UPDATE: MTR Gaming Withdraws Bond Offer, But Other Issuers Carry On

(Updates with broader market context, Warner Music and other pricings.) 

- MTR Gaming Group withdraws issue, unwilling to pay higher premiums

- Other companies, raising funds for M&A, continue to tap the market

- Warner Music Group raises $1.065 billion ahead of its merger

By Prabha Natarajan 
   Of DOW JONES NEWSWIRES 
 

MTR Gaming Group Inc. (MNTG), which was planning to sell $500 million in senior notes, has withdrawn its offer from the market because buyers were seeking higher compensation, according to investors familiar with the deal.

On Thursday, the company removed its listing as it was unhappy with the final terms proposed for its eight-year secured transaction, these people said.

But on the same day, a handful of other companies either launched or completed selling new issuance, including the sizable $1.065 billion three-part offering from Warner Music Group Corp. (WMG).

Most of these deals, however, were to pay for mergers and acqusition financing. Warner Music Group's offer came ahead of its merger with Access Industries. MTR, the gaming and casino operator, planned to use proceeds from the sale to repay existing debt and finance addition of video-lottery terminals at its Columbus, Ohio, racetrack. J.P. Morgan was the lead banker on the withdrawn deal.

Issuance of high-yield bonds had dropped dramatically since mid-June when the sovereign-debt crisis erupted. Since then, continued concern about that crisis, the slack growth of the U.S. economy and the chances of a lower credit rating for the U.S. have worried investors and made them more risk averse.

In some recent transactions, jittery investors have pushed back to secure better compensation for the risk. So, most companies are sitting it out unless they have a compelling reason to raise debt.

To be sure, two companies, ExamWorks Group Inc. (EXAM) and GFI Group Inc. (GFIG), on Thursday refinanced existing debt and were able to price at the tighter end of initial guidance.

Warner Music Group's debt, on the other hand, sold at weak levels though the total size of the issue was upsized by $20 million. The media group priced its $765 million senior notes due October 2018, 11.5% coupon, at 97.763 to yield 12%. The price talk had been in the area of 11.5% to 11.75%. UBS and Credit Suisse were the bankers on the deal.

Other companies, which are either acquiring or being acquired, also revealed plans to tap the market.

SRA International Inc. (SRX), the Fairfax, Va.-based technology and consulting services company, has put out guidance on its $400 million, eight-year senior notes offering. The funds raised will be used to back Providence Equity Partners' $1.88 billion offer for the company.

Ocwen Financial Corp. (OCN), a provider of residential and commercial mortgage loan servicing, is tapping the market with a $575 million senior secured term loan, according to a person familiar with the matter. Proceeds will be used to fund the acquisition of Litton Loan Servicing.

-By Prabha Natarajan, Dow Jones Newswires; 212-416-2468; prabha.natarajan@dowjones.com

(Anusha Shrivastava contributed to this report.)

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