Gaylord Container Corp. will use proceeds from a planned $525 million offering mainly to redeem other debt and prepay "a significant amount" of its bank borrowings, a spokeswoman said yesterday.
The news lifted Gaylord's 10 1/4% senior subordinated pay-in-kind notes due 2001 up as much as 10 points during the day, and they closed six to seven points higher.
Gaylord's 13 1/2% senior subordinated debentures due 2003 rose three points. Those issues would be redeemed with the offering's proceeds.
The Deerfield, Ill., company "is taking advantage of what we believe are favorable market conditions to do a refinancing," the spokeswoman, Kathryn Chieger, said.
The public offering will mark Gaylord's first since emerging from a prepackaged Chapter 11 bankruptcy on Nov. 2, she said.
One high-yield buyer couldn't say for sure how the market would receive new debt, but said, "there's plenty of money in the high-yield market to do it."
Gaylord yesterday said it filed a preliminary registration statement with the Securities and Exchange Commission covering $175 million of senior notes due 2001, $150 million of senior subordinated debentures due 2003, and $200 million of nets proceeds for senior subordinated discount debentures due 2005.
If the company completes the offering, Gaylord plans to redeem all $208.2 million principal amount of the 10 1/4% pay-in-kinds and all $182.3 million principal amount of the 13 1/2% debentures at 100% of their principal amounts plus accrued interest to the date of redemption.
BT Securities Corp. and Donaldson, Lufkin & Jenrette Securities Corp. would underwrite the proposed offering.
Gaylord Container makes and distributes corrugated containers, containerboard, unbleached kraft paper, multiwall bags, and grocery bags and sacks.
In secondary trading and yesterday, high-yield bonds ended unchanged to 1/8 point higher. Spreads on high-grade bonds held steady, with some tightening in General Motors Acceptance Corp. issues.
New Issues
Ohio Edison issued a three-part first mortgage bond offering totaling $260 million.
The first tranche consisted of $80 million of 6.375% bonds due 2000. The noncallable bonds were priced at 99.36 to yield 6.49%, or 85 basis points over comparable Treasuries.
The second consisted of $80 million of 6.875% bonds due 2005. The noncallable bonds were priced at 99.155 to yield 6.98%, or 100 basis points over comparable. Treasuries,
The third piece consisted of $100 million of 7.875% bonds due 2023. Noncallable for 10 years, the bonds were priced at 98.88 to yield 7.c74%, or 112 basis points over comparable Treasuries, Morgan Stanley & Co. managed the offering.
Digital Equipment Corp. issued $250 million of 7.75% debentures due 2023. The noncallable debentures were priced at 98.512 to yield 7.88%, or 104 basis points over comparable Treasuries. Moody's Invesors Service rates the offering A2, while Standard & Poor's Corp. rates it A-plus. Lehman Brothers managed the offering.
Federal Home Loan Mortgage Corp. issued $200 million of 4.55% notes due 1996 at par. Noncallable for a year, the notes were priced to yield 20 basis points over comparable Treasuries Merrill Lynch & Co. managed the offering.
Pacificorp issued $150 million of 6.75% first mortgage and collateralized trust bonds due 2005. The noncallable bonds were priced at 99.869 to yield 80 basis points over comparable Treasuries. Moody's rates the offering A3, while Standard & Poor's rates it A-minus. Goldman, Sachs & Co. managed the offering.
Federal Home Loan Banks issued $139 million of 4.53% notes due 1996 at par. Noncallable for a year, the notes were priced to yield 20 basis points over comparable Treasuries. Merrill Lynch managed the offering.
Federal Farm Credit Bank issued $100 million of 4.25% step-up medium-term notes due 1996. The notes were priced at par to yield 100 basis points over the year Treasury bill. They are noncallable for a year, after which the coupon steps up to 5.05%. Merrill Lynch managed the offering.
Student Loan Marketing Association issued $100 million of 4.25% step-up notes due 1998. They were priced at par to yield 100 basis points over the year Treasury bill. The notes are noncallable for a year, after which the coupon steps up to 6.05%. Merrill Lynch managed the offering.
Georgia Power issued $75 million of 7.75% first mortgage bonds due 2023. Nonrefundable for five years, the bonds were priced at 99.08 to yield 7.83%, or 100 basis points over comparable Treasuries. Moody's rates the offering A3, while Standard & Poor's rates it A-minus. A group led by Goldman Sachs won competitive bidding to underwrite the offering.
Georgia Power also issued $50 million of 6.875% first mortgage bonds due 2008. Noncallable for five years, the bonds were priced at 99.125 to yield 6.97%, or 100 basis points over 10-year Treasuries. Moody's rates the offering A3, while Standard & Poor's rates it A-minus. A group led by First Boston managed the offering.
Rating News
Moody's has lowered International Business Machines Corp.'s long-term debt rating and those of its financially supported, wholly owned subsidiaries IBM Credit Corp., IBM International Finance N.V., and IBM Japan Ltd. to A1 from Aa2.
The action affects about $18 billion of debt.
Elsewhere, the White House yesterday said it will nominate Aida Alvarez, vice president of public finance for First Boston Corp. in San Francisco, as the head of a new Office of Federal Housing Enterprise Oversight at the Department of Housing and Urban Development.
The senior banker on First Boston's state of California accounts, Alvarez would be the first regulator to fill the post created last year by Congress to oversee the Federal National Mortgage Association and Federal Home Loan Mortgage Corp.
The Puerto Rican native graduated from Harvard College in 1971 and has been a key player on the Clinton administration's transition team focusing on the Securities and Exchange Commission. She also co-chaired the national unit of the Women's Advisory Committee of the Clinton-Gore Campaign.
Alvarez is active in new business development at First Boston, with a focus on infrastructure financings, particularly in the Southwest, New York State, and California. She is the senior member of teams that manage transactions for San Antonio's public utility and New York's Metropolitan Transportation Authority.
A former television news anchor in New York City, Alvarez was vice president for public finance at Bear, Stearns & Co. in New York from 1985 to 1988 and vice president for public affairs at New York City Health & Hospitals Corp. from 1984 to 1985. She has been active on a number of panels, including the Rebuild L.A. Finance Task Force and the California Council for Environmental and Economic Balance.
Vicky Stamas contributed to this column.
