end at $8.69. Volume of 40 million shares was a little heavier than usual.

CNBC said that SK - which is smaller than Sprint - would likely have to enlist the help of private-equity partners in order to fund any acquisition of Overland Park, Kan.-based Sprint, which has a market capitalization of around $26 billion. The CNBC report cautioned that although the talks had "heated up" in recent days, a price had not yet been discussed and no buyout deal was imminent.

Skeptics noted that given the roughly $10 billion disparity in the market capitalization of the two companies, SK probably could not swallow up the larger Sprint without raising substantial capital to do so - no small feat in the current capital market environment. They also opined that with the federal government as a major Sprint customer, regulators were less likely to allow such an acquisition by a foreign-based company to go though unimpeded.

Dole, Chiquita gain from E.U. compromise

Elsewhere, a trader said that Dole Foods' 8 5/8% notes due 2009 were up a point at 96 bid, 97 offered. Another trader had those bonds at 96.625 bid, which he called up 5/8 point.

The first trader meantime saw Dole arch-rival Chiquita Brands' 8 7/8% notes due 2015 a point higher at 83.5 bid, 85 offered.

He attributed the gains in Dole and Chiquita to the news that the European Union will accept a compromise offered by the World Trade Organization aimed at defusing a long-simmering conflict over tariffs the E.U. imposes on imports of bananas, a key product for both Dole and Chiquita.

The European supranational had been accused by the WTO of favoring banana imports from African and Caribbean banana growers - many located in former French and British colonies - over lower-cost producers such as Ecuador and other Latin American growers. The U.S. - mindful of the damage with the higher tariffs had allegedly done to shipments from Westlake Village, Calif.-based Dole and Cincinnati-based Chiquita - had also been urging the Europeans to reform their tariff system.

Autos take an upside ride

A trader saw General Motors's benchmark 8 3/8% bonds due 2033 unchanged at 53 bid, while another trader saw those bonds up 1 point at 54.5 bid, 55.5 offered. GM's 7.70% notes due 2016 were quoted up as much as 2½ points at 56 bid, while its 7 1/8% notes due 2013 rose nearly 2 points to just below the 60 bid level.

At another desk, a trader characterized GM paper as up ½ point "across the board," adding that he didn't know "if it was short-covering, or what."

A market source saw the 8 3/8s up a point at 53, and pronounced its 7.20% notes due 2011 nearly 3 points better, in busy dealings, just below the 70 mark.

While short-covering in the recently troubled bonds was seen as a possible factor, a participant also suggested a delayed investor reaction to the package of internal restructuring moves laid out on Tuesday by GM chief Rick Wagoner, who said that the carmaker would generate $10 billion of cost-savings and other internal capital improvements over the next two years, while selling assets and borrowing to raise another $5 billion. He also said that GM would move forward with plans to close four truck factories and could slate personnel layoffs at other facilities, among other measures.

GM's 49% -owned automotive and residential finance arm, GMAC's 8% bonds due 2031 rose 1 point to 59 bid, a trader said, while its 6 7/8% notes due 2012 firmed slightly to 62.5 bid. Another market source saw GMAC's 7¾% notes due 2010 up nearly 2 points at 79.5, although its 7% notes due 2012 lost a point to finish at 63.

A trader saw GM competitor Ford's 7.45% bonds due 2031 up ½ point at 54 bid, 55 offered, while at its financing arm, Ford Motor Credit's 7¼% notes due 2011 gained 2 points to above the 77 level.

Another market source had the 7.45s up nearly a point at 53, while the company's 6½% notes due 2018 were ahead by as much as 4 points, also around the 53 mark. Ford Credit's 7% notes due 2013 were seen ½ point better at 72.

Gaming names seen a better bet

Among the gaming issues - which had slid badly on Thursday and Friday in response to poor Nevada and Atlantic City revenue numbers, got a respite on Monday but then headed back downward on Tuesday - Wednesday's session saw them largely better, likely on short-covering after having been pounded down in three sessions out of the last four.

A trader saw Isle of Capri Casinos Inc.'s 7% notes due 2014 "pretty active" and up a point at 66 bid. Another trader saw the bonds at that same level but characterized them as up ½ point.

The first trader also saw Trump Entertainment Resorts Inc.'s 8½% notes due 2015 closing at 51.5, which he called up ¼ point, while Station Casinos Inc.'s 6% notes due 2012 were around ½ point better at 77.75.

At another desk, a market source saw those Station bonds up 1 point at 77.5 bid, while yet another source said they rose 1½ points at 78, and called the Trump paper up 1½ points, although he only saw them at 50 bid, 51 offered.

He saw MGM Mirage's 6 7/8% notes due 2016 up a point at 77.5 bid, 79 offered, though the issue was "not heavily traded," while its 6½% notes due 2009 gained ½ point to 97.25 bid, 98.5 offered. Boyd Gaming Corp.'s 7 1/8% notes due 2016 gained ½ point to 67.5 bid, 69.5 offered.

Tribune bonds troubled

A trader saw Tribune Co.'s 4 7/8% notes due 2010 down 1½ points at 62.5 bid, 64.5 offered, blaming the slide in the underperforming Chicago-based media conglomerate's bonds on overall publishing sector weakness after rival newspaper operator Gannett had "bad numbers." A second trader saw the Trib notes down 1 point at 63.

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