Spreads on RJR Nabisco bonds widened about 20 basis points yesterday after the company yanked a stock offering tied to the performance of its food businesses.

Since RJR Nabisco Holdings Corp. announced its plans close to four months ago. the market value of similar food companies has declined "significantly," a company release says.

"This decline in the market would make it difficult to successfully complete an offering at the price range stated in its offering prospectus." the release says.

Proceeds from the offering were expected to total as much as $1.7 billion.

Stewart Morel, a vice president and industrial analyst at UBS Securities Inc., said RJR Nabisco's 7 5/8% debt of 2003 was bid at a 230 basis point spread over comparable Treasuries after the announcement, compared with a 210 basis point bid before the news.

"The debt markets were counting on an equity infusion to bolster the balance sheet." Morel said when asked to explain the widening.

RJR Nabisco said, however, that its improved balance sheet leaves it in good shape and with " no compelling need to raise equity capital."

Charles M. Harper, RJR Nabisco chairman and chief executive officer, said in the release, "Over the past few years, RJR Nabisco has made tremendous progress in strengthening its balance sheet."

Harper added that RJR is currently capitalized at an investment-grade level and has no need to raise capital in an unfriendly market environment.

"Our food business has a stable of brands that are second to none," Harper said. "We have a very compelling success story to tell at Nabisco and have no intention to sell an interest in that business for less than a full and fair value."

In other news, investment adviser PPM America Inc. is suing Goldman, Sachs & Co. and other firms involved in a 1988 leveraged buyout of Bucyrus-Erie Co. and some later transactions.

PPM America yesterday filed a securities fraud and fraudulent conveyance suit on behalf of Jackson National Life Insurance Co., a Michigan-based insurer that holds $60 million of Bucyrus-Erie bonds, according to a release from law firm Anderson Kill Olick & Oshinsky, which is representing PPM America in the suit.

Jackson National purchased the bonds in 1990, the release says. Bucyrus-Erie, which makes surface mining equipment, was not named in the suit, which PPM America filed in U.S. Federal Court in New York.

The release alleges that Bucyrus-Erie, which was founded in 1880, was largely profitable before the Goldman Sachs-led leveraged buyout.

Goldman got a 49.9% stake in the company for $1 million. Since the buyout, the release says, Bucyrus-Erie has suffered net losses triggered mainly by the heavy debt load assumed in the buyout.

"PPM's complaint aneges that the Goldman-led buyout constituted a fraudulent conveyance in favor of various investors who profited to the detriment of Bucyrus-Erie and who were also named as defendants." the release from PPM America's lawyers says. "For its scant $1 million equity stake, Goldman Sachs reaped millions of dollars in transaction fees."

The holders of other Bucyrus-Erie debt, which constituted a major portion of the sums paid to shareholders in the LBO, also benefited "substantially" from both the 1988 buyout and an exchange offer for the company's bonds made in 1989, the release alleges.

Jackson National Life claims that Bucyrus-Erie's deteriorating financial health led Goldman Sachs to "fraudulently misrepresent" the sale of new bonds to Jackson in 1990.

"Jackson charges that the broad scheme to hinder creditors culminated in the widely reported sale-leaseback of Bucyrus-Erie's South Milwaukee plant to a fund managed by Greycliff Partners Ltd. in 1992," the release says. "Greycliff is a New York partnership managed by Mikael Salovaara, a former Goldman Sachs partner who left the firm in 1991 amid allegations of impropriety by the Water Street Fund, a Goldman Sachs-led investment partnership."

Yesterday's suit names Salovaara and former Goldman partner Frederick Eckert as defendants.

A spokesman for Greycliff said the suit "has no merit."

Goldman Sachs did not comment.

In secondary trading yesterday, spreads on high-grade bonds were unchanged. High-yield bonds ended firm.

Now Issues

Florida Power & Light issued $230 million of 5.50% first mortgage bonds due 1999. The noncallable bonds were priced at 98.75 to yield 5.75% or 55 basis points over when-issued five-year Treasuries. Moody's Investors Service rates the offering A2, while Standard & Poor's Corp. and Duff & Phelps Credit Rating Co. rate it A. A group led by Merrill Lynch & Co. won competitive bidding to underwrite the offering.

Federal National Mortgage Association issued $200 million of step-up medium-term notes due 1998 at par. The notes were priced to yield 4.80% initially. They are noncallable for two years, after which the coupon increases to 5.95%. They were priced to yield a spread of 60 basis points over two-year Treasuries and, later, 74 basis points over five-year Treasuries. Lehman Brothers managed the offering.

McDonnell Douglas Corp. issued $200 million of 8.25% senior notes due 2000 at par. The noncallable notes were priced to yield 269 basis points over comparable Treasuries. Moody's rates the offering Ba2, while Standard & Poor's rates it BBB. Duff & Phelps rates it A. Merrill Lynch lead-managed the offering.

Air Products & Chemicals Inc. issued $100 million of 6.25% notes due 2003. The noncallable notes were priced at 99.135 to yield 6.368% or 48 basis points over comparable Treasuries. Moody's rates the offering Al, while Standard & Poor's rates it A-plus. Lehman Brothers lead-managed the offering.

Standard & Poor's affirmed its BBB-minus senior debt ratings for RJR Nabisco Holdings Corp. and its units, along with its BB-plus rating on the corporation's subordinated debt, preferred equity redeemable cumulative stock, and cumulative convertible preferred stock ratings.

Rating News

The rating agency also affirmed its A-3 commercial paper rating on RJR Nabisco Inc. Approximately $14 million of debt is outstanding for the combined entities.

"The affirmation follows the company's announcement that it has decided not to proceed with its public offering of a new class of common stock tied to the earnings of its food operations." a Standard & Poor's release says. "Proceeds of the public offering, anticipated to be about $1.5 [billion] to $1.7 billion, were expected to be used to modestly reduce debt leverage, currently about 62% of total capital."

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