Search results for

Genesis Health Ventures has closed a $515 million deal that was increased $100 million due to strong appetite for the health care sector. Lisa Salamon, director of investor relations at Genesis, said two weeks ago the company emerged from a "fun fifteen months of bankruptcy." Mellon Bank led the $290 million debtor-in-possession facility, but First Union, Goldman Sachs andGE Capital are leading the new facility. Salamon declined to comment on why the other banks stepped up to lead the exit financing. Upon oversubscription of the deal, Genesis decided to upsize the facility with a part of the proceeds paying off its outstanding DIP facility and the extra amount used to pay some leases and help finance the acquisition of American Pharmaceutical Services, said Salamon.

The slide in Global Crossing debt continued last week in the wake of the company's Oct. 4 earnings warning and management shuffle. The benchmark long haul communications provider saw bids on its 9.5% senior notes of '09 (Ba2/BB-) sink to 15 last Thursday, down from 21 the previous week. "There have been several downdrafts in the [high-yield wireline telecommunications] sector over the past year, but this latest downdraft since Sept. 11 has been more severe than others, and we think it represents real capitulation," says Trent Spiridellis, analyst at Banc of America Securities. He says "slowing demand for data services, shrinking budgets for capital expenditures, customer churn, soft wholesale demand and the company's general unwillingness to do business with competitive carriers" were among the factors contributing to Global Crossing's earnings miss, and the decline of the sector as a whole.

A handful of telecommunications names took a hit last week, each dropping about 10 points, with dealers saying a revenue projection by Global Crossing sparked the trading. Global Crossing's debt traded in the high 50s while McLeod USA traded in the low 50s. Bank debt for Level 3 hung in and traded flat at 60. "Their bonds are holding up because of a bond tender offer," a dealer said, noting this in turn is supporting bank debt levels. Exact volume could not be determined, but dealers said it was minimal. Late last week Moody's Investors Service lowered the rating on Global Crossing's bank debt to B1 from Ba1 due to the company's recent financial guidance that projects a revenue shortfall. The telecommunications company is based in Hamilton, Bermuda.

Land O'Lakes will carry significantly higher debt and have weaker debt protection measures following its acquisition of Purina Mills, putting pressure on the company's new $375 million senior secured bank deal. Moody's Investors Service assigned a Ba2 rating to the new credit. Land O'Lakes is paying $243 million for Purina and is also taking on $120 million in Purina Mills debt. Peter Abdill, senior credit officer at Moody's, said timing was an issue for Land O'Lakes. "Land O'Lakes did [the acquisition] at a difficult time in the agriculture cycle," said "Sometimes an acquisition in a downturn is the right thing to do; you can buy on the cheap. But they did it at a bad time in their business life." Land O'Lakes, based in Arden Hills, Minn., is a branded dairy food and agricultural supply cooperative.

Corporate bonds from the beleaguered industrial manufacturing sector are being pitched as good total return plays by investment-grade players, who argue that the recent spread pullbacks are overdone, given the income stream diversification in several of these names.

Stephen MacLennan, head of interest-rate derivatives trading at Standard Chartered Bank in Hong Kong, recently resigned in the midst of a reorganization of its interest-rate derivatives desk. Reasons for the departure could not be determined by press time. Mike Bass, head of interest-rate derivatives in Singapore and to whom MacLennan reported, declined all comment on MacLennan. MacLennan could not be reached.

BNP Paribas has hired Alan Dunne, a foreign exchange technical strategist at Bank of America in Singapore, as a London-based strategist for the major developing currency markets in the European time zone. Dunne said he will cover currency and local debt market strategy, including foreign exchange derivatives strategy and interest-rate swaps, for Poland, Hungary, South Africa, Turkey and the Czech Republic.

The collapse last week of U.K. rail operator Railtrack is causing credit derivatives professionals to reconsider their positions in other companies regulated or subsidized by the U.K. government. The Railtrack collapse is significant because it is the first investment grade default in the European market. Since the company was put into administration traders are revaluing credit-default swaps that are priced with an implicit government guarantee on the reference credit, according to credit traders. For example five-year protection on National Grid widened 15bps to 40-45bps last week. Although National Grid does not have explicit backing, the company's rate of return is determined by the government.

China Standard & Poor's has affirmed the BBB long term foreign currency rating and A-3 short term ratings for the People's Republic of China. The agency said that it expected the sovereign to continue economic liberalisation in the coming years, despite the downturn in global growth, with efforts to build new social welfare, legal and regulatory systems helping to strengthen the country's weak institutions.

Australia The possibility of a rapid resurrection of the jumbo Enex Resources float diminished this week as coking coal prices weakened and analysts downgraded their outlook for prices.

As reported in EuroWeek last week, the Korean government is pressing ahead with its $500m combined convertible (CB) and Global Depository Receipt (GDR) offering to sell down the next stage of its Korea Tobacco & Ginseng shareholding. The roadshow began yesterday (Thursday) in Hong Kong and will end with pricing on October 24.

The IPO of the Japanese unit of US coffee shop chain Starbucks Corp attracted overwhelming attention from investors and the media in Japan this week, despite the deal's relatively small size. The disproportionate attention commanded by the deal is a sure sign of the weakness in the global equity markets.