Bond market volatility has stalled Kroger Co.'s $250 million junk bond offering, a company spokesman said yesterday.
"We made the decision to hold off on making the offering until the bond market stabilized," said Paul Bernish, a Kroger spokesman.
The Cincinnati-based supermarket chain decided to postpone the issue Monday and formally pulled it Tuesday, calling off road shows in New York and Boston, Bernish said.
The company filed a registration statement with the Securities and Exchange Commission on Sept. 18 to offer $250 million of senior secured notes due 1999, Bernish said. Citicorp Securities Markets Inc. was named as the lead underwriter, he said.
Kroger plans to reactivate the offering as soon as conditions permit, Bernish also said, adding that the deal will likely have the same structure.
"It's just a matter of when we think, and our adviser think, it's a more opportune time to present it," he said.
Some analysts speculated that Kroger was unable to find buyers at the level it wanted for the secured deal, emphasizing that they did not know for sure. The company has been able to price some previous deals in the 9% range.
Kroger priced its most recent new issue on Aug. 13. The $125 million of 9% senior subordinated notes due 1999 were priced at 99.488 to yield 9.10%.
Bernish said the company had not even gotten to the pricing state. Such untrue speculation, he added, is "making too much" of a "routine" decision that a lot of other companies will probably have to make.
One analyst said price wars, particularly in Detroit where Kroger weathered a 10-week strike and is now fighting to regain market share from A&P, have put the company under some pressure.
"So the earnings are not what I had expected earlier this year," the source said.
The analysts added, however, that Kroger is a geographically diversified company that has been active in refinancing its higher-cost debt.
In secondary trading, high-yield bond prices ended largely unchanged. Among gainers were Collins & Aikman Group.'s 11 7/8 senior subordinated debentures of 2001, which added about four points. U.S. Gypsum Co. bonds also ended higher. Both were recovering from recent price drops. High-grade bonds moved lower in the line with Treasuries.
New Issues
Mercantile Bancorp issued $150 million of 7.65% subordinated notes due 2002. The noncallable notes were priced at 99.20 to yield 7.741% or 138 basis points over comparable Treasuries. Moody's Investors Service rates the offering Baal, while Standard & Poor's Corp. rates it BBB-minus. Salomon Brothers Inc. lead-managed the offering.
Amsco International Inc. issued $100 million of step-up convertible subordinated debentures due 2002. The bonds are noncallable for three years followed by a two-year conditional call that allows the company to call the debentures provided stock is at or above the call price for 20 out of 30 trading days.
The step-up schedule for the debentures coupons proceeds as follows: 4.50% from Oct. 15, 1992 through Oct. 15, 1995; and 6.50% from Oct. 15, 1992, through Oct. 15, 2002. The debentures are convertible into Amsco common at $30.10, a 24.123% premium over Tuesday's closing stock price. J.P. Morgan Securities Inc. lead-managed the offering.
Federal Farm Credit Bank issued $100 million of floating rate notes due 1994 at par. The noncallable notes float daily at 255 basis points under the prime rate and pay quarterly. Lehman Brothers sole-managed the offering.
Yesterday's Ratings
Standard & Poor's has downgraded Woodward & Lothrup Inc.'s subordinated debt to CCC from B-minus, reflecting "further deterioration in the company's financial profile and escalating amortization requirements, as well as continued dependence on support from the Taubman Investment Co."
The action affects about $84 million of debt. The rating outlook is negative, a Standard & Poor's release says.
Acquired in a 1984 leveraged buyout by investor and shopping center developer Alfred Taubman, the company operates 17 Washington-based Woodward & Lothrup department stores and 15 Philadelphia-based John Wanamaker stores, the release says.
