Cincy Bell, Telex, HCA price deals; Iron Age falls on restructure plan; Trump up despite loss

By Paul Deckelman

New York, Oct. 31 - Cincinnati Bell Inc. and Telex Communications Inc. were heard by high yield syndicate sources to have successfully priced offerings on Friday and HCA Inc., sold $600 million in an upsized split-rated issue.

In the secondary market, Iron Age Corp. was the Halloween horror story, its bonds careening down into the 20s following the company's announcement earlier in the week of a planned debt restructuring and a Standard & Poor's ratings downgrade. On the upside, bonds of Trump Hotels & Casino Resorts Inc. were quoted up several points even though the Atlantic City, N.J.-based gaming operator posted a loss for the third quarter versus a year-earlier profit.

With investors' wallets still bulging with cash - the latest high yield mutual fund flow numbers showed virtually no change in the swollen year-to-date net inflow of over $17 billion - opportunistically priced drive-by offerings are all the rage, as issuers take advantage of the generous liquidity conditions to borrow money at sharply lower rates.

And thus, Cincinnati Bell on Thursday announced that it would sell $540 million of new notes due 2014, and on Friday priced the deal at par to yield 8 3/8%, at the tight end of pre-deal market price talk projecting a yield in the 8½% area.

Also pricing well was Telex, a Minneapolis-based maker of audio and communications equipment, which sold $125 million of new five year notes at par to yield 11½%, actually inside price talk of 11¾%-12%.

The other issue heard to have priced by day's end was the split-rated (Ba1/BBB-) crossover credit HCA, which sold $350 million of new 5¼% notes due 2008 at 99.709 to yield 5.317% and $250 million of 7½% notes due 2033 at 99.858 to yield 7.512%, market sources said. The quickly-shopped offering was upsized from the originally anticipated $500 million.

Meantime, The Manitowoc Co. Inc., a Wisconsin-based maker of cranes and other heavy industrial machinery, figures to become the next issuer to come to market with an opportunistically priced drive-by deal, announcing that it will sell $125 million of senior notes due 2013; the company said that it expected to launch the deal Monday on a conference call and to price some time Tuesday.

Elsewhere on the new-deal front, Michael Foods Inc., which on Thursday launched a $595 million bank debt deal that was well received by investors, was believed to be getting ready to shop a $285 million offering of senior subordinated notes. There was no official word, but UBS Securities, Banc of America Securities and Deutsche Bank Securities - all of whom are co-syndication agents on the bank loan - are expected to also lead-manage the bond deal for the Minnetonka, Minn.-based diversified food processor and distributor.

When the new Cincinnati Bell 8 3/8% senior subordinated notes due 2014 were freed for secondary dealings, they were heard to have firmed smartly to levels around 102.75 bid, 103.75 offered, a trader said, with "a lot of buying going on" in the new issue and the Ohio-based telecommunications company's existing 7¼% notes due 2013, which improved to 101.625 bid, 102.125 offered.

At another desk, a market source quoted the 71/4s as having firmed to 101.5 bid from 100.5 on Thursday, although he saw the company's 7¼% bonds due 2023 retreat to 93 bid from 95 on Thursday. He said that there had been an early bid around the 95 bid, 96 offered level early in the session, but said that "the guy must have been a better seller than buyer," because "the bid really faded and pulled back today," as the issue headed lower.

But that decline was nothing, compared with the sharp fall in Iron Age's 9 7/8% notes due 2008, which "got crushed" a market-watcher said in pegging the bonds at 23 - well down from their recent levels at 63.

The company's debtholders were apparently reacting to the Pittsburgh-based safety-show distributor's announcement this past week outlining a proposed debt restructuring plan. The plan includes an offer to exchange all of parent Iron Age Holding Corp.'s outstanding 12.125% senior discount notes due 2009 and its subsidiary's 9 7/8% notes for common stock of IAC Holdings, a newly formed holding company, and $8 million of new 15% payment-in-kind (PIK) subordinated convertible secured notes due 2008. Following the completion of the exchange offer, IAC will own 100% of Iron Age Corp.'s common stock.

Standard & Poor's late Thursday cut the company's corporate credit rating to CC from CCC-, and said that because the consideration being offered by the company in exchange for the existing securities "represents a substantial discount to the original debt issue terms," it is tantamount to a default."

Reliant Resources Inc. announced that it plans to take a $1 billion non-cash third quarter charge against earnings related to the company's wholesale energy business.

It affirmed its full-year forecast for adjusted profits from continuing operations, and said in a press release Friday that the non-cash charge won't cause the company or any of its units to run afoul of debt agreements. Reliant's 9¼% notes due 2010 and its 9½% notes due 2013 both ended down about half point on the session, at 89.5 bid and 89 bid, respectively.

On the upside, Trump Hotels & Casino's 11 5/8% notes due 2010 were being quoted up more than two points at 89.25, while the Trump Atlantic City Associates 11¼% notes due 2006 were being quoted up nearly two points at 77.5 bid. The rise came despite the New Jersey casino operator having reported Thursday that it had posted a third- quarter loss of $12.4 million (43 cents a share), a sharp deterioration from the year-ago net income of $9.6 million, (44 cents a share).

A trader freely acknowledged that the Trump numbers "looked crappy - and everyone know they were gonna be crappy," so there was no downside surprise when the figures came out. He saw the bonds "not really moving" in a 76.5-77 context.

The company - which owns and operates three big hotel/casinos at the seaside Jersey gaming resort - blamed its weak figures on poor weather in September, including Hurricane Isabel in September, and the opening of the Borgata, a massive new Atlantic City hotel and casino right next door to Trump's Marina casino, hurt results.

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