LifePoint prices drive-by deal in slow session

By Ronda Fears

Nashville, Tenn., May 16 - In an otherwise low volume trading session with the market still preoccupied with Adelphia's expected demise, LifePoint Hospitals Inc. was pitching a $200 million deal to price after the close on the heels of an advanced pricing by Pep Boys.

Market players, hungry for new paper, were scouting for potential new issue candidates but most of that was "killing time, while Adelphia goes up in flames," as one hedge fund manager in New Jersey put it.

"There was still a lot of focus on Adelphia, although the converts were not trading an awful lot today," said a convertible trader at a major investment bank in New York.

"That situation captured a lot of the market's attention, but there was not a lot of volume today, period. People think there are some big deals out there in the wings, waiting to get done, but meanwhile there's just not a lot to pick from. The new issues have been dominated by these $150 million, $200 million deals that are just difficult to get set up in."

Players were still sitting on the sidelines, for the most part, traders said, as stocks ended flatly - albeit slightly higher - for the second consecutive day after a two-day climb. The Dow Jones Industrial Average ended 0.44% higher while the Nasdaq edged up 0.28%.

"Tradingwise it was slow today. There's a lot of uncertainty out there," said Jeffrey Siedel, head convertible analyst at Credit Suisse First Boston.

"These stories keep developing and you look to see if things get overdone," providing an opportunity to get involved, he said.

But for the most part, despite the market run-up earlier this week in tandem with stock, convertible investors are "hunkered down, watching their portfolios closely to make sure they aren't in deep water," said the hedge fund manager in New Jersey.

Dealers said there still were some yield players looking at biotech names for bargains.

Even though there has been some speculation recently that the biotech sector was ripe for "rationalization" in stock prices, a hedge fund manager in New York said that "now is the time for believers to make a move."

A sellside market source said there were some people beginning to look at Baxter International, a medical equipment maker, because of the put coming due in June. The $800 million 1.25% convertible due 2021 is putable at par, in cash only, on June 1.

The Baxter convert was quoted up 0.125 point to 100.625 bid, 101 offered. The stock closed off 52c to $52.82.

Power names continued to move south in the wake of the turmoil spilling out from the Enron disaster, with Calpine, Reliant Energy, CMS and Mirant all lower.

With slim pickings in the secondary, market players were searching for new deal candidates.

Some were looking to the S&P report Thursday that identified companies in a liquidity crunch, one source said, trying to narrow the field to those that would be ripe for a convertible issue. But no one wanted to share any specific name or names.

LifePoint's deal was quoted bid 0.375 over par and offered at 0.5 over par in the grey market, but final terms were not expected until early Friday. LifePoint shares ended down $2.23 to $36.43.

Another new deal was filed by Provident Financial Group Inc. at the SEC, for $150 million of mandatory PRIDES via Merrill, but the timing was uncertain. Market sources said there was no pricing guidance and no indication yet as to when the deal might be brought to market.

To some degree, dealers noted that activity late this week has been slow due to the annual Morgan Stanley convertible conference, which draws many of the big-name players.

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