Sierra Pacific sells $100 million; three deals go on the road; Goodyear gains

By Paul A. Harris

St. Louis, April 12 - One deal, a drive-by, priced Monday in a post-holiday session which turned out to be quiet, as market sources had forecast last Thursday.

Meanwhile news of three new roadshow starts surfaced during the week's opening session.

And in trading of existing bonds the big name was Goodyear Tire & Rubber. One trader saw the Akron, Ohio company's paper firm on news that its income restatement could have been worse.

Sierra Pacific Power Co. sold $100 million of eight-year general and refunding mortgage notes, Series H (Ba2/BB) at par to yield 6¼%.

Price talk on the deal, led by Merrill Lynch & Co. and Lehman Brothers, was for a yield in the 6 3/8% area, so the Reno, Nev.-based regulated utility came tight to talk.

A trio of roadshow starts

The roadshow starts Tuesday for downsized Invista's downsized $575 million offering of eight-year senior note units (B1) in dollar and euro tranches, with pricing expected on April 23. The deal has been reduced from $1.2 billion.

Each unit will be comprised of notes issued by KoSa Lux Finance BV, Arteva Global Holdings BV, KoSa UK Finance BV and KoSa Canada Co.

JP Morgan and Credit Suisse First Boston are joint bookrunners on the acquisition financing.

Meanwhile a three-day roadshow got underway on Monday for Ferrellgas Escrow LLC and Ferrellgas Escrow Finance Corp.'s offering of $250 million of 10-year senior notes, which are expected to price late Wednesday or early Thursday.

Credit Suisse First Boston and Banc of America Securities are joint bookrunners acquisition financing from the Liberty, Mo.-based propane company.

And the roadshow starts Tuesday for iPCS Inc.'s $180 million of eight-year senior notes, which are expected to price late in the week of April 19.

Credit Suisse First Boston and Bear Stearns & Co. are joint bookrunners on the deal from the Sprint PCS affiliate, proceeds from which will be used to refinance senior secured debt as the company exits from Chapter 11.

Goodyear bonds firm

"There was a little bit of choppiness in the secondary market today," one source told Prospect News, shortly after Monday's session ended.

"It's been quiet here," the source added. "I did not detect any positive or negative sentiment - just people being kind of lazy in getting back from the Easter holiday."

The big news among traders was Goodyear, which stated in a press release that it expects the reduction to net income between 1997 and 2003 identified through a now-concluded investigation into its overseas business to total approximately $10 million, with most of it impacting the company's European Union business.

The company's bonds were generally quoted three points better.

"This investigative process was thorough and we are pleased to have it behind us," said Robert W. Tieken, Goodyear executive vice president and chief financial officer, in a press release. "We look forward to issuing our financial results and refocusing all of our energies toward Goodyear's ongoing turnaround efforts."

The accounting investigation was requested by the company's audit committee and announced on Dec. 10, 2003. On Feb. 11, the company said it was extending the investigation from Europe to other overseas operations. On March 9, Goodyear reported that it took disciplinary actions against several senior managers in its European Union operation in connection with the investigation.

The company also has identified additional adjustments to those previously disclosed in its Sept. 30, 2003 Form 10-Q that are expected to result in a reduction in net income of approximately $65 million between 1997 and 2003.

The adjustments include $20 million related to workers' compensation claims, $10 million to the aforementioned investigation, $10 million to fixed assets, $8 million to product liability, $7 million to inter-company profit elimination in inventory and $10 million to other items.

"The Goodyear findings were not as bad as anticipated," one trader said, adding that the company's bonds were "up on the short end about two points."

The trader cited Goodyear's 6 5/8% notes due 2008 at 99.5 bid, 100.5 offered, up from 96.5 bid, 97.5 offered.

Meanwhile the 7 7/8% notes due 2011 were 87.5 bid, 88.5 offered, up from 84.5 bid, 85.5 offered.

"It was mostly short covering," the trader commented. "that, and the fact that the news was not that bad."

Another source had the Goodyear 6 5/8% notes at 100 bid, 101.50 offered.

Yet another market source had the same notes spotted at 97, unchanged.

Calpine news fails to shake bonds

A trader also took note Monday of a report in the Los Angeles Times that small earthquakes have become more common in the town of Anderson Springs, Calif. since Calpine Corp. began injecting millions of gallons of wastewater underground to help create steam used to produce electricity at its geothermal plants - but said that the development apparently has not caused the San Jose, Calif. company's bondholders to start quaking.

Calpine's 8½% notes due 2011 were seen at 74 bid, 75 offered, unchanged, the trader said.

Another source actually had Calpine's 81/2s up a quarter to 73.75 from 73.50.

Fight for Weirton Steel causes paper to firm

A trader also saw movement in the existing paper of bankrupt Weirton Steel, which is being sold at a "closed door auction" in Pittsburgh.

The trader remarked that the word is that International Steel Group is vying with a group of bondholders to gain control of the company.

Weirton's 10% notes due 2008 were at 41 bid, 44 offered from 37 bid, 39 offered, "up a couple of points," said the trader.

Meanwhile International Steel's new 6½% senior notes due 2014 (Ba3/BB) which priced last Thursday at 99.096, were seen late Monday unchanged from Thursday's close: 100 bid, 100.25 offered

Recent issues a mixed bag on Monday

Among other recently issued junk bonds, a trader saw the new Mueller Group 10% notes due 2012 at 103 bid, 103.5 offered, "up a half."

Meanwhile, the trader saw both of the new Allied Waste issues unchanged: the 6 3/8% due 2011 were 100.25 bid, 100.50 offered, while the 7 3/8% notes due 2014 were 100.50 bid, 100.75 offered.

Another source had the Allied Waste 6 3/8% notes unchanged at 100.25, while the 7 3/8% 10-year paper was spotted at 100.50 down from 100.75.

Elsewhere among recent issues, Delco Remy's new 9 3/8% notes were offered at 100.25 without a bid.

And the new Superior Essex 9% notes due 2012, which price last Thursday at 97.24, were offered at 98 without a bid.

"With Europe being closed people took another day off," the trader noted.

"Some of us came expecting some activity after the lack of activity we saw last week. But today was dead."

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