Cricket up on insider buying; Unisys gains; United Rentals off on court loss; funds lose $204 million

By Paul Deckelman and Andrea Heisinger

New York, Dec. 21 - Amid a generally sleepy session on Friday - the last official full trading day before the upcoming holiday break and the end of the last full trading week of 2007 - Cricket Communications Inc.'s bonds were seen better in line with a spurt in the stock of parent Leap Wireless International Inc., spurred by revelations of insider buying, a bullish sign for the San Diego-based telecommunications operator.

Another upsider was Unisys Corp., also in line with a rise in its stock, on apparent investor optimism about the prospects for the information technology company once it moves from its current company headquarters.

On the other hand, United Rentals Inc.'s bonds and shares were seen in retreat after a Delaware court shot down the company's attempt to force erstwhile prospective buyer Cerberus Capital Management to complete its buyout deal for the company, which Cerberus backed out of last month.

Primaryside activity remained in its usual year-end deep-freeze on the traditional first day of winter.

Funds down $204 million

Meanwhile, a market source familiar with the weekly high yield mutual fund flows statistics generated by AMG Data Services of Arcata, Calif. told Prospect News on Friday morning that that in the week ended Wednesday, some $204.1 million more left the weekly-reporting funds than flowed into them, reversing the pattern of inflows seen in the previous two weeks, including the $152.8 million cash infusion in the previous week, ended Dec. 12.

With 50 weeks now in the books, the latest outflow swelled the year-to-date cumulative outflow among the weekly-reporting funds to $2.598 billion.

However, as has been the case for much of the year, the trend was quite different among those funds which report on a month-by-month basis rather than reporting weekly. There was neither a net gain nor a net loss among those funds in the latest week, leaving them continuing to show a net inflow for the year of $6.593 billion.

Consolidating the year-to-date totals of both categories of funds shows an aggregate inflow of $3.995 billion.

The flow of money into and out of the junk bond funds is seen as a generally reliable market barometer of overall high yield market liquidity trends - although they only comprise 10% to 15% of the total monies floating around the high yield universe, far less than they used to - because there is no reporting mechanism to track the movements of other, larger sources of junk market cash, such as insurance companies, pension funds and, most recently, hedge funds.

Indexes little changed

A trader saw the widely followed CDX junk-bond performance index unchanged in a "very quiet" market at 95½ bid, 95¾ offered. The KDP High Yield Daily Index was up 0.01 at 77.61, while its yield remained at 8.75%, unchanged on the day. In the broader market, declining issues slightly outnumbered advancers. Overall market dollar volume was cut nearly in half from Thursday's already reduced levels.

"Nothing was doing." one trader said. The market was "unchanged, unchanged, unchanged, unchanged."

"It was pretty quiet," another trader said. "There were a couple of things going on in the morning and the market felt a little firmer. The equity market was off to the races and our market tried to follow through, but customer-wise and activity-wise, things were just dead quiet," especially as the day wore on.

"We got a couple of trades done here and there," he said, but for the most part, "half the Street left at noon [ET] and I think the other half left at 2 [pm]," with all of the Street brokers gone by then. "It was pretty quiet," he reiterated.

Cricket springs on Leap's leap

A name which saw some movement was Cricket Communications' 9 3/8% notes due 2014, which were seen up nearly 2 points on the day at 94.75 bid. Another market source, though, had the bonds up perhaps ½ point on the day, in very active trading, at 93.5, off from high prints in the 95 area.

The bonds firmed in line with a gain of $3.95, or 8.31%, in the Nasdaq-traded stock of parent Leap Wireless; at one point during the session, the shares had been up by as much as 18%.

The movement was attributed to investor enthusiasm kindled by information, revealed in regulatory filings, that several company insiders, including chairman Mark Rachesky, have recently been buying Leap stock. He disclosed in a Securities and Exchange Commission S-4 filing Thursday that his investment fund bought 1.8 million of the company's shares, on top of half a million purchased the day before, bringing his total stake in the company to 21%. Another big investor seen recently loading up on Leap has been Harbinger Capital Partners, whose stake has now grown to about 13.5%.

Unisys up as stock gains

Another bond name rushing upward Friday in tandem with gains in its shares was Unisys, whose 6 7/8% notes due 2010 were being quoted up more than a point on the day at 95.50.

Meantime, its New York Stock Exchange-traded shares were lifted by some 10.17%, or 47 cents, to close at $6.09 on heavier-than-usual volume of about 4 million shares.

There was no immediate news seen out on Friday that might explain the rise - but Unisys had announced earlier in the week that it will eventually be moving its corporate offices and about 250 jobs to downtown Philadelphia from suburban Blue Bell, about 30 miles away; Unisys says the move will let it cut real estate costs, since the remaining workforce at Blue Bell will be farmed out to other nearby company facilities; it also believes the move to a more centralized big-city locale will help it attract a stronger workforce and help its sales and marketing efforts. Investment-oriented bulletin boards also buzzed with speculations about possible personnel reductions and other potential cost-cutting moves.

United Rentals off after court ruling

On the downside, United Rentals' 7% notes due 2014 were seen down 1 point at 88 bid, 89 offered and its 6½% notes due 2012 at 93 bid, 94 offered, off 1½ points, although a trader said that the issues were "really not all that heavily traded.

The company's NYSE-traded shares meantime swooned 17.08%, or $3.69, to close at $17.91 on volume of some 10.1 million shares, more than triple the norm, after a Delaware state court on Friday quashed the Greenwich, Conn.-based heavy-equipment rental firm's efforts to force private-equity investor Cerberus Capital Management to go through with its previously announced plan to acquire United Rentals for about $4 billion - a leveraged buyout transaction with a total price tag approaching $7 billion counting debt and other liabilities.

Cerberus was enthusiastic about the LBO when the deal was first announced at the beginning of the summer but got cold feet as the later-summer-autumn credit crunch made it unlikely that it could borrow the money needed to swing the deal on reasonable terms. It pulled out last month, sending United Rentals to court.

United Rentals expressed disappointment with the court's decision, and said it would now consider other alternatives.

True Temper tumbles

Elsewhere, a trader saw Ames True Temper Inc.'s bonds get mowed down after the Camp Hill, Pa.-based maker of non-powered lawn and garden tools reported fiscal fourth-quarter numbers that the trader described as "not so good." He pegged its 10% notes due 2012 down 6 points at 54 bid, 56 offered following the results.

The company said that its net sales for the 13-week period ended Sept. 29 were $84.9 million, a 13.1% percent decrease from $97.6 million a year earlier - a slide which it blamed on the soft housing market. While its net loss for the period was slightly smaller than a year ago, at $9.7 million compared to $10.1 million previously, adjusted EBITDA fell to $2.5 million from $9.1 million a year earlier.

E*Trade cites progress, bonds firmer

E*Trade Financial Corp. - which said that it has seen "significant improvement" in customer cash trends since its Nov. 29 announcement of a $2.5 billion cash infusion from Citadel Investment Group, and which will release details of its turnaround plan when it reports results next month - was a little firmer on the day, with its 8% notes due 2011 about ½ point higher at 86.75.

Tropicana reaches lender accord

A trader saw Tropicana Entertainment LLC's 9 5/8% notes due 2014 - which on Thursday had fallen several points into the lower 60s, their sharp rebounds from the previous week's lows in the 50s apparently interrupted - back on the upside Friday, gaining 1 point to 63 bid, 65 offered.

A market source at another desk saw the gaming company's bonds, on the other hand, off from their day's highs around 64, ending little changed in a 63+ bid context.

The Fort Mitchell, Ky.-based gaming operator said that it had reached an accord with its senior lenders under which they will forbear for up to a year on declaring the company in default under its senior credit facility in the wake of the recent action by New Jersey casino regulators in denying Tropicana a renewal of the gaming license for its Atlantic City casino, instead ordering the facility sold. Tropicana said it will work with the state-appointed trustee for a quick sale of the property and said that its cash flow until the sale will still be available to help service the company's debt. Tropicana will use the proceeds of the Atlantic City sale, as well as the proceeds from the announced sales of other facilities in Evansville, Ind. and Vicksburg, Miss. to pay off its senior debt.

Healthcare names more robust

A trader saw some activity in Community Health Systems Inc.'s 8 7/8% notes due 2015 move up to 101.75 bid, 102.25 offered from 101.25 bid, 101.75 on Thursday, although he reflected that may have been more a case of the market generally being up "½ point across the board," rather than due to any special strength in the Franklin, Tenn.-based acute-care hospital operator.

Another market source saw the bonds push up to 102.25 bid from prior levels around 101.625.

The first trader also noted that Select Medical Corp.'s 7 5/8% notes and floating-rate notes due 2015 were holding onto the gains of several points each which they had notched on Thursday.

He quoted the fixed-rate notes at 86 bid, 86.25 offered, up from 84 bid, 84.5 offered previously, and opined that the floaters "where right in there too."

He attributed the gains to reports that the Senate had passed favorable legislation on Medicare and Medicaid reimbursement rates to be paid to companies like Select Medical, a Mechanicsburg, Pa.-based provider of long-term acute-care services.

"We saw the Select bonds jump 2 or 3 points in a matter of hours" Thursday he said, and they kept those gains on Friday.

Primary stays quiet

There were no new high-yield issues Friday, capping an equally slow week.

During the five sessions, Helix Energy Solutions Group Inc. priced an upsized $550 million issue in a private offering via Banc of America Securities LLC.

The other news for the week came from Legends Gaming, which pulled its deal of $220 million in two tranches after it had priced.

The issue priced Dec. 12 after being restructured from a single tranche of five-year notes, and was set to settle Dec. 27.

Jefferies & Co. was bookrunner for the private offering.

Sources called it a "very unusual" move, citing only one other instance this year of a deal being pulled after pricing.

"It was really quiet today," a market source said.

They added that there are no new issues planned for the coming week.

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