Upsized Triton PCS leads trio of pricings, but Nova drops out

By Paul Deckelman and Paul A. Harris

New York, May 30 - Triton PCS Inc.'s substantially upsized $725 million 10-year note issue led a trio of new-deal pricings worth nearly $1.5 billion on Friday, a sign that there's still plenty of life - and cash - in the primary market, even despite Thursday's report of a second large liquidity outflow from junk bond land. But on the downside, Nova Chemicals Corp. withdrew its planned $200 million offering - the third such cancellation/postponement in four days, and a possible sign that at least some issuers are deciding that the optimum hour for bringing in new deals has probably already passed.

In secondary dealings, the new Triton bonds firmed smartly when they were freed; otherwise, Charter Communications Holdings LLC debt was quoted firmer, as the cable company was reported to have asked its bankers to take the necessary steps to allow principal owner Paul Allen to make a $300 million investment in Charter, to help get its finances in order.

In the face of the second reported outflow from high-yield mutual funds in as many weeks, the primary market proceeded purposefully during the final session of the holiday-abbreviated week of May 26.

Terms emerged on three junk bond transactions, including a dramatically upsized bond sale from wireless operator Triton PCS, which sold $725 million of 10-year notes to yield 8½%. The deal was increased from $500 million.

And three companies took up positions on the forward calendar with offerings that are expected to price during the coming fortnight.

Also during Friday's session news of the third pulled transaction of the week of May 26 made the market rounds. Nova Chemicals Corp. withdrew its $200 million of eight-year senior notes (Ba2/BB+), stating that a recent asset sale would stand in the place of the bond proceeds to fund the August 2003 put of its $150 million 7% debentures due 2026. Citigroup was the bookrunner on the Rule 144A offering (see related story in this issue).

In pulling its deal Nova followed Huntsman LLC which earlier in the week postponed a $250 million sale of seven-year notes (B3/B-), citing "market conditions" and Alon USA, which postponed a planned $150 million note sale (B3/B), also citing market conditions.

Shortly after news circulated Friday that Nova withdrew its deal one sell-side official said that the move had more or less been expected.

"They have money elsewhere to take care of that offering," said the source. "If they had gotten a great rate they would have taken advantage of it, if not they'd use the proceeds from the asset sale.

"As for Alon, that was just too small of a company. No one wanted any part of that deal.

"And as for the Huntsman LLC deal that got postponed, that's at the holding company level and it's 7.9-times levered.

"Those were deals that people were just trying to push the market with."

Asked whether the $619.6 million outflow from high-yield mutual funds for the week ending May 28 - the second consecutive outflow following a succession of 12 inflows in a row - was a cause for concern, this official said: "No."

"I don't think that much money has flowed out at this point," the source commented. "We've had $15 billion come in and less than $800 million has gone out.

"Next week will be the big determination, I think.

"The secondary market was firmer this week despite the outflow," the official added.

This sell-sider also made note of a continuing buildup in the new issuance calendar, with three prospective issuers announcing roadshow starts on Friday. If the calendar appears to be building up rapidly, the source said, it may be because issuers do in fact perceive that the market is cooling.

"People might be thinking that now the market is backing up and they feel like they have to get something done," the official said. "People who were waiting for the last possible minute, now have to be concerned that maybe we have reached the last possible minute."

Whether or not the last possible moment is nigh, the primary market operated through the month of May at a torrid pace: high yield issuance was $18.42 billion in May, according to Prospect News data, which also pegs 2003 year-to-date new issuance at $52.24 billion (for details see report elsewhere in this issue).

Terms were heard Friday on four completed transactions - one from late Thursday.

Triton PCS priced an upsized $725 million of 10-year senior notes (B2/B+) at par to yield 8½%, in the middle of the 8½% area price talk. It was increased from $500 million.

Lehman Brothers, Citigroup, JP Morgan and Merrill Lynch were joint bookrunners on the Berwyn, Pa.-based wireless networks operator's Rule 144A deal.

Also pricing a sizable deal Friday was Dallas-based cement and structural steel-maker Texas Industries, Inc., which sold $600 million of eight-year non-call-four senior notes (B1/BB-) at par to yield 10¼%. Price talk on the Rule 144A deal, via Banc of America Securities and UBS Warburg, was for a yield in the 10% area.

And Lamar Media Corp., a wholly-owned subsidiary of Lamar Advertising Co., priced a $125 million add-on to its 7¼% senior subordinated notes due Jan 1. 2013 (Ba3/B). The deal, which priced late in the day Thursday, priced at 103.661 to yield 6 5/8%.

JP Morgan was the bookrunner.

Lamar priced the original $260 million at par, last Dec. 17, and so walked away from Friday's transaction with a significantly lower interest rate.

Terms also emerged Friday on a split-rated offering from Leucadia National Corp., which sold $200 million of 7% senior notes due Aug. 15, 2013 (Ba1/BBB-) at 99.612 to yield 7.052%.

Jefferies & Co. was the bookrunner on the New York City-based financial services holding company's deal.

And the forward calendar grew by three deals during the last session of the May 26 week.

Cooperative Computing, Inc. began the roadshow Friday for $175 million eight-year senior notes (B2/B+), with pricing expected to take place on June 6.

JP Morgan is the bookrunner on the Rule 144A deal from the Austin, Texas-based company, which provides enterprise systems and information services for the automotive aftermarket.

The roadshow also started Friday for Houston Exploration Co.'s $150 million of 10-year senior subordinated notes (existing ratings B2/B) - a deal that is expected to price late in the week of June 2.

The oil and gas exploration and production company will have Wachovia Securities running the books for its new Rule 144A notes offering.

And the roadshow starts Monday for Tenneco Automotive Inc.'s $300 million of 10-year senior secured second lien notes (B2/CCC+). JP Morgan, Morgan Stanley and Banc of America Securities are bookrunners on the Lake Forest, Ill. automotive part supplier's deal, which is expected to complete its roadshow on June 10.

When the new Triton 8½% senior notes due 2013 were cleared for secondary activity, traders said, they shot up to 102.5 bid/103.25 offered from their par issue price.

However, the new Texas Industries 10¼% senior notes due 2011, which also came at par, hung out in a narrow 100-100.5 bid range "all day," a trader said. "They did nothing. It was an issue [price] bid - and that was that."

Outside of the newly issued bonds, Charter's 9.92% notes due 2011 were heard to have firmed to around 62 bid from 60.5 on Thursday, buoyed by the talk that the cash-strapped St. Louis cabler may persuade its bankers to OK changes in the capital structure that would let Allen lend it the $300 million.

However, at another desk, a trader said that he "didn't see much" in the way of Charter movement, with its benchmark 11 5/8% notes due 2009 continuing to hover around 72-73 bid, about where they had strongly risen to on Thursday when the latest round of Allen speculation had begun.

Allen - the multi-billionaire co-founder of Microsoft Corp. - had made the $300 million financing commitment earlier in the spring, but it would require lender approval to implement the investment, since the loan would reportedly be structured subordinate to the company's bank debt but ahead of its unsecured bonds.

Reports Friday said the company held a conference call with some senior lenders to discuss the plan, which calls for the creation of a new Charter corporate entity that would officially borrow the money from Allen.

The $300 million is not all that much, relative to Charter's $18.6 billion mountain of debt, but the money reportedly would be used to keep Charter in compliance with certain credit facility covenants.

On the equity side, Charter's Nasdaq-traded shares - which had risen nearly 11% Thursday on talk of the bank meeting - were up another 21 cents (7.53%) Friday to $3, on volume of 16.3 million, more than double the norm.

Elsewhere, RCN Corp. debt - which one market observer noted "has been moving up a little" - continued to firm on Friday, although no fresh news was immediately seen on the Princeton, N.J. based telecommunications operator to explain the firmer trend, except perhaps for firmer quarterly numbers reported around mid-May.

RCN had announced on May 14 that in the first quarter, it had net income to common shareholders of $32.4 million (29 cents per share), versus a loss of $148.7 million, ($1.46 per share) a year earlier. The quarterly net loss from continuing operations was $135.6 million ($1.23 per share) in the latest quarter, versus a year-ago loss of $150.6 million ($1.48 per share.) Revenues for the latest quarter were $124.5 million, an 11.7% increase from $111.4 million a year ago.

In Friday's dealings, RCN's 9.80% notes due 2008 firmed to 35.5 bid from 34, while its 10 1/8% notes due 2010 were a point better, at 35. It's 11% notes due 2008 were seen as high as 39 bid, up several points from recent levels.

Away from distressed telecommers, Crown Castle International's 10 5/8% senior discount notes due 2007 were seen having firmed to around the 105.313 level at which the Houston-based communications antenna tower operator said it would redeem the bonds (see Tenders and Redemptions section for full details).

A trader said that "it had been moving up [recently] even though it was not definitive that this [redemption] was going to happen." He saw the bonds trading as high as 105.75-106 bid Friday - actually slightly above the take-out point - which he termed about a point-and-a-half rise.

"People were somewhat expecting [the redemption]. So it wasn't a surprise, although perhaps the timing of it was fortuitous."

Aside from the communications sector, Penn National Gaming Inc.'s 11 1/8% notes due 2008 were quoted down about a point-and-a-half at 108, while Argosy Gaming's 7½% notes due 2009 were around that same level, down nearly a point; analysts have noted that both companies are likely to be impacted by actions of legislatures in their respective states, with Pennsylvania's lawmakers seen delaying on a bill to allow race tracks like those which Penn owns, to install slot machines; meantime, Illinois-based riverboat gamer Argosy could be hurt should the legislature there decide to bet on an increase in gaming taxes or an expansion of gaming in the state - at the expense of incumbent operators like Argosy - in order to solve budgetary problems.

Overall, things were "fairly quiet," a trader said, estimating that prices were generally unchanged to perhaps up ¼ point. "Things were better bid," he said, "but it wasn't a buyer's grab-a-thon."

At another desk, another trader, commenting on the $619.7 million outflow in the weekly AMG Data Services junk bond mutual fund flow numbers - the second loss in as many weeks, following an incredible 12 straight weeks of mostly huge inflows to the funds - acknowledged that the size of the outflow was something of a surprise. "You wouldn't have thought that the number would be as large," he said, although he added that given the secondary market's failure to show any traction in the first two days of the holiday-shortened week a sizable outflow in the week ended Wednesday shouldn't have shocked anyone.

At any rate, he said, after snoozing through Tuesday and Wednesday, Thursday's session didn't feel like an outflow session and on Friday, "though it was slow, there was still some activity, and bonds were definitely firmer than they had been at the beginning of the week. "

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