Emmis, Amscan deals price; Amkor lower on earnings

By Paul Deckelman and Paul A. Harris

New York, April 27 - Amscan Holdings Inc. was heard by high-yield primary market sources Tuesday to have sold its planned offering of 10-year notes, while Emmis Operating Co. upsized its new issue of eight-year notes.

In the secondary arena, the new Amscan bonds firmed smartly after they were freed for aftermarket activity. Amkor Technology Inc.'s notes fell after the company's release of first-quarter earnings.

In total, over half a billion dollars' worth of new debt priced during Tuesday's primary market session, which also saw the new deal pipeline continue to build.

One sell-side official told Prospect News that high yield seems to be getting its footing.

"The market looked better today," the official commented. "Secondary levels were definitely up. There were specific names that were off," he added, citing Amkor.

"But based on what we have seen so far this week the primary market seems better."

The source pointed to three deals as evidence that the investment banks are recently turning out tight junk bond transactions.

First was the Invista deal. Last Friday Invista and Arteva Specialties Sarl (Luxembourg) priced an upsized $675 million of eight-year senior unsecured notes (B1/B) at par to yield 9¼%, at the tight end of the 9¼%-9½% price talk.

Second was Monday's sole transaction: Waste Services Inc.'s $160 million of 10-year senior subordinated notes (Caa1/B-). The bonds priced at par to yield 9½%, again at the tight end of the 9½%-9¾% price talk.

Finally the source pointed to one of Tuesday's two transactions, Amscan Holdings Inc.'s $175 million of 10-year senior subordinated notes (B3/B-) which priced at par to yield 8 ¾% - once again at the tight end of the 8¾%-9% price talk.

Goldman Sachs & Co. ran the books on the acquisition and debt refinancing deal from the Elmsford, N.Y. manufacturer and distributor of decorative party goods.

The source also pointed out that Tuesday's other deal, from Indianapolis-based diversified broadcasting company Emmis Broadcasting Corp., was upsized by $25 million, although it priced at the wide end of talk.

Emmis Operating Co. sold $375 million issue of eight-year senior subordinated notes (B2/B-) at par to yield 6 7/8%.

Price talk was 6¾% area on the debt refinancing deal that was led by Goldman Sachs, Deutsche Bank Securities, Banc of America Securities and Credit Suisse First Boston.

"The primary market is fine," commented the sell-sider. "It's not like the days where we had enough new issuance pricing where you could get a feel for how well the market is absorbing supply.

"If we were to have one of those days where five deals price, with the add-ons and so forth, I don't know what would happen.

"But as it stands things feel pretty good."

Two roadshow starts

News of two roadshow starts was heard during Tuesday's session - both eight-non-call-four deals. And both led by Bear Stearns & Co.

An April 28-May 6 roadshow is set for American Real Estate Partners LP's offering of $300 million eight-year senior notes.

The Mount Kisco, N.Y.-based master limited partnership, in which Carl Icahn is chairman of the board of the General Partner, will use the proceeds to repay debt and fund possible investments and acquisitions.

And an April 28-May 4 roadshow is scheduled for Itron Inc.'s $125 million of eight-year senior subordinated notes (B2/B).

The Spokane, Wash.-based provider of technology and information to the energy and water industries will use the proceeds to partially fund Itron's acquisition of the Electricity Products Business of Schlumberger Ltd. and to repay bank debt.

Finally, on the European front, TUI AG upsized its offering of non-rated seven-year bullets to €500 million from €350 million on Tuesday.

The deal is talked at 6 5/8%-6 7/8%, and is expected to price Friday.

The Royal Bank of Scotland, Commerz and WestLB are joint bookrunners.

When the new Amscan notes were freed for secondary activity, they were heard to have moved up to 101.25 bid, 101.75 offered from their par issue price earlier in the session. Traders did not see Emmis' eight-year notes in secondary.

Amkor down on earnings

Back among the established issues, Amkor's bonds were softer after the West Chester, Pa.-based semiconductor packaging and test equipment company reported disappointing first quarter earnings.

A trader saw the company's 7¾% notes due 2013 down two points on the session at 100.5 bid, 101.5 offered.

At another desk, Amkor's 9¼% notes due 2008 were seen down some two-and-a-half points at 108 bid.

Amkor reported that its earnings declined to $12.2 million (seven cents a share) from $14.5 million (nine cents a share) a year earlier. Wall Street was looking for the company to earn a dime a share.

EBDIT came in at $101 million, a nearly 90% rise from prior-year EBDIT of $53.2 million.

While Amkor's net revenue rose to $464.6 million from $343.1 million, it fell short of the company's forecast due to softness in its cellular phone products and production restraints at its plants.

Amkor's shares swooned $4.26 (31.74%) to $9.16, on Nasdaq volume of 18 million shares, about 10 times the norm.

U.S. Steel hardly lifted by results

Elsewhere, earnings did not seem to provide much of a boost for United States Steel LLC's bonds, even though the Pittsburgh-based steel giant reported good first quarter numbers, relative to a year ago and even to last quarter.

A market source saw U.S. Steel's 10¾% notes up perhaps a quarter point at 117.25 bid while its 9¾% notes remained at 113.5 bid.

However, at another desk, the 10¾% notes were quoted as high as 119 bid, up a point-and-a-half.

Aided by higher steel prices and increased demand for the metal amid a recovering U.S. economy - and a strong Chinese economy, eating up most of the Asia-produced steel that would otherwise have found its way to the U.S. and produced a market glut - U.S. Steel reported first quarter net income of $58 million (47 cents per diluted share), a sharp turnaround from the net loss of $38 million (40 cents per diluted share) in the year-ago quarter and from the net loss of $22 million (26 cents per diluted share) seen in the 2003 fourth quarter.

The company reported first quarter 2004 income from operations of $151 million, sharply improved from losses from operations of $34 million in the 2003 fourth quarter and $44 million in the 2003 first quarter.

Scotts gains

Also on the earnings front, The Scotts Co. said its fiscal second-quarter net income rose to $73.1 million ($2.21 a share) from $62.5 million ($1.94 a share) a year ago.

Excluding restructuring and other charges, earnings for the Marysville, Ohio-based maker of lawncare products rose to $73.7 million ($2.23 a share) from $64.4 million ($2 a share).

Scott's 8 5/8% notes were up three-quarters of a point, to 104.5 bid.

Regal Entertainment Corp. reported that said that its first-quarter net income was $22.8 million (16 cents per share) - better than the 15 cents a share Wall Street had been expecting, but off from year-ago results of $35.3 million (26 cents a share), including one-time costs.

The Knoxville, Tenn.-based movie theater operator said the decline was due to a calendar quirk that excluded the week between Christmas and New Year's - traditionally a time of high volume in the cinema industry - from the latest quarter results (see related story elsewhere in this issue).

Regal's' 9 3/8% notes due 2012, which the company is tendering for, were seen unchanged at 119.125, the estimated take-out level, despite Monday's warning from Moody's Investors Service lowering the company's outlook from stable to negative, in response to company plans to spend $710 million of borrowed money to pay stockholders a special $5 per share dividend.

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