Market mostly lower, though American Media gains; Pokagon talk heard

By Paul Deckelman

New York, June 14 - Junk bonds were lower pretty much across the board Wednesday, traders said, in line with a fall in Treasuries. One of the few issues seen pushing to the upside was American Media Inc., whose bonds firmed after the publisher of the National Enquirer and various other publications said it planned to explore the possible sale of five of its 16 titles.

Elsewhere, though, things were pretty much on the downside. Even General Motors Corp. - whose bonds had firmed over the previous several sessions after former subsidiary Delphi Corp. announced an agreement with its main union on expanded buyouts for most of its workers, a development seen lessening the chances of a potentially ruinous strike that would disrupt the automaker's parts supply pipeline - was seen giving up some of its recent gains. Also lower were the bonds of its General Motors Acceptance Corp. financing unit and those of Delphi and various other parts suppliers, continuing the negative trend that the latter had shown over the previous several sessions.

Primary market activity remained quiet, with the only real development seen being the emergence of price talk on Pokagon Gaming Authority's upcoming issue of eight-year notes.

American Media was about the only credit seen doing anything on the upside, a trader said, quoting the Boca Raton, Fla.-based publisher's 10¼% notes due 2009 at 92.5 bid, 93.5 offered, up 2½ point on the day, pushed northward by the news that the company will look into selling five of its titles. The Wall Street Journal reported in Wednesday's editions that the company would seek a target price of at least $300 million for the five titles - three fitness magazines from its exercise, diet and body-builders oriented Weider Publications subsidiary (Muscle & Fitness, Flex, and Muscle & Fitness Hers); Country Weekly, which covers the country music scene; and Mira!, a Spanish-language title.

The company said in its statement that the five titles potentially being shopped generated about $84 million in revenues for the 12 months ended March 31, with operating income plus depreciation and amortization of some $29.6 million.

American Media said that it would look to focus its energies on what it called its "core brands" in the areas of its celebrity weeklies, such as the National Enquirer and Star, and its "active lifestyle" magazines, such as Shape and Men's Fitness. The privately held company separately announced plans to hold a Thursday conference call aimed at its noteholders during which it will discuss its progress on its cost savings initiatives, the announced asset sales and an update on timing of its financial restatements. Back in February, the company said in a regulatory filing that it would delay its quarterly report for the period ended this past December until it restates some earlier financial results.

Besides the National Enquirer and Star, the company's popular celebrity gossip/supermarket tabloid titles include the Globe, the Sun, the National Examiner, as well as the favorite of Elvis- , Bigfoot- and UFO-watchers everywhere, the Weekly World News. It announced plans in April to close three close three money-losing magazines-Celebrity Living Weekly, MPH and Shape En Espanol, as well as plans to move National Enquirer's operations from New York down to the company's Florida base.

Apart from that upward blip, the trader said, "in general, the whole market was off about a point. You name it - and it was off."

GM lower

Apart from American Media, "everything else was down," including GM, whose benchmark 8 3/8% notes due 2033 were down ¾ point at 76 bid, 77 offered, while Delphi's 6½% notes due 2009 were down a full point at 83 bid, 84 offered.

At another desk, a trader, seeing the GM bonds down ¾ point at 76 bid, 76.5 offered, saw GMAC's 8% notes due 2031 also ¾ lower, at 94 bid, 94.5 offered.

He saw Ford Motor Co.'s 7.45% notes due 2031 at 71.75 bid, 72.25 offered, off ¾ point, while Ford's credit arm's 7% notes due 2013 were a point down at 86 bid, 86.5 offered. Among the parts suppliers other than Delphi, former Ford unit Visteon Corp.'s 8¼% notes due 2010 were half a point lower at 92 bid, 92.75 offered, although its 7% notes due 2014 were only down ¼ point at 81.25 bid, 82 offered.

Bankrupt Toledo, Ohio-based parts maker Dana Corp.'s 7% notes due 2028 lost a point to 77 bid, 78 offered.

Six Flags weak

Apart from the automotive names, the first trader saw weakness in such names as Six Flags Inc., whose 9¾% notes fell by a point intra-day, although they closed "pretty much unchanged" on the overall session, at 94.5 bid, 95.5 offered.

Another trader saw the Tulsa, Okla.-based theme park operator's 9 5/8% notes due 2014 retreat more than "two or three points" on the day. "They opened up hitting a 94.75 bid, which is down two points, and they traded as low as 93.75 bid, 94.75 offered at the close."

There was no fresh news out about the company, he said. "It's just an over-levered credit. I think the mindset that everybody has on this bond - it happens every year - is you buy it in the fall or the winter, when there's no bad news to come out. Then, you sell it around Memorial Day, anticipating that they didn't do what they said they were going to do. And I think that's a little bit exacerbated by the market just being weaker today.

"Overall, the market was down a good point," he continued. "I think every trader had a sector that was something like that trading today - if you're looking to get out, it's going to be a down bid. There might be some shorts getting set up there."

For instance, he said, in the gaming sector, "a lot of one-off names didn't trade."

MGM Mirage wider

One that did, after a fashion, was MGM Mirage's 6 7/8% notes due 2016, which "seemed to have widened out." He said that the 10-year MGM paper was trading at a spread of about 270 basis points above Treasuries, "a 40 bps widening in a relatively short period of time for a top tier gaming credit." In dollar-price terms, they were at about 94 bid, 95 offered, down from 95.5 bid, 96 offered Tuesday.

"These things went right through 250 [bps] off, like it was nothing," he said.

Looking at the overall market, he added that "on the buyside, even if there are people that are buying, they're probably squeamish watching the market go down as they're making bids. So even if you have you have a natural bid in the marketplace, you're waiting for it to stop going down before you start buying.

"Treasuries were down significantly today - I know that we'd been held hostage for a while by the stock market going down, but now that's going up, and had a nice bounce today - but we didn't get it."

He added that "I'm not seeing a lot of broad-based selling - but there must be some selling out there to knock these things down."

Another loser was Spectrum Brands Inc., the Atlanta-based maker of Rayovac batteries and various other consumer products. Its 8½% notes due 2015 lost two points to 84.5 bid, 85.5 offered.

From the distressed-bond market came word that Movie Gallery Inc.'s 11% notes due 2012 were down 2½ points on the day at 75 bid, 76 offered, "one of the bigger movers, a trader said. There was no fresh significant news seen out on the Dothan, Ala. based video-rental store chain operator, although it did say in an 8-K filing with the Securities and Exchange Commission that at last week's annual meeting shareholders approved an executive bonus plan.

Calpine lower

Calpine Corp.'s notes were "down a couple" of points, the trader said, although there was no fresh specific news out about the bankrupt San Jose, Calif.-based power generator. Its 8½% notes due 2011 dipped 1½ points to 45 bid, 46 offered. However, its Calpine Canada Energy Finance II ULC unit's 8½% notes due 2008 were seen hanging in there at 61 bid, 63 offered. "I don't think any were trading today [Wednesday]," the trader said.

Asbestos names plunge, bounce

Another trader at that same shop characterized the asbestos-challenged issues as "very sloppy," down as much as five points intra-day before coming off those lows late in the session to cut those earlier losses about two points. Bankrupt Toledo-based insulation maker Owens Corning's notes ended down two points at 84.5 bid, 85.5 offered, while bankrupt Lancaster, Pa.-based floorcovering maker Armstrong World Industries Inc.'s bonds were also down a deuce, at 69.5 bid, 70.5 offered.

Overall, the trader said, "everything was off - on no news out - just the CPI number." And with that gauge of retail price inflation out, and showing a rise in inflationary pressures in May, Treasuries sank sharply on investor fears a June rate increase by the Federal Reserve is all but certain. The 10-year Treasury note was down 22/32 from Tuesday's close, while its yield ballooned to 5.06% from 4.97% the previous day. With Treasuries off, the trader continued, "nothing priced today. It was a bad day to do a new deal."

Pokegon releases talk

About the only development in the primary arena, high yield syndicate sources said, was that Pokagon Gaming Authority's $305 million issue of eight-year senior notes is expected to price to yield around 10½%.

The New Buffalo Township, Mich.-based Native American gaming company's Rule 144A deal, which is non-callable for the first four years, is expected to price during Thursday's session via sole book-running manager Banc of America Securities LLC. Books will close at noon ET, with pricing anticipated late in the afternoon.

Pokagon plans to use the expected new-deal proceeds to fund the construction of its Four Winds Casino and Resort - an ambitious project which has been on the drawing board for six year, but which only recently received court approval, over the vociferous objections of environmentalists and other opponents (see related story elsewhere in this issue).

Also expected to price during Thursday's session, the sources said, is Williams Partners LP's $150 million offering of five-year non-callable senior unsecured notes, via joint book-running managers Citigroup and Lehman Brothers. The Tulsa, Okla.-based company - a unit of natural gas and pipeline operator Williams Cos. Inc. - plans to use the proceeds from the deal to help pay for its $360 million purchase of a 25.1% stake in another Williams unit, Williams Four Corners LLC, along with the proceeds from a separate offering to 6.6 million common equity units.

Williams Partners announced Wednesday that it had priced the latter offering at $31.25 per unit, for gross proceeds of $206.25 million. Full exercise of a 990,000-unit 30-day greenshoe option by the underwriters to cover over-allotments could boost the total gross proceeds of the equity unit offering by approximately $30.937 million, to about $237.187 million.

At closing, the partners will own natural gas gathering, processing and treating assets in Colorado and New Mexico.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.