JLL/Delta Dutch Pledgeco drives by; 21st Century trades actively; MGM off amid proxy fight

By Paul A. Harris and Paul Deckelman

New York, April 29 – For a third consecutive session, the high-yield primary sphere saw just one new dollar-denominated, junk-rated deal price, although a number of other prospective offerings are being shopped around.

JLL/Delta Dutch Pledgeco BV, a Durham, N.C.-based conglomerate with holdings in the pharmaceutical and specialty chemical manufacturing businesses, came to market on Wednesday with an unscheduled and upsized $550 million offering of five-year senior PIK toggle notes.

Traders saw that new paper moving higher in the aftermarket in active dealings.

They also saw busy activity in Tuesday’s lone deal – cancer-care provider 21st Century Oncology, Inc.’s downsized $360 million of eight-year notes – although those bonds came off the initial levels they had reached after they had priced.

Elsewhere, market participants were anticipating Ahern Rentals, Inc.’s $500 million offering of eight-year second-lien secured notes, which are expected to price during Thursday’s session.

Also on tap for Thursday, they said, is the $350 million dealer re-marketing of Global Cash Access Inc.’s 10% notes due 2022, which the company originally priced last December. In the euro-denominated market, NH Hotels SA is expected to complete a €200 million offering of seven-year secured notes.

Outside of the new-deal world, MGM Resorts International’s bonds were lower in heavy trading, amid an intensifying proxy contest for control of the Las Vegas-based gaming giant and other negative gambling industry news.

Statistical indicators of junk market performance were lower for a second consecutive session on Wednesday.

JLL upsizes

The news flow in the high-yield primary market remained slow on Thursday.

The session's sole issuer was JLL/Delta Dutch Pledgeco BV, the parent company of DPx Holdings BV.

The company priced an upsized $550 million issue of five-year senior PIK toggle notes (Caa2/CCC+) at par to yield 8¾%.

The deal was upsized from $500 million.

The reoffer price and yield came on top of final price talk. Earlier yield guidance was 8¾% to 9%.

The cash coupon is 8¾%, and the PIK coupon is 9½%.

J.P. Morgan, UBS, Jefferies, KeyBanc and Morgan Stanley were the joint bookrunners for the dividend deal.

Ahern talk is 7 3/8% area

Elsewhere, Ahern Rentals talked its $500 million offering of eight-year senior secured second-lien notes (B3/B) to yield in the 7 3/8% area.

Official talk came tight to earlier guidance that had the deal shaping up in the mid-7% area

Books close at 10 a.m. ET Thursday, and the deal is set to price Thursday afternoon.

BofA Merrill and JPMorgan are managing the sale.

Meanwhile there is an active calendar of deals set to price late this week or next week.

The market is awaiting official talk.

Among these is PrimeSource Building Products, which is marketing $230 million of eight-year senior notes (Caa1/CCC+) with early guidance in the low 9s.

Extended Stay America, Inc. is roadshowing a $500 million offering of 10-year senior notes (expected B3/confirmed BB-) that are guided in the high 5s.

In a deal expected to price next week, Petra Diamonds Ltd. is planning to sell $300 million of five-year senior secured second-lien notes (B2/B+), which have early guidance in the mid 8s.

And in a split-rated deal, Quicken Loans Inc. is marketing a $1.25 billion offering of 10-year senior notes (Ba2/BBB-) that are being guided in the 6% area.

Global Cash re-market talk

Dealers are talking the re-market sale of Global Cash Access’ $350 million of 10% senior notes due Jan. 1, 2022 (Caa1/CCC+) with a yield in the 12% area, at a discount to par of roughly nine points.

Yield talk comes on top of initial guidance.

Books are scheduled to close at 4:30 p.m. ET Wednesday, and the Rule 144A and with registration rights deal is set to price Thursday.

The original issue priced at 98.921 to yield 10.21% on Dec. 18, 2014.

BofA Merrill Lynch is the left bookrunner for the re-marketing effort. Deutsche Bank is the joint bookrunner.

The company will not receive proceeds from the re-marketing. Proceeds from the initial transaction were used to fund the acquisition of Multimedia Games Holding Co. Inc.

Global Cash priced the 10% unsecured notes as part of a $700 million two-part deal that also included a $350 million tranche of senior secured notes due March 15, 2021 (B1/B+/), which priced at par to yield 7¾%.

The secured notes are believed to have been taken down by a single account last December, when terms on the two-part deal were announced, a trader said on Thursday.

However the unsecured tranche – the 10% notes due 2022 – were priced but were not syndicated, which is the reason for the re-marketing effort, the trader said.

NH Hotels for Thursday

In the European market, NH Hotels plans to price a €200 million offering of seven-year senior secured notes (expected ratings /B/B+) on Thursday, trailing an investor conference call scheduled to get underway at 5 a.m. ET Thursday morning.

Global coordinator JPMorgan will bill and deliver for the Rule 144A and Regulation S for life offer. BBVA, Bankia, Bankinter, Barclays, BNP Paribas, Deutsche Bank and Morgan Stanley are the joint bookrunners. Jefferies is the lead manager.

The Madrid-based hotel company plans to use the proceeds to refinance debt and for general corporate purposes.

JLL/Delta Dutch moves up

In the secondary sphere, a trader quoted the new JLL/Delta Dutch Pledgeco – better known to some in the market under the company’s former name, Patheon – 8¾%/9½% quickly shopped senior PIK toggle notes due 2020 at 100½ bid on the break, versus their par issue price.

He said that there was “nothing to speak of” in those initial dealings, “but certainly, starting out of the box [higher] is better.”

A little later, a second trader gave an update – showing that the notes had moved up 1 full point from their pricing level to 101 bid, with a brisk $39 million of the new bonds having changed hands by the close.

21st Century Oncology active

Traders saw busy trading in 21st Century Oncology’s 11% notes due 2023, with one quoting the bonds in a 100¼-to-100½ bid context, up from the par level at which the Fort Meyers, Fla.-based cancer-care provider priced its regularly scheduled $360 million issue, after downsizing it from $400 million originally.

At another desk, a market source pegged the bonds at 100¼ bid on volume of more than $27 million.

But he said that the trading levels were off by nearly ½ point from the peak levels reached in relatively light dealings on Tuesday following the pricing.

Micron issue easier

Among other recently priced offerings, a trader said that Micron Technology Inc.’s bonds “were not really going anywhere” on Wednesday, saying that both halves of that $1 billion drive-by deal were “up and down from 99¾.”

A second trader said that the company’s 5¼% notes due 2024 were off by ¼ point, at 99½ bid, on volume of more than $20 million.

Micron, a Boise, Idaho-based semiconductor manufacturer, priced $550 million of the 5¼% notes at par after upsizing the tranche from the original $500 million.

It also priced $450 million of 5 5/8% notes due 2026 at par, after downsizing that tranche from $500 million originally.

MGM trades off

Away from the new deals, gaming operator MGM Resorts International’s 6% notes due 2023 were seen “down around 1 point or so,” around 103¾ bid, a trader said.

A second said that the bonds ended around 104 bid, down 1 point on the day, with volume topping $36 million, putting it high on the junk Most Actives list.

The first trader noted that “there’s news about a proxy fight – obviously there are some issues there.”

A group of activist investors, organized as Land & Buildings Investment Management, LLC and Land & Buildings Capital Growth Fund, LP, is challenging the company’s management, saying that the incumbents have failed to realize the value of MGM’s extensive real estate holdings.

The group announced in a filing with the Securities and Exchange Commission on Tuesday that it plans to hold a Thursday afternoon conference call for interested MGM investors, during which it will “discuss why it believes there is an urgent need for change at MGM Resorts International.”

“Prior to the call, Land and Buildings will release a new public presentation detailing its views,” the filing said.

MGM’s New York Stock Exchange-traded shares (NYSE: MGM) fell $1.25, or 5.59%, on Wednesday, ending at $21.11. Volume of 19.8 million shares was about 1.5 times the usual turnover.

Besides the prospect of a boardroom battle, other developments were also casting a pall over the company.

The Nevada Gaming Control Board said that gaming revenues for March at the state’s casinos – where MGM is a prominent player – were down by more than 3% from year-earlier results.

MGM sector rival Wynn Resorts Ltd. reported weak first-quarter results late Tuesday.

And Morgan Stanley downgraded its outlook for the Macau gaming market to “cautious” from “in-line.” MGM is one of the four big U.S. gaming companies operating there.

Indicators stay lower

Statistical indicators of junk market performance were lower for a second consecutive session on Wednesday. They had first turned lower on Tuesday after having been mixed on Monday for a third session in the previous four, and after having been mostly better on Friday.

The KDP High Yield Daily index fell by 9 basis points on Wednesday to end at 71.73, its second straight loss, having also been down by 1 bp on Tuesday. That followed Monday’s 4-bps gain, after having been unchanged on Friday.

Its yield rose by 3 bps to 5.16%. It had been unchanged at 5.13% on Tuesday – its third steady yield in the previous four sessions – after having come in by 1 bp on Monday.

The Markit Series 24 CDX North American High Yield index dropped by 3/16 point on Wednesday to 107¼ bid, 107 5/16 offered. Wednesday’s downturn was its third straight, and its fourth loss in the last five sessions, with the index having also been marginally lower on Tuesday and having edged down by 1/32 point on Monday.

The Merrill Lynch U.S. High Yield Master II index saw its second successive setback on Wednesday, retreating by 0.137%, on top of Tuesday’s 0.004% dip. Those back-to-back losses followed three straight advances and five such upturns in the previous six sessions.

The latest decline dropped the index’s year-to-date return to 3.768% from Tuesday’s 3.91%, and from Monday’s 3.952%, which had been its second consecutive new peak level for the year.

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