Range Resources prices add-on; Cenveo bonds fall on bid for rival

By Paul Deckelman and Paul A. Harris

New York, Aug. 9 - Range Resources Corp. took advantage of favorable market conditions Wednesday, pricing a quickly appearing add-on offering to its existing 7½% senior subordinated notes due 2016. Elsewhere in the primary market, details emerged on the structure of TDS Investor Corp.'s- Travelport's - upcoming multiple-tranche, billion-dollar-plus mega-deal, which is expected to price on Friday. And pre-deal market price talk was heard on Constellation Brands Inc.'s half-billion-dollar 10-year issue.

In the secondary market, Cenveo Inc.'s bonds gyrated around at lower levels, after the Stamford, Conn.-based commercial printer offered to buy book and magazine publisher Banta Corp. for $1.12 billion. Banta, while saying that it would consider Cenveo's expression of interest, characterized the bid as hostile and "highly conditional," and criticized Cenveo for rushing to publicize a bid that Banta's own executives had barely seen.

Elsewhere, Young Broadcasting Inc.'s bonds were up on the New York-based television station group owner's better-than-expected quarterly earnings. Also up on earnings was Movie Gallery Inc., which is expected to report strong earnings on Thursday. Homebuilders were lower after Toll Corp. issued weak guidance.

A sell-side source marked the broad high yield market unchanged to perhaps slightly firmer on Wednesday.

Meanwhile a single new issue was transacted in the primary market.

Range Resources priced an upsized $100 million add-on to its 7 ½% senior subordinated notes due May 15, 2016 (B2/B) at 99.50 on Wednesday, resulting in a 7.57% yield to maturity.

JP Morgan was the bookrunner for the drive-by debt refinancing deal from the Fort Worth, Texas-based independent oil and gas company. The deal was doubled in size from $50 million.

The original $150 million issue priced at par on May 18, 2006, so Range Resources' add-on resulted in higher interest expenses.

Constellation Brands, high grade-style

Elsewhere Constellation Brands Inc. talked its $500 million offering of 10-year senior notes (existing ratings Ba2/BB) at Treasuries plus 240 to 250 basis points.

Pricing is expected on Thursday.

Citigroup and JP Morgan are joint bookrunners for the debt refinancing deal from the Fairport, N.Y., producer and marketer of beverage alcohol brands.

A market source said that the notes will be pricing high grade-style, with no high yield covenants.

Also expected to price during the Thursday session is Reichhold Industries Inc.'s $195 million of eight-year senior notes (B2/BB-) via Banc of America Securities and Wachovia Securities. Price talk is 8¾% to 9%.

Also anticipated is BCM Ireland Finance Ltd. (eircom Group plc)'s €350 million of 10-year senior floating-rate notes (B) via Credit Suisse, Deutsche Bank Securities, JP Morgan, Barclays Capital and Dresdner Kleinwort, price talk Euribor plus 500 to 525 basis points.

TDS rolls out structure

Chicago-based travel services provider TDS Investor Corp. (Travelport) unveiled the structure and price talk on its $1.4 billion equivalent offering of high-yield notes in five tranches on Wednesday.

The offering is comprised of three tranches of eight-year senior notes (B3/B-):

• $400 million to $450 million of fixed-rate notes talked at a yield in the 9¾% area;

• $150 million to $200 million floating-rate notes talked at the Libor plus 450 basis points area; and

• €235 million floating-rate notes talked at the Euribor plus 450 basis points area.

In addition the company plans to price $300 million of 10-year senior subordinated notes, with price talk for that tranche at the 11¾% area, and €150 million of 10-year senior subordinated notes, talked at 10¾% to 11%. Both are rated Caa1 by Moody's and B- by Standard & Poor's.

The deal is expected to price Friday morning ET.

Lehman Brothers, Credit Suisse, UBS Investment Bank, Citigroup and Deutsche Bank Securities are joint bookrunners for the acquisition financing.

Range, Allis-Chalmers up in trading

When the new Range Resources 71/2s were freed for secondary dealings, a trader saw the bonds firm to 100.5 bid, 101 offered, from their issue price at 99.5.

A trader at another desk saw Allis-Chalmers Energy Inc.'s new 9% 2014 add-on, at 100.5 bid, 101.5 offered. The Houston-based oilfield sales and services company's bonds priced Tuesday at par.

Cenveo lower

Back among the established issues, Cenveo's 7 7/8% notes due 2013 were bouncing around on the downside in response to the day's events.

Several traders saw those bonds down about 2½ to 3 points on the session at around 94.5 bid. Those bonds had been even further down - in the 93 bid area - in morning trading, as they plunged on the opening on the news, only to inch their way back upward to finish in a 94-95 context.

Cenveo - the old Mail-Well - offered $46 per share in cash for Banta, saying the combination of the two companies would create a "print powerhouse." That offer values Banta at about $1.12 billion. The per-share price represents a 36% premium over Banta's closing price Monday of $33.90.

Even so, the latter company was not much impressed, verbally holding its potential buyer at arm's length. Banta characterized the bid as "hostile," and blasted Cenveo, saying the would-be suitor "chose to release publicly the letter that your legal advisers faxed to us late last night prior to giving us the opportunity to review your highly conditional unsolicited indication of interest in combining our two companies." Banta also disputed Cenveo's assertions that the two companies had been in direct contact with one another on such an acquisition possibility.

Late in the day, after trading had wound down, Cenveo announced that its second-quarter loss widened to $33.1 million (62 cents per share) from a year-earlier loss of $10.6 million (22 cents per share), as sales slid to $357.9 million from $421.7 million.

Young rises on results

Elsewhere on the earnings front, Young Broadcasting's 10% notes due 2011 were seen up as much as 1½ points during the session before "coming off a touch" from that high, a trader said, to end up a point at 92.5 bid, 93.5 offered.

Young reported a net loss for the quarter of $11 million (52 cents per share) - considerably below the year earlier deficit of $36.2 million ($1.80 per share). The numbers also beat the Street, which had been expecting about 65 cents per share of red ink, published reports said.

Earnings boost Mirant

Traders saw Mirant Corp.'s bonds better, after the Atlanta-based power generating company reported net income of $99 million (32 cents per diluted share) for the second quarter - a solid turnaround from its year-ago net loss of $10 million. The company did not issue a year-ago per-share loss figure.

A trader saw Mirant's 8.30% notes due 2011 at 98.75 bid, 99.75 offered, up ½ point on the day. Another trader pegged its 8½% notes due 2021 also up ½ point, at 94.25 bid, 95.25 offered. He saw its 7 3/8% notes due 2013 better by ¼ point at 97 bid, 98 offered.

Mirant - which is in the process of shedding its non-core international assets, with the intention of returning their value to its shareholders - announced further asset sales, putting on the block six U.S. gas plants located in non-core markets. Company executives told analysts on a conference call following the release of the numbers that while Mirant's aim remains returning cash to its shareholders upon the completion of the planned sales, it will balance that with its need to preserve the credit profile of the business that will remain after the asset sales and to maintain adequate liquidity for expected cash requirements (see related story elsewhere in this issue).

Tenet slips, recovers

A trader saw Tenet Healthcare Corp. bonds spending most of the day on the downside but then "gaining back all that they had lost" during a flurry of trading late in the session after the Dallas-based hospital operator released "decent numbers" after the close.

He saw Tenet's 6½% notes due 2012 up a point at 84.5 bid, 85.5 offered, improved from offered levels at 84.5 in the morning The bonds had bounced back to levels at which they were trading several days ago, he said.

A second trader agreed that Tenet "was off through out the day and then bounced back," although that trader saw them finishing essentially unchanged on the day, with its 6 3/8% notes due 2011 at 85.5 bid, 86.5 offered, but "up from the lows."

Movie Gallery better

Traders saw Movie Gallery's 11% notes due 2012 up about 2 points at 82.5 bid, 83.5 offered. A trader suggested that there was a lot of short-covering in the Dothan, Ala.-based video rental chain operator's bonds ahead of its scheduled release Thursday of what are expected to be strong earnings.

Fedders, homebuilders drop

On the downside, a trader said that Fedders Corp.'s numbers "were pretty awful," which greased the skids under the air conditioner manufacturer's 9 7/8% notes due 2014 down 4 points on the session at 74 bid.

And homebuilders were also getting battered, with WCI Communities, Inc.'s 9 1/8% notes due 2012 down 2 points at 88 bid, 89 offered, and Technical Olympic USA's 10 3/8% notes due 2012 a point lower at 89 bid, 91 offered, the trader said, after sector peer Toll Corp. reported a 47% decline in orders during the third quarter, and warned that the fourth quarter would be no better. Another builder, KB Home's 8 5/8% notes due 2008, finished down ½ point at 103 bid.

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