More on ARC's recent private placement "Notes" sale (certainly nothing that would interest you, but I'm posting this anyway)

ARC recently announced that it had completed the sale of $200 million in Notes via a private placement and that the notes were priced to yield 11%. I was surprised at the high rate of interest ARC is going to be paying on these notes.

Trading (volume) activity in ARC stock has been very high the past week, during which time ARC’s price-per-share has declined. I asked a financially-savvy friend for his opinion about the recent high volume of trading in ARC stock, and he said that the higher volume (with the price-per-share trending down slightly) could be because “capital structure arbitrage” firms have bought the new ARC Notes and, as a hedge against their investment in the Notes, are shorting shares of ARC stock. I had no idea what he meant when he said “capital structure arbitrage", and, after Google-research and reading a couple of articles about that subject, I still don’t know how that works. Maybe you do?

I also looked at a three other fairly recent private placement unsecured “Notes” offerings; Scotts, SAIC, and Landry’s, to compare them to the yield on ARC’s Notes. Scotts and SAIC (both public companies) got a very decent interest rate compared to the interest rate ARC is going to be paying. Landry’s (private company) is going to be paying even a higher interest rate than ARC.


Dec 13 2010 (Reuters) - Scotts Miracle-Gro Company (SMG.N) on
Monday sold $200 million of senior notes in the 144a private
placement market, said IFR, a Thomson Reuters service.
Bank of America Merrill Lynch and JP Morgan were the joint
bookrunning managers for the sale.
BORROWER: SCOTTS MIRACLE-GRO COMPANY
AMT $200 MLN COUPON 6.625 PCT MATURITY 12/15/2020
TYPE SR NTS ISS PRICE 100 FIRST PAY 6/15/2011
MOODY'S B1 YIELD 6.625 PCT SETTLEMENT 12/16/2010
S&P BB-MINUS SPREAD 334 BPS PAY FREQ SEMI-ANNUAL
FITCH N/A MORE THAN TREAS NON-CALLABLE 5 YRS*
*MAKE-WHOLE CALL 50 BPS


Dec 13 (Reuters) - SAIC Inc (SAI.N) on Monday sold $750
million of senior unsecured notes in two parts in the 144a
private placement market, said a market source.
The notes are guaranteed by Science Applications
International Corp.
Bank of America Merrill Lynch, Citigroup and Morgan Stanley
were the joint bookrunning managers for the sale.
BORROWER: SAIC INC
TRANCHE 1
AMT $450 MLN COUPON 4.45 PCT MATURITY 12/1/2020
TYPE SR NTS ISS PRICE 99.637 FIRST PAY 6/1/2011
MOODY'S A3 YIELD 4.496 PCT SETTLEMENT 12/20/2010
S&P A-MINUS SPREAD 120 BPS PAY FREQ SEMI-ANNUAL
FITCH N/A MORE THAN TREAS MAKE-WHOLE CALL 20 BPS
TRANCHE 2
AMT $300 MLN COUPON 5.95 PCT MATURITY 12/1/2040
TYPE SR NTS ISS PRICE 99.851 FIRST PAY 6/1/2011
MOODY'S A3 YIELD 5.961 PCT SETTLEMENT 12/20/2010
S&P A-MINUS SPREAD 155 BPS PAY FREQ SEMI-ANNUAL
FITCH N/A MORE THAN TREAS MAKE-WHOLE CALL 25 BPS


HOUSTON, Dec. 14, 2010 /PRNewswire/ -- Landry's Restaurants, Inc. ("Landry's" or the "Company") today announced that it intends to offer up to an additional $87.0 million aggregate principal amount of 11 5/8% senior secured notes due 2015 (the "Additional Notes") in a private placement not registered under the Securities Act of 1933. The Additional Notes will have the same terms and be part of the same series as the $453.5 million aggregate principal amount of 11 5/8% senior secured notes due 2015 which were previously issued. Proceeds from the offering will be used to pay for the acquisition of Bubba Gump Shrimp Co. Restaurants, Inc., if such acquisition is consummated; to pay related fees and expenses; and for general corporate purposes.