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Bankruptcy: LightSquared suit should be dismissed, Ergen says; auction delayed

Lawyers for Charles Ergen and his companies, DISH Network and EchoStar Corporation, asked U.S. Bankruptcy Judge Shelley Chapman on Monday to dismiss a lawsuit filed by LightSquared that largely echoes a suit filed by the company’s majority equityholder, Harbinger Capital Partners.

Chapman largely dismissed the Harbinger suit last month, finding it could not proceed on its own in lawsuits accusing Ergen of fraudulent debt purchases, but said the firm could act as a party to the suit if LightSquared itself pursued the claims (see “LightSquared judge says Harbinger can’t go it alone in Dish suit,” LCD News, Oct. 30, 2013).

LightSquared filed its own suit on Nov. 15, after reviewing thousands of documents produced in discovery requests, but still fails to provide support for its allegations of wrongdoing, Ergen’s lawyers claim. “The plaintiff’s inability to connect the dots can be taken as an admission that supporting facts do not exist,” they wrote. “The court has already dismissed this action once, and should do so again.”

A hearing on the dispute is scheduled for Dec. 10.

Meanwhile, an auction of LightSquared’s assets, at which Ergen is the primary bidder has been postponed until Dec. 11, following a closed-door hearing in Manhattan on Monday. The auction was originally set for Nov. 25. – John Bringardner

 

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Double B new-issue yields: leveraged loans vs. high yield bonds

After spiking in June – amid talk of tapering in the Fed’s bond buying program – yields on double B rated leveraged loans and high yield bonds have thinned. As of Nov. 21 the average BB new-issue yield was  3.78% for leveraged loans and 5.63% for high yield bonds. Theses averages include deals completed during the 30 days up to Nov. 21.

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Global Aviation unsecured creditors’ committee appointed; full list, contact info

The U.S. Trustee for the bankruptcy court in Wilmington, Del., named an unsecured creditors’ committee in the Chapter 11 proceedings of Global Aviation.

The members of the committee and contact information are as follows:

  • Israel Aerospace Industries, BEDEK Aviation Group (Attn: Adam Rosen, (703) 875-3730);
  • Unical Aviation (Attn: Mercy Tan, (909) 348-1700);
  • Air Line Pilots Association, International (Attn: Robert Lewis, (703) 689-2270.
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European high yield bond issuance adding to record 2013

european high yield bond volume

European high yield bond issuance has totaled $65.4 billion so far in 2013, easily surpassing the $36.4 billion seen for all of last year, according to S&P Capital IQ/LCD.

The surge in volume comes amid a steady inflow of cash into European high yield bond funds, which in October saw €1.71 billion in net cash inflows. For 2013 through October European high yield funds have seen €5.3 billion of net cash inflows.

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Hot Topic PIK toggle notes (CCC+/Caa2) price at 98 to yield 12.52%

Hot Topic today completed an offering of senior PIK toggle notes via sole bookrunner Bank of America, according to sources. The CCC+/Caa2 offering was increased from its initial target by $10 million.

Issuance comes at HT Intermediate Holdings, and proceeds from the deal will be used to fund a shareholder dividend.

Recall that Sycamore Partners in June completed the buyout of the company in a $600 million deal. Hot Topic is a mall- and web-based specialty retailer offering music and pop-culture licensed apparel, accessories, music, and gifts.

Terms:

Issuer HT Intermediate Holdings / Hot Topic
Ratings CCC+/Caa2
Amount $110 million
Issue senior PIK toggle notes (144A)
Coupon 12% (cash) / 12.75% (PIK)
Price 98
Yield 12.52%
Spread n/a
FRN eq. n/a
Maturity May 15, 2019
Call nc2.5
Trade Nov. 25, 2013
Settle Dec. 2, 2013 (T+4)
Joint Bookrunners BAML
Co-leads
Co’s.
Px talk
Notes Calls: 103, 101.5, par; w/ 2.5-year equity clawback for entire issue @ 105; carries T+50 make-whole call; w/ change of control put @ 101; upsized by $10 million
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Goldman Sachs prints $1B of 2023 floating rate bonds at L+160; terms

Goldman Sachs LogoGoldman Sachs Group today completed a $1 billion offering of floating-rate notes due November 2023 at L+160. The FRNs were inked at the midpoint of guidance and through initial whispers in the L+165 area.

LCD records show limited amounts of floating-rate offerings issued this year dated longer than five years, including a 10-year FRN inked by GECC in March at L+100.

Goldman Sachs has placed two FRN offerings with five-year tenors so far this year. On Nov. 12, the New York bank completed a $1 billion floating-rate tranche due 2018 at L+110. In April, it inked a $1.25 billion FRN sale also due 2018 at L+120.

On Nov. 14, Moody’s concluded its review on eight large U.S. banking groups, including Goldman Sachs, (along with Morgan Stanley, JPMorgan, Bank of New York Mellon, Bank of America, Citigroup, State Street, and Wells Fargo) and downgraded, by one notch, the bank’s senior holding company ratings to Baa1, from A3.

Standard & Poor’s maintains a negative outlook on its A- rating. “The outlook reflects the negative outlook on the U.S. sovereign rating, as well as the potential negative impact that yet-to-be-finalized regulations (particularly the Volcker Rule) could have on the company’s ability to continue its business in its current form. The outlook also recognizes the potential effect of the eurozone crisis on Goldman’s funding and liquidity, though those risks have been curbed for now with the support that has been provided to struggling countries and financial institutions,” the agency said in ratings rationale published last December. Terms:

Issuer Goldman Sachs Group
Ratings A-/Baa1
Amount $1 billion 
Issue SEC-registered senior notes
Coupon L+160
Price 100
Maturity Nov. 29, 2023
Trade Nov. 25, 2013
Settle Nov. 29, 2013
Books GS
Px Talk L+160; guidance L+160 area (+/- 5 bps); IPT L+165 area
Notes Proceeds will be used for general corporate purposes

 

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Alcatel-Lucent USA add-on bonds (CCC+/B3) price at par to yield 6.75%

Alcatel-Lucent USA today completed an add-on offering of its 6.75% notes due 2020 via sole bookrunner Citi, according to sources. Pricing was in line with talk and the additional notes bring the total issue size to an even $1 billion.

Proceeds, together with cash, will be used to repay all of the €298 million outstanding under its Alcatel-Lucent USA senior term loan due 2019. Issuance comes under Rule 144A for life.

Terms:

Issuer Alcatel-Lucent USA
Ratings CCC+/B3
Amount $250 million
Issue add-on senior notes (144A-life)
Coupon 6.75%
Price 100
Yield 6.75%
Spread n/a
FRN eq. n/a
Maturity Nov. 15, 2020
Call nc3
Trade Nov. 25, 2013
Settle Dec. 3, 2013 (T+5)
Joint Bookrunners Citi
Co-leads
Co’s.
Px talk 100 area
Notes w/ three-year equity clawback for 35% @ 106.75; subject to T+50 make-whole call; w/ change-of-control put @ 101; issue size now $1 billion.
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Credit Agricole bolsters London high-yield team with 4 hires: La Villa, Nabhan, Jarrett, Derieux

Credit Agricole is bolstering its high-yield platform in London with four hires.

Daniele La Villa joins the bank’s global high-yield trading platform from Banca IMI, where he was a senior high-yield and peripherals investment grade corporate bond trader. La Villa will report to Kai Wolter, global head of credit trading.

Roland Nabhan joins the high-yield capital markets team from Citi, and will report to Youssef Khlat, global head of high-yield capital markets.

Jermaine Jarrett joins Credit Agricole as head of high-yield syndicate from Mizuho, reporting to Damien Loynes, head of corporate, emerging market, and high-yield syndicate.

Finally, Remi Derieux is joining the bank as head of high-yield sales with a pan-European focus, from Newedge where he engineered its high-yield business. Prior to Newedge, Derieux was head of high-yield sales at BNP Paribas in London. He will report to Michael Duff, head of U.K. credit sales. – Staff reports

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European high yield bond funds see €232M investor cash inflow

J.P. Morgan’s weekly analysis of European high-yield funds shows a €232 million inflow for the week ended Nov. 20. This includes a €15 million net inflow to ETFs, and an €82 million net inflow for short-duration funds. The reading for the week ended Nov. 13 is unrevised from an inflow of €195 million. The latest reading is the eleventh consecutive weekly inflow.

The provisional reading for October is a €1.71 billion inflow, which is the eighth month this year for which net inflows have been recorded. Additionally, October is set to challenge January – when a €1.8 billion inflow was recorded – as the biggest month of the year for inflows. October’s reading is only the third €1 billion-plus monthly inflow this year, the other being July. The largest monthly outflow was €2.4 billion, tracked in June.

The latest estimate for total inflows this year through October is €5.3 billion, versus €4.6 billion for the comparable period last year.

Strong inflows are set to be matched by solid supply in the next few weeks, according to bankers. Already this week there are five borrowers set to issue, which is impressive given the week is set to be cut short by the Thanksgiving holiday in the U.S. A loan and bond refinancing for Tank & Rast is the only non-Italian deal this week, as Snai and Astaldi market pure high-yield deals, Finmeccanicaprepares its first deal as a fallen angel, and Beni Stabili hits the unrated space.

In the U.S., retail cash inflows to high-yield funds totalled $783 million for the week ended Nov. 20, according to Lipper, a division of Thomson Reuters. ETF inflows comprised 58% of the total, or $451 million. The positive reading expands on the week prior’s $219 million inflow, and marks the tenth inflow in the past 11 weeks. Inflows total $2.36 billion for the year to date, versus a modestly negative reading five weeks ago.

Retail cash inflows to bank loan mutual funds and exchange-traded funds totalled $726 million for the week ended Nov. 20, according to Lipper. That total is down from $829 million the week before, but up from $577 million two weeks ago. The solid inflow figure comes despite a $13 million outflow from ETFs during the sample period, just the third such outflow this year. The net inflow streak is now at 75 weeks, for an infusion of $56.9 billion over that period.

As reported, J.P. Morgan only calculates flows for funds that publish daily or weekly updates of their net asset value and total fund assets. As a result, J.P. Morgan’s weekly analysis looks at around 50 funds, with total assets under management of €10 billion. Its monthly analysis takes in a larger universe of 90 funds, with €27 billion of assets under management. For a full analysis, please see “Europe receives HY fund flow calculation.” – Luke Millar

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Brand Energy high yield bonds (CCC+/Caa1) price at par to yield 8.5%

Brand Energy & Infrastructure this afternoon completed an offering of senior notes via a huge bookrunner group steered by Morgan Stanley and including Citi, Goldman Sachs, UBS, HSBC, ING, Natixis, RBS, Societe Generale, and SunTrust, according to sources. Terms on the CCC+/Caa1 transaction were pushed 25 bps wide of guidance after $50 million was shifted to the coordinated term loan. The bond deal is part of the financing backing the sponsor-to-sponsor sale of Brand Energy to Clayton, Dubilier & Rice from First Reserve. Terms:

Issuer Brand Energy / Bullseye Merger
Ratings CCC+/Caa1
Amount $500 million
Issue senior notes (144A)
Coupon 8.5%
Price 100
Yield 8.5%
Spread T+616
FRN eq. L+603
Maturity Dec. 5, 2021
Call nc3 @ par+75% coupon
Trade Nov. 22, 2013
Re-offer Trade Nov. 26, 2013 (t+2)
Joint Books MS/CITI/GS/UBS/HSBC/ING/NTX/RBS/SGC/STRH
Px talk 8-8.25%
Notes downsized by $50 million amid shift to term loan; first call at par+75% coupon; wide of talk by 25 bps.