Roundy's restructures; Calpine trades off; Cablevision, Level 3 firm

By Paul A. Harris

St. Louis, Oct. 25 - Calpine Corp. bonds traded lower Tuesday on news that Whitebox Advisors LLC and Harbert Management Corp. are pressing their case that the San Jose, Calif.-based power generator is in default on an issue of convertibles.

Meanwhile Cablevision Systems Corp. improved on the Dolan family's decision to abandon its attempt to take the company private, while Level 3 Communications Inc. improved on its $81.5 million sale of a non-core asset.

Overall sources put the high-yield market an eighth of a point to half a point higher during the Tuesday session.

In a quiet primary market no deals were priced. However a bent, folded, spindled and mutilated Roundy's Supermarket Inc. offering once again underwent deal surgery.

A 'skittish' market

Marking high-yield unchanged to half a point higher on Tuesday, one trader commented that the market felt skittish.

This trader saw Calpine's 8½% notes due 2011 half a point lower on the day at 48 bid, 49 offered, while the shorter-maturity 10½% notes due 2006 were at 89 bid, 91 offered, off a point.

News that Whitebox Advisors LLC and Harbert Management Corp., are reasserting their position that Calpine's 6% convertible notes due 2014 are subject to conversion because of a price-threshold issue made junk bond holders nervous, the trader said.

Another trader saw Calpine's 8½% notes due 2011 at 49.50 bid, "a little weaker," while spotting the company's 8½% notes due 2008 at 56.60 bid, 57.50 offered late in the afternoon, unchanged to half a point weaker.

Cablevision firms as Dolans bail on plan

News that the Dolan Family has withdrawn its proposal to take Cablevision private, canceling a proposed $4.25 billion bond deal at the holding company level and a $2.8 billion credit facility at the operating company level, sent the company's existing bonds higher on Tuesday.

One trader had Cablevision Systems Corp.'s senior notes "up two to four points."

In a Monday letter to the Cablevision board of directors Charles and James Dolan recommended that the board declare a $3 billion special dividend in cash payable pro rata to all shareholders.

The Dolans stated that, "despite good faith negotiations over the past four months, it has become clear that we will be unable to reach agreement with the Special Transaction Committee on the terms of our proposal."

The Dolans also noted that during this period there has been a decline in communications sector valuations and an increased competitive environment.

Another trader had the senior notes up a point, and commented that bond investors are relieved because leverage on the company will remain at its present level rather than increasing.

Level 3 up on asset sale

Broomfield, Colo.-based Level 3 Communications' bonds firmed Monday on news that a wholly owned subsidiary has signed a definitive agreement to sell (i)Structure, LLC, Level 3's IT infrastructure management outsourcing subsidiary, to Infocrossing, Inc.

Level 3 expects to receive total consideration of $81.5 million, including $1.5 million of Infocrossing common stock, in proceeds from the sale.

One trader said that Level 3 bonds were up about a point across the board on the news, and spotted the company's 12 7/8% notes due 2010 at 81.50 bid, 82.50 offered.

Unisys gets a bounce

Trailing a Monday sell-off which came in the face of news that the U.S. government is investigating the possibility that Unisys Corp. overcharged the Transportation Security Administration for work done under a technology contract, the company's bonds recovered on Tuesday, a trader said.

The Blue Bell, Pa., information technology services company's 8½% notes due 2015 were seen as high as 88 bid Tuesday, up from Monday's 83 bid, 86 offered, the trader said, adding that the notes priced at par in September.

Charter up on news of asset sale

A trader also saw improvement in the existing bonds of troubled St. Louis cable and broadband internet services provider Charter Communications.

News that the company may sell assets totaling $1.2 billion ("to deleverage the balance sheet," according to the trader) met with approval among bond investors.

The trader added that Charter appears to be mulling the sale of certain groups of subscribers in West Virginia, Illinois, Indiana, Kentucky, Nevada, Utah, New Mexico and elsewhere, and spotted Charter's 8 5/8% notes due 2009 - "the unsecured holding company seniors" - at 82 bid, 83 offered, up 1.5 points on the day.

AK Steel firms despite Q3 loss

In spite of Ohio-based AK Steel Corp.'s Tuesday report of a third quarter 2005 net loss of $29 million, or $0.26 per share of common stock, a trader saw the company's 7¾% notes close at 90 bid, 91 offered, up from 89.25 bid, 90.25 offered on Monday.

Meanwhile the trader saw Tenet Healthcare Corp.'s 9¼% notes due 2015 lower on Tuesday, closing at 95.50 bid, 96.50, down three-quarters of a point from Monday's 96.25 bid, 97.25 offered.

The trader added that on a quiet day Tenet's long paper was unchanged to weaker at 77.50 bid, 78.50 offered.

Roundy's rejigs

No issues were priced during the Tuesday primary session. However the dividend-funding deal from Roundy's Supermarkets Inc. underwent modification once again.

The company restructured its downsized $175 million offering of high-yield notes. Roundy's now plans to sell $175 million of eight-year senior fixed-rate notes, non-callable for four years. Price talk is 10¼% to 10½%. Pricing is expected on Wednesday.

Bear Stearns & Co. and Goldman Sachs & Co. are joint bookrunners for the Rule 144A with registration rights offering.

Previously the company had been marketing a $175 million tranche of seven-year floating-rate notes.

In addition to Tuesday's restructuring, covenant changes were made to the notes, sources said.

Last week Roundy's dropped a proposed $150 million tranche of eight-year senior subordinated notes, and subsequently lowered the amount of the dividend that it plans to pay to its principal shareholder, Willis Stein & Partners III, LP, to $400 million from $550 million.

Late in the day sources said that the deal could be subjected to a further downsizing, to $150 million.

Also headed for a Wednesday pricing is Nova Chemicals Inc.'s $300 million offering of eight-year senior floating-rate notes (Ba2/BB+).

The company is talking its notes at six-month Libor plus 300 to 325 basis points.

Citigroup and JP Morgan are joint bookrunners.

© 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.