Telecom Rules the Day; Buying Frenzy in Cable


Telecom issues from the well-known names continue to dominate the primary market, and it appears that will be the case for the near future, investors said last week.

The biggest deal last week was VoiceStream Wireless Corp.'s $1.5 billion offering, which was increased from an original plan of $1 billion due to high demand, according to market observers. And as a further indication of strong demand for big household names, VoiceStream traded up immediately in the secondary by about three points.

Public deals in the offing include Alliance Atlantis, which is expected to come with a $200 million senior subordinated transaction of '09 notes with Goldman Sachs as the lead manager, and Metromedia Fiber, which is marketing a $600 million offering of senior notes with a 2009 maturity. Both of those are expected to price this week.

Deals that will be sold under Rule 144A and are expected to price next week include Georgia Gulf Corp., which will come with a $250 million transaction of '07 notes via Chase Securities; North American Van Lines, which will come with a $250 million senior subordinated offering of '09 notes managed by Chase Securities and Bank of America Securities; and WRC Media, which is expected to come with a senior subordinated note offering worth $150 million with a maturity of 2004 underwritten by Donaldson, Lufkin & Jenrette.

Buying Free For All

Some sources said that the European market is poised to see more new issues in the coming months to finance all the cable acquisitions that are likely to occur. A number of companies are in the selling mode.

Deutsche Telekom, for one, is selling its cable assets that include six million subscribers and could fetch up to $10 billion. In fact, Europe's largest phone company was waiting on bids just last week on those cable assets to comply with European Union competitive rules.

Telia, based in Sweden and set to merge with Norway-based Telenor, has 1.2 million cable subscribers for sale, analysts said. And Switzerland-based Cablecom also has cable assets for sale, which are being bid on by UPC and Mannesman AG, Germany's biggest mobile phone operator.

As far as who the likely buyers are of the assets, it's almost anybody's guess at this point, analysts said. Other cable concerns like UPC and NTL are potential suspects as are investment firms such as Blackstone Group.

Deals Of The Week

VoiceStream priced its much-ballyhooed offering at par to yield 441 basis points over Treasurys. It is initially callable in 2004 at 105.188, and then prices fall in subsequent years to 103.458, 101.729 and par.

Stericycle Inc., a hazardous waste disposal company, priced $125 million of 10-year notes at par to yield 12.375%. Donaldson Lufkin & Jenrette was the underwriter. The company will use proceeds to help finance its purchase of the medical waste operations of Allied Waste Industries.

The issue is first callable in 2004 at 106.1875, and then prices fall in succeeding years to 104.25, 102.0625 and par thereafter.

LTV Corp. sold a $275 million issue at a slight discount, 99.2690, to yield 586 basis points over Treasurys. The coupon was 11.75%.