Short Takes on High Yields


O'Sullivan Industries received a B3 rating from Moody's Investors Service on its proposed $110 million offering of senior subordinated notes, and a B1 rating on its proposed $165 million secured credit facility. The company's proposed $25 million senior discount notes were rated Caa1. Moody's said the ratings reflected the company's heavy debt level following a proposed leveraged recapitalization by Bruckmann Rosser Sherrill & Co. and its management, as well as the expected thin EBITDA coverage...

High yield issuer Ocean Energy last week finalized the sale of its Enstar subsidiary to Semco Energy. Ocean said it plans to use the proceeds from the sale, about $290 million, to pay down existing debt and for other corporate purposes. Ocean currently has more than $1.3 billion in outstanding high yield bonds in nine separate issues...

Pinnacle Holdings announced third quarter results last week, posting increased revenues and cash flow but also a decrease in net income. For the quarter, revenues were $23.1 million, an increase of 169% from the year-ago period of $8.6 million; and cash flow from tower operations increased 141.8% to $16.2 million from $6.7 million. The cash flow figures beat out CIBC World Markets' expectations by 20%, according to the investment bank. The net loss for the three-month period was negative $15.5 million, a drop from the negative $10.7 million in the same time period last year...

CHS Electronics last week had its debt lowered to Caa3 on its $200 million senior note issue. The rating change stems from increasing liquidity problems, among other things, according to Moody's Investors Service. Some of the company's European and Latin American operating subsidiaries have been unable to remedy their covenant violations under local credit facilities, according to the rating agency. It is likely that the company will sell a controlling share in some of those overseas units to groups led by existing management...