Marriott Corp. fired the latest shot in the war with its PPM America Inc. bondholders by filing a $110 million countersuit against them.
"Our claim is basically that PPM sought to interfere both in our deals with our financial advisers ... and also that it conspired to organize a group boycott of Marriott hotels and other services," said Robert T.
Souers, a Marriott spokesman. Souers confirmed a Reuters report concerning the suit, which he said was filed on May 7 in U.S. District Court in Baltimore.
The filing charges PPM America, which is leading several other institutional investors in a lawsuit designed to block Marriott's proposed restructuring plan, with "tortious interference," he said.
"Someone who's guilty of that has interfered in contracts in an illegal way," Souers said.
Marriott announced in mid-November that it had reached a mutual agreement with Merrill Lynch & Co. that ended the firm's role as a financial adviser on the restructuring, Souers said.
The counterclaim also alleges that PPM America damaged Marriott's relationship with Houlihan Lokey Howard & Zukin, a Marriott adviser, he said. While that relationship has not been officially ended, it is an inactive one, Souers said.
Lawrence Kill, an attorney with Anderson Kill Olick & Oshinsky, which is representing the PPM America bondholders, dismissed the counter suit as a tactical maneuver.
"To me this is just a tactical maneuver, a ploy to distract us from the case," he said. If Marriott had indeed suffered $110 million of damage, why did the company wait until the last minute to file the claim, Kill questioned.
In other news yesterday, a former Donaldson, Lufkin & Jenrette Securities Corp. high-yield trading manager said that he has formed a broker-dealer called Schlesinger Securities Corp.
Alan H. Schlesinger said yesterday that the new firm, which is based in Great Neck, N.Y., is designed to serve institutional junk investors' research and trading needs.
"I have some pretty good relationships and I'm continuing to build upon the relationships that I have made in the past and also develop new relationships," Schlesinger said.
The firm will focus on uncovering value in the secondary market, which is currently being overshadowed by what Schlesinger called the recent "glut" of new offerings.
According to Securities Data Co., 105 high-yield deals totaling $20.5 billion have arrived this year through Wednesday. That compares with 236 deals totaling $39.6 billion in 1992.
Working with Schlesinger at the new firm are Chuck Strausser, a former Donaldson, Lufkin & Jenrette vice president, and Emily Samuels, former manager of equity trading at Beacon Capital Management.
Schlesinger managed DLJ's high-yield trading operation from 1987 to 1992. Previously, he ran trading desks at Bear, Stearns & Co. and L.F. Rothschild. At L.F. Rothschild he was responsible for both the high-yield and high-grade trading operations.
Schlesinger Securities is a member of the National Association of Securities Dealers and Securities Investor Protection Corp. The firm will clear through Cowen & Co. on a fully disclosed basis, the release says.
In a February interview, Schlesinger said was considering starting a small broker-dealer. He left Donaldson Lufkin on Dec. 21.
In secondary trading, high-yield bonds move up 1/4 point overall, while Foodmaker Inc.'s bonds rose after news of a transaction involving its Chi-Chi's Inc. restaurants. Spreads on high-grade bonds ended unchanged.
Federal National Mortgage Association issued $300 million of 5.40% medium-term notes due 1998 at par. Noncallable for three years, the notes were priced to yield 16 basis points over comparable Treasuries. Merrill Lynch managed the offering.
Heller Financial issued $200 million of 6.5% notes due 2000. The noncallable notes were priced at 99.70 to yield 6.555%, or 87.5 basis points over comparable Treasuries. Moody's Investors Service rates the offering A2, while Standard & Poor's Corp. rates it A. Merrill Lynch was the lead manager for the offering.
Chemical Bank issued $200 million of 7% subordinated notes due 2005 at par. The noncallable notes were priced to yield 93 basis points over comparable Treasuries. Moody's rates the offering Baal, while Standard & Poor's rates it A-minus and Duff & Phelps Credit Rating Co. rates it A. Goldman, Sachs & Co. was the lead manager.
Long Island Lighting Co. issued $200 million of 7.125% debentures due 2005. The noncallable debentures were priced at 99.80 to yield 7.15%, or 110 basis points over comparable Treasuries. Moody's rates the offering Baa3, while Standard & Poor's, Duff & Phelps, and Fitch Investors Service rate it BBB-minus. Lehman Brothers was the lead manager.
Florida Power & Light issued $175 million of 7.625% first mortgage bonds due 2024. The noncallable bonds were priced at 98.25 to yield 7.775%, or 80 basis points over comparable Treasuries. Moody's rates the offering A2, while Standard & Poor's and Duff & Phelps rate it A. Kidder, Peabody & Co. won competitive bidding to underwrite the offering.
La Quinta Motor Inns issued $120 million of senior subordinated notes due 2003 at par. The notes are callable after five years at 103.469. Moody's rates the offering B2, while Standard & Poor's rates it BB-minus. Donaldson Lufkin was the lead manager for the offering, which was increased from $100 million.
News America Holdings issued $100 million of 7.5% senior notes due 2000. The noncallable notes were priced at 99.826 to yield 7.531%, or 186 basis points over comparable Treasuries. Moody's rates the offering Ba2, while Standard & Poor's rates it BBB-minus. Citicorp Securities Markets Inc. was the sole manager.
Federal Home Loan Banks issued $100 million of 5.450% notes due 1998 at par. Noncallable for a year, the notes were priced to yield 20 basis points over comparable Treasuries. Merrill Lynch managed the offering.
Allnet Communication issued $85 million of 9% notes due 2003. The notes were priced at 99.187 to yield 9.125%. They are callable after five years beginning at 103 before moving to 101.5 and then to par. Moody's rates the offering B2, while Standard & Poor's rates it B-minus. PaineWebber Inc. was the lead manager.
Buckeye Cellulose issued $70 million of 10.25% senior notes due 2001 at par. The notes are callable after five years at 103.875, moving to par in 2000. Moody's rates the offering B2, while Standard & Poor's rates it B. Merrill Lynch managed the offering.