Rogers Cantel Mobile Inc.'s plans to begin the roadshow for its $250 million note issue the week of Oct. 21, capitalizing on the junk bond market rally and a friendlier reception for cellular communications credits, a company spokesman said yesterday.
"You're starting to see some very good cellular transactions in the U.S., a lot higher than where they were a year ago," the spokesman at the Toronto-based company said. He requested anonymity.
"And also this year, the high-yield bond market has really made a comeback," he said.
The roadshow will start in New York and proceed to Hartford, Cincinnati, Milwaukee, Chicago, Boston, Des Moines, Los Angeles, Toronto, and Winnipeg -- among several other cities -- the spokesman said.
Rogers Cantel Mobile will use proceeds from the senior secured notes due 2001 to pay down existing bank debt. Merrill Lynch & Co. will manage the offering.
Tapping the U.S bond market allows Rogers Cantel Mobile to diversify its financing sources, the spokesman said. Three large Canadian banks now provide most of the company's financing. The source declined to name them.
Rogers Cantel Mobile also plans to assemble a new bank syndicate and increase its revolving credit facility to $1.1 billion from $800 million, another method of diversifying its financing sources. The three banks now provide most of that $800 million.
Rogers Cantel Mobile's proposed $250 million offering follows a $136 million issue of liquid yield option notes issued by Rogers Communications Inc., Rogers Cantel Mobile's ultimate parent. That deal closed August 16, a day after Rogers Cantel Mobile's immediate holding company, Rogers Cantel Mobile Communications Inc., completed a $280 million initial public offering. The stock deal consisted of 15 million Class B subordinated voting shares. Rogers Communications owns 84% of the total shares and commands 98.1% of the total votes.
Standard & Poor's Corp. assigned a BB-minus rating to the $250 million issue. Rogers Cantel Inc., a holding company, has guaranteed the offering, Michael Petit, a senior vice president at Standard & Poor's, said.
The agency said its rating reflects Rogers Cantel Mobile's heavy borrowing linked to large capital investments incurred to put its network in place.
The rating also acknowledged Rogers Cantel Mobile's position as the largest and only nationally integrated cellular network operator, and its "favorable growth prospects."
"They have a very large competitive advantage," Petit said.
The company is the only cellular communications company now authorized by the Canadian government to provide service nationwide, he said. No other company has announced plans to challenge it, Petit said.
"It was like AT&T 20 years ago," he said.
Elsewhere in the high-yield market yesterday, P&C Food Markets Inc. and American Medical International Inc. priced their deals.
P&C Food issued $125 million of 11.5% senior notes due 2001. The notes, priced at par, are noncallable for five years. Salomon Brothers Inc. managed the offering. Moody's rates the notes Ba3, while Standard & Poor's rates them B.
The high-yield market overall was up about a 1/4 to 3/8 yesterday, while high-grade corporates were down slightly, traders said.
American Medical issued $100 million of 11% senior secured notes due 2000. The notes are noncallable for five years after which they can be called at 103.143 declining to par in the eighth year. First Boston Corp. managed the offering, with Merrill and Salomon as co-managers. Moody's rates the notes Ba3, while Standard & Poor's rates them B-plus.
Late Monday, Eastman Kodak Co. issued a $3.2 billion issue of zero-coupon convertible subordinated notes. The notes were priced at 265.08 for each $1000 of principal amount to yield 6.75%. Called liquid yield option notes, they are non-callable for two years with a 250% provision. The issue was increased from $1.6 billion earlier. The notes convert into Eastman Kodak common stock at $47.15 a share, a 15% conversion premium over Monday's closing price on the stock. Moody's rates the deal A-3, while Standard & Poor's rates it BBB-plus.
