Clients of Scudder Stevens & Clark "likely" will join a bondholders' lawsuit against Marriott Corp. tomorrow, an attorney representing the bondholders said yesterday.
Larry Kill, a partner at the law firm of Anderson Kill Olick & Oshinsky P.C., yesterday said when PPM America Inc. and eight other plaintiffs were planning the lawsuit, Scudder had expressed an interest in joining, but decided not to. Because of that, Anderson Kill decided it would allow Scudder's clients to participate in the lawsuit.
A Scudder spokeswoman yesterday said, "We [Scudder] are not beneficial owners of the bonds, and we don't plan to participate in the lawsuit."
She said she could not comment on whether any of the firm's clients were interested in joining the suit.
"As a policy, we do not discuss our client relationships," she said.
The suit, filed in United States District Court for the District of Maryland, alleges that Marriott failed to disclose a planned restructuring when it issued $400 million of senior notes in April and May.
A judge has set today as the deadline for amending the suit.
Some other investment firms or their clients have expressed an interest in joining the suit, Kill said. Before they are allowed to join, however, it must be decided whether their joining will "in anyway encumber our ability to prosecute the case effectively," Kill said.
On Oct. 5, Marriott announced plans to split its present operations in two, with one, Host Marriott, receiving most of the debt. In addition to the PPM America suit, some class action suits have been filed.
Elsewhere yesterday, new issues continued their brisk pace.
Jack Tate, director of Prudential Securities Inc.'s taxable fixed income syndicate desk, said a similar scenario unfolds every year at this time as issuers see a window of opportunity open.
Corporate issuers generally stay sidelined during November, when the Treasury's auction schedule is heavy and Thanksgiving also limits activity.
Issuance then picks up during the first two to two-and-a-half weeks in December, just before issuers and investors close their books for the year.
New Jersey-based Securities Data Co. said $4.18 billion of debt had been priced this week through Wednesday.
For the year through Wednesday, issuers have priced 1,880 debt deals totaling $287.7 billion, Securities Data's figures show. That count is already well past the 1991 tally of 1,617 deals totaling $200.5 billion.
Securities Data's figures are for nonconvertible corporate debt, excluding mortgage and asset-backed securities, but including agency issues.
In secondary activity, high-grade bonds passed a quiet day, with spreads moving in line with Treasuries. High-yield bonds ended firm and up in some spots.
New Issues
Amoco Canada issued $300 million of 7.25% notes due 2002. The noncallable notes were priced at 99.646, to yield 7.30%, or 40 basis points over comparable Treasuries. Moody's Investors Service and Standard & Poor's Corp. rate the offering triple-A. Goldman, Sachs & Co. lead managed the offering.
Philip Morris issued $300 million of 7.125% notes due 1999. The noncallable notes were priced at 99.585, to yield 7.201%, or 60 basis points over comparable Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A. First Boston Corp. lead managed the offering.
Wachovia Corp. issued $250 million of 7% subordinated notes due 1999. The notes were priced at 99.074, to yield 7.17%, or 59 basis points over comparable Treasuries. Moody's rates the offering A1, while Standard & Poor's rates it AA-minus. Merrill Lynch & Co. lead managed the offering.
Federal Home Loan Banks issued $206 million of 5.525% notes due 1995 at par. Noncallable for a year, the notes were priced to yield 20 basis points over three-year Treasuries. First Tennessee Bank Memphis lead managed the offering.
Federal Home Loan Banks issued $190 million of 6.580% notes due 1997 at par. Noncallable for a year, the notes were priced to yield 38 basis points over comparable Treasuries. Lehman Brothers lead managed the offering.
United Jersey Bank issued $175 million of 8.625% subordinated notes due 2002. The noncallable notes were priced at 99.44, to yield 8.71%, or 178 basis points over comparable Treasuries. Moody's rates the offering Ba1, while Standard & Poor's rates it BBB-minus. Merrill Lynch lead managed the offering.
Central Power & Light issued a two-part first mortgage bond offering totaling $140 million. The first tranche consisted of $25 million 7.125% bonds due 1999. The noncallable bonds were priced at 99.70, to yield 7.18%, or 60 basis points over comparable Treasuries. The second consisted of $115 million of 7.5% bonds due 2002. The noncallable bonds were priced at 99.89, to yield 7.515%, or 60 basis points over comparable Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A. Morgan Stanley & Co. lead managed the offering.
Kansas Gas & Electric issued $135 million of first mortgage bonds due 2003. The noncallable bonds were priced at 99.888, to yield 7.615%, or 70 basis points over 10-year Treasuries. Moody's rates the offering A3, while Standard & Poor's rates it A-minus. Dillon Read & Co. sole managed the offering.
Ithaca Industries issued $125 million of 11.125% senior subordinated notes due 2002. The notes are callable after five years at 105.5 moving to par in 1999. Moody's rates the offering B2, while Standard & Poor's rates it B. Merrill Lynch & Co. managed the offering.
Household Bank issued $100 million of 8.450% subordinated notes due 2002. The noncallable notes were priced at 99.93, to yield 8.461%, or 155 basis points over comparable Treasuries. Moody's rates the offering Baa 1, while Standard & Poor's rates it A-minus. Merrill Lynch lead managed the offering.
Box Energy Corp. issued $50 million of 8.25% convertible subordinated notes due 2002 at par. Noncallable for three years, the notes convert into common stock at $11 a share, a 14.29% conversion premium. They were rated B3 by Moody's and B-minus by Standard & Poor's. Paine Webber Inc. sole managed the offering.
