*Station Casinos, a casino operator in Las Vegas, was planning to sell what is already its third deal of the year, which was expected to be priced toward the end of last week. The eight-year, non-call four year transaction for
$400 million comes after two previous deals that were done in January and at the end of February. The sales are part of a decisive strategy on the part of the casino operator to issue several smaller deals across different points on the maturity curve, on the view that it can get better execution in smaller deals with different tenors than it can with one large offering. Charles Ullerich, a gaming analyst at ABN AMRO Asset Management, says the company is issuing debt in short stages as a way to spread out its maturities to decrease its interest expense. He calls Station Casinos the dominant operator in Sin City. Banc of America Securities is underwriting the new eight-year deal. The casino company sold 6 7/8% of '16 senior subordinated notes late last month and $400 million of 6 1/2% senior subordinated notes issued in January.
*Friendly Ice Cream was in the market with $175 million in senior unsecured notes, which were seen as a good gauge of whether the company was able to make amends with investors. Outstanding bonds of the restaurant company have been modestly distressed in recent years (trading in the low 70s), which "left investors with a bad taste in their mouth," according to one salesman. The company's previous offering, sold in 1997, was a sale of 10 1/2% notes due in '07. The proceeds of this new private placement deal will be used to retire all of the outstanding notes. The deal was priced last Thursday with a 8 3/8% coupon, to yield 478 basis points over Treasuries. Jerry Hirschberg, a director at Standard and Poor's, says Friendly has improved its business over the last few years, by closing poorly located stores and improving food quality and selling ice cream in the store and in other supermarkets. As a result, S&P last month changed the outlook on the company's single-B rating to positive from stable. Goldman Sachs underwrote the deal.