Downsized First Quality, upsized Carrols price; new Intelsat, Surgery Partners bonds off; oils roiled

By Paul Deckelman

New York, June 20 – The high yield primary market saw a pair of new deals totaling $475 million having priced on Tuesday – well down from the nearly $1.9 billion which gotten done on Monday’s watch.

First Quality Finance Co., Inc., a maker of paper-based personal-care products, brought a downsized $400 million of new eight-year notes to market.

Carrols Restaurant Group, Inc., a fast-food restaurant franchise operator, did an upsized $75 million add-on to its existing 8% senior secured notes due 2022.

Monday’s megadeal-sized offering of new eight-year notes from satellite communications company Intelsat Jackson Holdings SA racked up some stratospheric, almost out-of-this world sort of volume figures on Tuesday – but after some initial firmness, ended up retreating and ending lower on the day.

Traders said the new Surgery Partners, Inc.’s eight-year notes, which priced on Monday, were also very actively traded, but went home lower on the day.

Energy issues like California Resources Corp. and Halcon Resources Inc. moved lower in line with yet another plunge in world crude oil prices.

Statistical market performance measures turned lower across the board on Tuesday after having been mostly better on Monday. That, in turn had followed having been lower all around both last Thursday and again on Friday.

Downsized First Quality prices

First Quality Finance Co., Inc. had the big deal of the day on Tuesday as it priced $400 million of senior notes due 2025 (B1/BB-) at par to yield 5%, syndicate sources said.

That pricing came in line with price talk in the 5% area.

The offering was downsized from the $500 million originally announced when the deal surfaced on the radar screens on Monday.

The issue was shopped to potential buyers via a Tuesday morning investor call, with pricing taking place later in the session.

The Rule 144A/Regulation S for life issue was brought to market via bookrunners Wells Fargo Securities LLC (left bookrunner), J.P. Morgan Securities LLC, BofA Merrill Lynch, Citizens Capital Markets Inc. and SunTrust Robinson Humphrey Inc., along with co-managers SMBC Nikko Securities America, Inc. and BB&T Capital Markets.

The company is a funding subsidiary of First Quality Enterprises, Inc., a Great Neck, N.Y., maker of paper-based personal-care products such as disposable baby diapers, wipes and adult incontinence products, paper towels and bath tissues, engineered fabrics for medical uses, and bottled water.

It plans to use the new-deal proceeds to repay revolving loans outstanding under the company’s senior secured credit facilities, pay related transaction fees and expenses, and for general corporate purposes.

Carrols serves up add-on

The day’s other new pricing came from Carrols Restaurant Group, Inc., a Syracuse, N.Y.-based restaurant company, which priced a $75 million add-on tranche to its existing $200 million of 8% senior secured second-lien notes due May 1, 2022 (B3/B).

High-yield syndicate sources said that the quick-to-market offering was upsized from the originally announced $50 million.

It priced at .106.5, for a 6.418% yield to maturity and a 4.78% yield to worst.

Wells Fargo was the sole bookrunner on the deal, which was being sold under Rule 144A and Regulation S with registration rights.

The add-on brings the total amount of 8% secured 2022 notes outstanding to $250 million.

The company’s original $200 million quick-to-market deal priced at par back on April 15, 2015, with Wells Fargo as the left-side bookrunner, accompanied by joint book runner Stephens Inc. and co-managers Rabo Securities USA Inc. and Raymond James & Associates Inc.

The add-on tranche will have essentially the same terms as the existing $200 million of notes, and the new notes will ultimately be treated as a single series with the existing notes, once a planned exchange offer (with the new paper swapped into a registered offering) is completed successfully.

Carrols – a Burger King franchise owner-operator since 1976, claiming to be the largest U.S.-based franchisee of Burger King restaurants, based on the number of outlets operated – plans to use the net proceeds from the add-on deal to repay outstanding revolving credit borrowings under its senior credit facility, to pay related fees and expenses and for working capital and general corporate purposes, including for possible future acquisitions.

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