Specialty Retailers Inc.'s $100 million debt offering became another casualty of a less friendly initial public offering market yesterday, high-yield and other sources said.

The $100 million of senior subordinated notes due 2002 through Lehman Brothers were part of a recapitalization plan that was postponed after the company pulled its initial public offering of common stock as announced yesterday.

"Specialty Retailers postponed its initial public offering because of weak demand in the domestic institutional equity market," Bernard Fuchs, chief executive officer of the 230-store apparel business, said in a release.

Specialty Retailers planned to sell 7.25 million shares of common stock at between $13 and $15 a share. In addition to the $100 million note offering, the recapitalization also included a tender offer for the company's 14 5/8% senior subordinated notes due 1999 and the redemption of some private debt and preferred stock issues.

Mr. Fuchs said those institutional equity investors have apparently been badly "burned" over the past six to eight months and were unwilling to purchase the stock at the price Specialty Retailers wanted. He said Specialty Retailers will return when the market comes back.

"I think it's a good company."

one analyst said. V

Edward Mally, head of high-yield research at Salomon Brothers Inc., observed that the initial public offering market has become pickier when it comes to high-yield credits.

"Clearly the window is not open as wide as it had been," Mr. Mally said yesterday, referring to the climate of several months ago. The market is not as receptive to deleveraging stories as it once was, he said.

"It's looking for operating performance," Mr. Mally said.

Sources cited Ralphs Supermarket Inc. and Revlon Inc. as other initial public offering market casualties. Ralphs had planned to sell 6.075 million common shares, but postponed it last month because the equity market had changed dramatically since the company first contemplated the offering. The price that Ralphs could get for its equity then failed to reflect the company's high-quality and true value, Chairman Byron Allumbaugh said in a release at the time.

Revlon postponed its initial public offering July 30, also following weak demand by U.S. institutional buyers, according to James Conroy, senior vice president and special counsel at McAndrews & Forbes Holdings Inc. McAndrews & Forbes currently owns 100% of Revlon's stock, he said.

Revlon's proposed deal consisting of 11 million common shares at $14 each drew healthy demand from overseas and retail investors, Mr. Conroy said. He emphasized that the offering had been delayed rather than abandoned.

In secondary trading, high-yield bond prices gained 1/4 to 1/2 point. High-grades lagged the Treasury market's losses, surrendering about 1/2 point in the 30-year sector.

New Issues

Kroger Co. issued $125 million of 9% senior subordinated notes due 1999. Callable at par after four years, the notes were priced at 99.488 to yield 9.10%. Moody's Investors Service rates the offering B1, while Standard & Poor's Corp. rates it B. Goldman, Sachs & Co. lead managed the offering.

PHH Corp. issued $100 million of 3.45% medium-term notes due 1993. The noncallable notes were priced initially at par. Moody's rates the offering A2, while Standard & Poor's rates it A-plus. J.P. Morgan Securities Inc. sole managed the offering.

In rating news, Standard & Poor's has upgraded Hoechst-Celanese Corp.'s long-term debt to AA-minus from A-plus, affecting $500 million of long-term debt. The agency also affirmed the company's A-1-plus commercial paper rating, as well as A-1-plus commercial paper rating of its immediate parent, Hoechst Corp. Hoechst AG of Germany guarantees Hoechst Corp.'s program and is the ultimate parent of both companies, according to a Standard & Poor's release.

"Hoechst-Celanese's rating reflects S&P's reassessment of the company's position within the group," the release says.

Standard & Poor's has downgraded Continental Grain Co.'s senior debt to BB-minus from BB. The action affects about $94.5 million of rated debt, according to a Standard & Poor's release.

"The rating downgrade reflects Continental's reduced profitability levels following its poor operating performance in fiscal 1992, as well as continuing weak industry conditions and limited prospects for near-term improvement in the firm's dominant grain merchandising business," the release says.

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