JC Penney steals show with first bond deal in four years

By Natalie Harrison

NEW YORK, Sept 10 (IFR) - US department store giant JC Penney turned another corner on the road to redemption Wednesday, pricing a bigger-than-expected US$400m unsecured bond that showed it has ample access to the debt capital markets.

The upsized deal was multiple times oversubscribed, no mean feat for a troubled company that was only saved from default last year by a US$2.25bn real-estate loan.

The five-year non-call life bond priced at par to yield 8.125%, which was at the tight end of whispers, heard from investors at 8%-8.5%.

Not only was the trade grown in size from US$350m, but timing was also accelerated because of the strong reception from investors.

"This deal was all about proving the company has access to the unsecured bond market, which it has done," said one banker close to the deal.

According to IFR data, it was the issuer's first bond deal in four years.

"They could have priced a much bigger deal based on the level of demand," the banker said. "But the company decided not to do any more than US$400m, as it has liquidity."

JP Morgan was left-lead, while Barclays (LSE: BARC.L - news) and Goldman Sachs (NYSE: GS-PB - news) were also bookrunners.

Proceeds will be used to tender for three outstanding bonds maturing in the next three years: US$200m 6.875% notes due October 2015, US$200m 7.675% notes due August 2016, and US$285m 7.95% notes due April 2017.

Analysts expect the company to take out the entire 2015 bond.

PLUGGING ON

JC Penney (NYSE: JCP - news) was one of four deals expected to price Wednesday for a combined US$2.455bn.

Equipment hire firm Ashtead Group (LSE: AHT.L - news) , a relatively frequent issuer in the high-yield market, increased the size of its drive-by 10-year second priority senior secured note by US$100m.

Double B rated Ashtead, which operates in the US and the UK under the brand names Sunbelt Rentals and A-Plant, ended up raising US$500m.

AK Steel was expected to print a US$430m seven-year non-call three senior note to finance its US$700m acquisition of Severstal North America's Dearborn operations.

Leads began marketing the deal on Tuesday, with price talk set at 7.5%.

One investor told IFR he decided not to participate due to a short-term negative view on US steel companies.

"US steel prices are currently trading about US$120 more than European steel prices, and we just don't think that will last," he said.

He was also sceptical about valuations, noting a 500bp rally in AK Steel bond spreads over the past year.

Private equity group Apollo meanwhile was aiming to price a US$1.125bn bond for Jupiter Resources - a deal postponed last month to finance its acquisition of Encana Corp's Bighorn energy properties in Alberta.

Price talk was announced at 8.5%-8.75%, roughly in line with whispers of 8.5% area.

The high-yield primary market is poised for more action on Thursday and Friday.

The biggest deal on tap is a US$5bn triple-tranche trade for

California Resources.

Also in the energy sector is a US$325m deal for American Energy, on which price talk emerged Wednesday at 9% yield area including a small OID - significantly wide of high-7% area whispers.

"It's a debut deal, so it's harder to find the right pricing level," said one investor.

"The market also feels a lot worse this week than last. The market has lost about half a percent month-to-date."

DEALS PRICED:

JC PENNEY

JC Penney, expected ratings Caa2/CCC-, announced a US$350m 5-year NCL senior unsecured SEC-Reg (Madrid: SL001.MC - news) notes via JPM(left)/BARC/GS (KSE: 078935.KS - news) . Co-managers are BAML/WFS/GUGG/HSBC/RBS (LSE: RBS.L - news) /REGIONS. Pricing expected later this week. Put at USD101 if COC and concurrent S&P and Moody's downgrade. UOP: to pay the tender consideration and related transaction fees and expenses for JC Penney's contemporaneous tender offers to purchase for cash up to $300 million aggregate principal amount of its outstanding 6.875% Medium-Term Notes due 2015, 7.65% Debentures due 2016 and 7.95% Debentures due 2017 (collectively, the "Tender Securities"). JC Penney intends to use any remaining net proceeds for general corporate purposes, which may include further purchasing or otherwise retiring a portion of its existing indebtedness. BIZ: a chain of American mid-range department stores.

WHISPERS: 8-8.5%

PRICED: US$400m. Cpn 8.125%. Due 10/1/19. Ip par. Yld 8.125%. +635bp vs. 1.625% 8/31/19 UST. MWC T+50bp. USD101 COC put. First (Other OTC: FSTC - news) pay 4/1/15. Settlement date 9/15/14. Cusip # 708160CA2.

ASHTEAD GROUP

Ashtead Group PLC announced a US$400m 10-year second priority senior secured note offering. UOP: to repay a portion of the outstanding amounts borrowed under its first priority senior secured credit facility and to pay related fees and expenses as the next step in its long term balance sheet management. The transaction will enable the Company to fix the cost of a further tranche of its debt at attractive long-term rates and extend its average debt maturity profile. BIZ: Ashtead Group plc is a British industrial equipment rental company formerly based in Leatherhead, Surrey but which has since moved to new offices in the City of London (LSE: CIN.L - news) .

PRICE TALK: 5.625% area

PRICED: US$500m. Cpn 5.625%. Due 10/1/24. Ip par. Yld 5.625%. +309bp vs. 2.375% 8/15/24 UST. Call schedule: 2019 at USD102.813, 2020 at USD101.875, 2021 at USD100.938, 2022 at 100.000. Equity clawback up to 35% at USD105.625 prior to 10/1/17. USD101 COC put. First pay 4/1/15. Settlement 9/17/14. Cusip 045054AC7.

DEALS EXPECTED TO PRICE WEDNESDAY:

AK STEEL CORP

AK Steel Corp announced a US$430m 7-year nc3 SEC-Reg senior note offering via CS(left)/CITI/JPM. Road shows begin today (08Sep), with pricing expected later this week. Call protection: NC3 then par plus 1/2 coupon. Equity clawback up to 35% within the first 3-years. USD101 COC put. UOP: Finance the acquisition of Dearborn integrated steel mill. BIZ: Integrated steel producer.

PRICE TALK: 7.5% area. Books closed at 2pm today, with pricing expected after 4:30pm (following pricing of equity deal).

JUPITER RESOURCES

Jupiter Resources, announced a US$1.125bn 8-year nc3 senior notes via CS(left)/TD/RBC/BARC/GS/UBS (NYSEArca: FBGX - news) /DB/NOMURA. Pricing is expected later this week. Non-call 3-years then par plus 3/4 coupon. USD101 COC put. 144a/RegS for life. Equity clawback up to 40% within the first 3-years. UOP: Fund acquisition of Bighorn assets from Encana. BIZ: Private, Canadian E&P company in the Alberta Deep Basin.

WHISPERS: 8.5% area

PRICE TALK: 8.5%-8.75%. Books closed at 3:30pm.

DEALS PIPELINE:

APN NEWS & MEDIA LIMITED (NZSE: APN.NZ - news)

APN News & Media Limited, ratings tbd, announced a US$250m 7-year nc3 senior notes via CS(left)/DB/HSBC. 144a/RegS for life. Roadshows began Wednesday, pricing this week. USD101 COC put. Call Protection: NC3 then par + 3/4 coupon Equity Clawback: Up to 35% within the first 3 years. UOP: Repay existing revolver and general corporate purposes. BIZ: Diversified media company with radio, newspaper and outdoor businesses across Australia, New Zealand and Hong Kong.

AMERICAN ENERGY

American Energy, ratings tbd, announced a US$325m 8-year nc3 senior note offering via CS(left)/DB/MS. Roadshows began (03Sep), with pricing expected this week. 144a/RegS for life. Call Protection: NC3 then par + 3/4 coupon Equity Clawback Up to 40% within the first 3 years Change of Control. USD101 COC put. UOP: Repay revolver, fund future acquisitions and capex, and return capital to the Sponsor. BIZ: One of American Energy Partners (Other OTC: PGPHF - news) ' pure-play, sponsor-backed platform companies.

WHISPERS: High 7%

PRICE TALK: 9.00% yield area (including small OID). Books close tomorrow (11Sep) at 12pm.

ACOSTA INC

Acosta Inc, expected ratings Caa1/CCC+, announced a US$800m 8-year nc3 senior unsecured notes via GS(left)/JPM/MS/BARC. Co-manager Mizuho. Road shows from September 9 to 12, with NY group lunch on September 10. 144a/RegS w/o reg rights. UOP: The net proceeds of this offering will be used as part of the financing for the Acquisition and to pay certain fees, commissions and related expenses. BIZ: Acosta Sales & Marketing is a full-service sales, marketing and service company in North America. The company employs 400 workers at its corporate headquarters in Jacksonville, Florida and 22,000 at 65 locations in Canada and the United States.

WHISPERS: mid-7%

CALIFORNIA RESOURCES

California Resources, Ba1 by Moody's, announced a US$5bn multi-tranche offering via BAML(left)/JPM/CITI/WFS/GS/HSBC/MS/MUFG/USB. Structure is as follows: 5.5-year NCL, 7-year NCL and 10-year NCL. 144a/RegS applies. UOP: To make a cash distribution to Occidental. BIZ: California Resources Corporation is a subsidiary of Occidental Petroleum Corporation. After the distribution of its shares to Occidental's shareholders, the company will be a publicly-traded independent E&P company operating exclusively in California. California Resources is headquartered in Los Angeles, CA.

WHISPERS: 5.5% area on 10-year

PRICE TALK:

5.5yr 4.75-5%

7yr 5.25-5.5%

10yr 5.75-6%

ENPRO INDUSTRIES (NYSE: NPO - news)

EnPro Industries Inc announced a US$300m senior note offering due 2022. UOP: to repay borrowings under its senior secured revolving credit facility made to fund the purchase of any and all of $74.78 million in aggregate principal amount of its 3.9375% Convertible Senior Debentures due 2015 (the "Convertible Debentures") validly tendered, and accepted for purchase, pursuant to a cash tender offer (the "Tender Offer") that EnPro commenced on August 11, 2014.

EnPro intends to apply the remaining net proceeds to repay all remaining borrowings and accrued interest outstanding under its senior secured revolving credit facility, to pay fees and expenses related to the offering and the Tender Offer and for other general corporate purposes, which may in the future include retiring any Convertible Debentures not purchased in the Tender Offer. BIZ: EnPro Industries, Inc. is a leader in sealing products, metal polymer and filament wound bearings, components and service for reciprocating compressors, diesel and dual-fuel engines and other engineered products for use in critical applications by industries worldwide.

VISTAPRINT NV

Vistaprint N.V (NasdaqGS: VPRT - news) . , expected ratings B2/B, announced a US$250m 7-year nc3 senior note offering via JPM(left)/MUFJ/ST/SANT. Senior (Other OTC: SNIRF - news) co-managers are FT/HSBC/RBS. Road shows begin today (08Sep) with pricing expected this Friday (12Sep). 144a/RegS for life. First call at par plus 75% coupon. UOP: to repay outstanding indebtedness under a line of credit and a portion of the indebtedness outstanding under our revolving credit facility and to pay related fees and expenses. BIZ: Vistaprint N.V. operates as an online supplier of coordinated portfolios of marketing products and services to micro businesses worldwide.

CAPSTONE MINING CORP (Toronto: CS.TO - news)

Capstone Mining Corp, expected issue ratings B2/B+, announced a US$300m 8-year nc3 senior unsecured notes via CITI(left)/WFS. Co-managers are SCOTIA/CIBC/BMO/MIZ. Pricing expected Thursday (11Sep). Roadshow (HKSE: 0888-OL.HK - news) schedule: Monday - NYC with 12pm Group Investor Lunch, Tuesday - Boston with 12pm Group Investor Lunch, Wednesday - West Coast, Thursday - West Coast. NYC investor lunch 12pm on Monday. Boston investor lunch 12:30pm on Tuesday. 144a for life. USD101 COC put. Equity clawback 35% at par plus coupon within the first 3-years. MWC T+50bp. UOP: Repay existing credit facilities. BIZ: Capstone Mining Corp. is a Canadian base metals mining company, focused on copper.

TOWER INTERNATIONAL (NYSE: TOWR - news)

Tower International is planning to sell a US$250m senior unsecured note offering. UOP: used to prepay a portion of the issuers' existing $450 million Term Loan B due 2020. The company is also in the process of amending and restating its subsidiaries' $150 million asset-based revolving credit facility to convert it to a $200 million cash flow revolving credit facility. BIZ: Headquarters: Livonia, MI, Tower International LLC is a global designer and producer of structural components and assemblies used by most major automotive vehicle manufacturers. Expected to price 09/15.

W.R.GRACE & CO

W.R. Grace & Co. - Conn, expected tranche ratings Ba3/BB+, announced a US$1bn 2-tranche senior unsecured note offering via GS(left)/DB/BAML. Co-managers are Citi, Commerzbank (Xetra: CBK100 - news) , HSBC, KeyBanc, PNC, Scotiabank, SMBC, TD, UniCredit (Milan: UCG.MI - news) . 144a/RegS w/o reg rights. Roadshow September 10 - September 11, NY Group Lunch September 10, Boston Group Lunch September 11. Structure will consist of a 7-year NCL and a 10-year NCL. UOP: The net proceeds of this offering will be used: (i) to terminate obligations under the deferred payment agreement with the PI Trust for approximately $632 million; (ii) to partially fund the settlement of the warrant issued to the PI Trust; (iii) to repay amounts outstanding under the revolving credit facility; (iv) to pay certain fees and expenses incurred in connection with the notes offered hereby; and (v) for other general corporate purposes. BIZ: W. R. Grace and Company is a Columbia, Maryland- based chemical conglomerate. Grace is divided into three business segments - Grace Catalysts Technologies, Grace Materials Technologies and Grace Construction Products. (Reporting by Natalie Harrison; Additional reporting by Michael Gambale; Editing by Marc Carnegie)