Glatfelter, NPC deals price; Fedders bonds zoom as shares boom, Tembec also strong

By Paul Deckelman and Paul A. Harris

New York, April 25 - P.H. Glatfelter Co. was heard to have successfully priced a new issue of 10-year senior notes Tuesday while high yield syndicate sources also reported that NPC International Inc. brought a downsized offering of eight-year senior subordinated bonds to market very late in the session.

Secondary market watchers meanwhile said that not much was shaking among the established bonds, although here and there were significant exceptions. One was Fedders Corp., whose 9 7/8% notes due 2014 were seen having moved up sharply in tandem with a big jump in the Liberty Corner, N.J.-based air conditioner manufacturer's shares, although there was no firm news about the company seen out there.

Another exception to the general rule of rangebound lethargic trading were the bonds of Canadian forest products companies in general, and Tembec Industries Inc. in particular. Although Montreal-based Tembec was out with quarterly earnings Tuesday, most market participants queried by Prospect News said that a more likely catalyst for the rise was investor sentiment that a long-running trade dispute between Canada and the United States might soon be settled.

The primary market saw $405 million of new dollar-denominated issuance on Tuesday as three issuers each priced a single tranche.

One of those tranches came on top of the price talk, while another priced inside of price talk. One was downsized.

Glatfelter a blowout

Sources told Prospect News that P.H. Glatfelter Co.'s $200 million issue of 10-year senior unsecured notes (Ba1/BB+) was a blowout.

The issue priced at par to yield 7 1/8%, inside of the 7¼% to 7½% price talk.

Credit Suisse ran the books for the debt refinancing issue from the York, Pa., manufacturer of specialty papers and engineered products.

Downsized NPC on top of talk

Elsewhere, Lenexa, Kan.-based franchisee of Pizza Hut restaurants, NPC International Inc., priced a downsized $175 million issue of eight-year senior subordinated notes (Caa1/B-) at par to yield 9½%, on top of the price talk.

Merrill Lynch & Co. and JP Morgan ran the books for the acquisition financing.

The issue was downsized from $200 million with the company shifting $25 million to its bank loan.

Compression Polymers drives through

Moosic, Pa.-based Compression Polymers Holding Corp. priced a $30 million add-on to its six-month Libor plus 675 basis points senior floating-rate notes due July 1, 2012 (B2/B-) at 100.50 on Tuesday, resulting in a yield of Libor plus 660 basis points.

Wachovia Securities ran the books for the quick-to-market add-on.

Proceeds will be used to repay a revolver that was drawn to fund an acquisition.

The original $65 million priced at 99.50 on June 29, 2005 to yield six-month Libor plus 685 basis points.

Peri upsizes to €100 million

Meanwhile in Europe, Peri GmbH priced an upsized €100 million add-on to its existing 5 5/8% senior fixed-rate notes due Dec. 15, 2011 (Ba2/BB+) at 102.0 on Tuesday, resulting in a 5.208% yield.

The issue priced on top of the 102 area price talk.

Deutsche Bank Securities was the bookrunner.

The add-on was upsized from €75 million.

The original €150 million priced at par in December 2004 as part of an overall €250 million two-part transaction that also included a €100 million tranche of senior floating-rate notes due Dec. 15, 2009 which priced at par to yield six-month Euribor plus 175 basis points.

Nordic Telephone massively oversubscribed

Rumors began circulating early Tuesday that Nordic Telephone Co. Holdings ApS's pending €2.031 billion equivalent multi-tranche 10-year senior notes offering (B2/B/B+) is massively oversubscribed as it plays to a white hot euro market.

A source told Prospect News that the tranche sizes are expected to price as follows:

• $500 million fixed-rate notes, price talk 9%-9¼%;

• €881 million fixed-rate notes, price talk 8¼%-8½%; and

• €750 million floating-rate notes.

Deutsche Bank Securities, JP Morgan, Barclays Capital, Credit Suisse and Royal Bank of Scotland are underwriters for the acquisition financing that is expected to price on Wednesday.

On Tuesday morning New York time, a source told Prospect News that a gray market had taken shape on the Nordic Telephone notes, with the euro-denominated fixed rate notes spotted at 101.25 bid, 101.75 offered, and the euro-denominated floating-rate notes spotted at 101.875 bid, 102.375 offered.

Activant, Saxon talk deals

Elsewhere offerings that have been marketed via investor roadshows were talked during the Tuesday session.

Activant Solutions Inc. talked its $175 million offering of 10-year senior subordinated notes (Caa1/CCC+) at a yield of 9½% to 9¾%.

The Deutsche Bank, JP Morgan and Lehman Brothers-led offering is expected to price on Thursday.

Meanwhile Saxon Capital Inc. talked its $150 million offering of eight-year senior notes (B2/B) at 11 ¾% to 12%, with pricing set for Wednesday.

JP Morgan is the bookrunner.

Shaw to hold investor call

Finally Calgary, Alta.-based diversified communications company, Shaw Communications Inc., will hold an investor call Wednesday morning for its C$300 million offering of 6.15% senior unsecured notes due May 9, 2016 (Ba2/BB+/BB from DBRS).

TD Securities and RBC Capital Markets are joint bookrunners for the debt refinancing and working capital deal.

The notes will be marketed in both Canada and the United States, with C$100 million of the issue reserved for retail investors.

Glatfelter up in trading

When the new Glatfelter 7 1/8% notes due 2016 were freed for secondary dealings, several traders saw those bonds trading around 100.375 bid, 100.625 offered, up somewhat from their par issue price earlier in the session.

The new NPC 9½% senior subs due 2014 were seen having priced too late in the session to allow for any meaningful aftermarket activity.

Among other recently priced bonds, a trader saw Sensata Technologies BV's new dollar-denominated 8% notes due 2014 at 101.25 bid, 101.625 offered; the Attleboro, Mass.-based high-tech controls producer's issue had priced at par on Friday, along with a tranche of euro-denominated bonds, and had promptly jumped above the 101 level that session.

And he saw XM Satellite Radio Holdings' 9¾% notes due 2014 at 100.75 bid, 101.25 offered, and its floating-rate notes due 2013 at 100.5 bid, 101.5 offered. Both tranches of the Washington, D.C.-based satellite radio broadcaster's new deal had priced at par on Friday.

Fedders jumps

Back among the established issues, a trader saw Fedders' 9 7/8s up five points on the session to around the 79.5 bid level, although he said that there was "no real trading, it's really illiquid, so a couple of moves really moved the paper higher."

At another desk, a market participant saw those bonds as having moved up even more strongly, noting that the 79ish context at which the bonds ended was up from around 72 at the end of last week.

Even that prior level represented an amazing strengthening of the bonds, which had begun the month at around 63 bid, then firmed gradually over the course of a number of sessions to around the mid-70s, before dropping back to 72 - and from there jumping nearly eight points in Tuesday's dealings.

That rise in the bonds went hand in hand with a 41 cent climb (18.06%) in the company's New York Stock Exchange-traded shares, which closed at $2.68. Volume of 619,000 shares was nearly four times the norm. Fedders was the second-steepest gainer percentage-wise on the NYSE Tuesday, continuing its recently hot run in the equity market. A week ago, the shares had been more than a dollar lower than where they were Tuesday - and they were trading under $1 last month.

With no firm news seen out, market participants cited a grab-bag of possible influences, ranging from the ever-dependable short-covering, to possible merger and acquisition rumors, perhaps spurred by Fedders competitor Whirlpool Corp.'s recent successful acquisition of Maytag Corp., yet another air conditioner maker.

But the consensus in the investment community seems to be that it's not a hot takeover market that has Fedders shares and bonds sizzling - but forecasts of a hot summer. Recent warnings from some scientists that the whole atmosphere is gradually getting ever hotter via global warming have also spurred consumer air conditioner purchases, which has helped all of the manufacturers, Fedders included.

Canadian paper gains

Elsewhere, the biggest movers, a trader said, were in the Canadian paper sector, which was "up a couple of points." He saw Tembec's bonds up two to three points, while such competitors as Abitibi-Consolidated Inc. and Bowater Inc. - the latter is U.S.-based but also has extensive operations north of the border - were up about two points.

Another trader saw Tembec's 8½% notes due 2011 three points better at 57 bid, 58 offered, although a market source at another desk disagreed, pegging those bonds up maybe two points - but at 55.5 bid. At another shop, the 8 5/8% notes were seen up two points to 58 bid.

Yet another trader saw the Tembec bonds "up three points, at one point," before dropping back to end up about a point. He quoted its 7¾% notes at 54.5 bid, 55.5 offered, up a point.

A trader said the movement "was all in response to the potential for resolution of the U.S.-Canada tariff issue. [The forest products companies] may end up getting money that was in escrow. For some of these companies, it could be a significant amount, maybe in the hundreds of million [of dollars], particularly for Tembec." He saw Pope & Talbot's 8 3/8% notes at 89 bid, 90 offered - well up from recent levels in the lower 80s.

"This sector moved up," the first trader said, "on [expectations] that they're going to get some sort of refund back on the import duty" when the United States and Canada finally come to an agreement, even though there has been no official word yet.

The forest products names were "the really big mover in what was otherwise a pretty quiet day," he said even though the [Treasury] long bond was getting beaten up and stocks were down, with the Dow Jones Industrials off about 50 points.

North Atlantic up on merger sentiment

Apart from that sector, he said, there was some rumblings in the 9¼% notes of North Atlantic Trading Co., a tobacco merchant. Those bonds were pushed up in apparent sector sympathy - and renewed hopes of M&A activity in the sector, following the announcement that industry giant Reynolds American Inc. has agreed to acquire a holding company that owns Conwood, the nation's second largest manufacturer of smokeless tobacco products, for $3.5 billion.

He saw the 9¼% North Atlantic notes as having "rallied from 60 to 80, with limited trading. Now, with the price that was paid for the Conwood deal, you're going to see those bonds go higher."

A number of companies reported earnings - but the general consensus was that those bonds did not go anywhere on those results. A trader saw AK Steel Corp.'s 7 7/8% notes due 2009 at 99.75 bid, 100.75 offered, while Lucent Technologies' 6.45% notes due 2029 were unchanged at 89.5 bid, 90.5 offered.

However, one company which put out earnings but whose bonds were firmer, the trader said, was Broomfield, Colo.-based telecommunications company Level 3 Communications, Inc.; he saw its 11½% notes due 2010 at 98.55 bid, 99 offered, up 1¾ points, while its 12¼% notes due 2013 were at 106 bid, 107 offered, also up 1½ points.

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