The July 4 holiday means Ralphs Grocery Co. will likely price its $300 million offering tomorrow or wait until early next week, a high-yield sources said yesterday.

The Compton, Calif.-based supermarket chain plans to use proceeds from those 10-year notes, an accompanying initial public offering, and a newly acquired bank line to refinance $400 million of junk bondds and some old bank debt, the high-yield source said.

Road shows for the bond and stock offerings ended Friday, the source said. Those offerings are part of a recapitalization by Ralphs Grocery and its parent, Ralphs Supermarkets Inc.

In a related move, Ralphs Grocery yesterday extended its cash tender offer to July 6 for those $400 million of 14% senior subordinated debentures due 2000, the company said yesterday in a release.

The extension marked the third since the original May 29 deadline, the high-yield source said. As of June 26, holders of about $301.5 million principal amount or 75.4% of the debentures outstanding had been tendered. That is just slightly more than the $301.3 million or 75.3% of the debentures that had been tendered by June 12.

However, the high-yield source said the company will not sweeten its tender offer. The amount tendered so far is sufficient, she said, adding that the company has extended the tender offer only to coincide with the closings of the stock and bond offerings used to fund the offer. The company said it may extend the tender deadline again.

Merrill Lynch & Co. and BT Securities Corp. are the dealer managers for the tender offer, Ralphs said.

Ralph plans to offerf the $300 million of senior subordinated notes through Merrill, BT Securities, and Lehman Brothers.

Meanwhile, Ralphs Supermarkets plans to offer 6.07 million shares of common stock through Merrill Lynch, Lehman, and Morgan Stanley. Ralphs Supermarketss will sell 5 million of those shares, while Federated Department Stores Inc. will sell 1.07 million. Ralphs will not receive any of the proceeds from the sale of Federated's shares. Federated will still maintain a small equity stake in the company after the initial public offering, the source said.

A high-yield analyst following the company observed, "It's a well positioned, well managed, very efficient supermarket operator with solid growth plans."

In other news yesterday, Continental Medical Systems Inc. said it had filed with the Securities and Exchange Commission to offer up to $200 million principal amount of senior subordinated notes maturing 2002. The company plans to offer the notes as soon as possible after the SEC declares the registration statement effective, a Continental Medical release said.

Merrill Lynch; Donaldson, Lufkin & Jenrette Securities Corp.; and Citicorp Securities Markets Inc. were named underwriters. Continental Medical, based in Mechanicsburg, Pa., is the biggest independent provider of comprehensive medical rehabilitation services. It has annualized net operating revenues of more than $700 million, the release said.

In secondary trading yesterday, hopes that the Federal Reserve would erase monetary policy and a sense that inflation remains in check pushed investment-grade bond prices up 1/4 point in the short end and 1/8 point higher in the 30-year sector. High-yield bonds finished unchanged in light volume.

New Issues

BankAmerica Corp. issued $500 million of 7.75% subordinated notes due 2002. The noncallable notes were priced at 98.60 to yield 7.955% or 84 basis points over 10-year Treasuries. Moody's Investors Service rates the offering A3, while Standard & Poor's Corp. rates it A-minus. Salomon Brothers Inc. lead managed the offering.

Federal Paper Board issued a two-part offering totaling $175 million. The first tranche consisted of $50 million of 8.125% debentures due 2002. The noncallable debentures were priced at 99.759 to yield 8.16% or 105 basis points over comparable Treasuries. The second piece consisted of $125 million of 8.875% debentures due 2012 at par. The noncallable debentures were priced to yield 110 basis points over 30-year Treasuries. Moody's rates the offering Baa3, while Standard & Poor's rates it BBB-minus. J.P. Morgan Securities managed the offering.

Houston Industries Inc. issued $100 million of 7.875% debentures due 2002. The noncallalbe debentures were priced at 99.216 to yield 7.99% or 87 basis points over comparable Treasuries. Moody's rates the offering Baa2, while Standard & Poor's rates it BBB. First Boston Corp. sole managed the offering.

Carnival Cruise Lines issued $100 million olf 4.50% convertible subordinated notes due 1997. Noncallable for four years, the notes convert into common stock at a price of $34.75, a 22.46% conversion premium. Moody's rates the offering Baa2, while Standard & Poor's rates is BBB. Goldman, Sachs & Co. lead managed the offering.

Wisconsin Power & Light issued $72 million of 7.60% first mortgage bonds due 2005 at par. The noncallable bonds were priced to yield 49 basis points over 10-year Treasuries. Moody's rates the offering Aa2, while Standard & Poor's rates it AA. Goldman Sachs sole managed the offering.

Ratings News

Corporate credit quality ebbed in the second quarter as downgrades surpassed upgrades for the 13th consecutive quarter, according to Standard & Poor's Credit Week.

Standard & Poor's noted, however, that the pace of downgrades appears to be slowing, an agency release said.

Early data show the agency downgraded about $90.2 billion of debt and upgraded about $38.4 billion. downgrades totaled 97, while upgrades totaled 59. That compares to first-quarter figures of 117 downgrades totaling $156 billion and 54 upgrades totaling $56 billion.

Fitch Investors Service Inc. has given a BBB-minus rating to Time Warner Inc.'s new $1.3 billion redeemable reset note issue. The assignment marks the first time the agency has rated Time Warner's debt, a release from the rating agency says.

The agency also assigned BBB-minus ratings to two senior note issues by Time Warner Entertainment, totaling $850 million. Fitch said the credtit trend is improving.

"Fitch's rating of Time Warner follows realignment of its operations and capital structure and the creation of Time Warner Entertainment, a new self-financing limited partnership that includes the assets of the cable business, filmed entertainment and HBO programming businesses," the agency's release said, "Toshiba and C. Itoh & Co. will each invest $500 million in TWE."

That would give Time Warner a 87.5% interest, while Toshiba and C. Itoh will each have a 6.25% interest in TWE.

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