Primus Telecommunications better; Tembec gains; Bally, Tousa quiet; Six Flags up

By Stephanie N. Rotondo

Portland, Ore., June 6 - Pressure on the equity side also was felt in the distressed bond market, traders reported Wednesday, as bonds reacted to the more than 100-point drop in the Dow Jones Industrial Average.

A trader said many "go-go" names in distressed were either quiet or were down at least a half point with "buyers generally sidelined."

"It was a weird day today," he said.

Of the names that traders did deem notable, Primus Telecommunications Group Inc.'s debt was one of few companies that managed to not only hold on to its recent gains but also add to them. The company's bonds were seen up by another point and up as much as 7 points since Friday.

Tembec Inc.'s notes also held on, maintaining their recent gains and staying fairly active in an otherwise quiet day.

However, fresh news did little in names such as Bally Total Fitness Holding Co. and Technical Olympic USA Inc. (Tousa).

Bally announced that it had hired a new chief operating officer - one who has considerable experience with restructuring. A company spokesperson, Matt Messinger, said the hire would not effect the company's projected file date, which is slated for mid-July.

As for Tousa, the homebuilder announced late Tuesday that it would soon be the sole owner if its Transeastern joint venture. The news, though expected, did not prompt any activity in the company's debt. However, Transeastern's term loan did edge higher on the back of the announcement.

Elsewhere, a late conference call was seen as the catalyst for Six Flags Inc.'s gains, a trader said. The call was originally expected later this month, so market players were hoping to hear good news in the earlier call.

Primus Telecommunications firms

Primus Telecommunications' bonds were called "up pretty big" by one trader, who said the notes have seen decent gains since Friday.

The trader quoted the 3¾% notes due 2010 at 69 bid, 71 offered, up from the previous day's close around 68. He said the debt was at 63 bid, 64 offered on Friday.

Another trader saw the 3¾% notes trading in odd lots around 68 bid, 69 offered. He also saw the 8% notes due 2014 up about a point at 74 bid, 75 offered. At another desk, a source pegged the 8% bonds at 73 bid, 75 offered.

The first trader said he was not sure why the bonds have firmed, as the company has not released any new information. However, he said there is talk of a possible asset sale and a recent shelf registration has the market buzzing that there might be a debt exchange in the future.

The trader also noted that the company's stock has had a "nice run" since last week and into this week. However, the stock did close down on the day, hit by the beat down in the general equity market. The common shares fell 6 cents, or 5.37%, to $0.97.

Tembec steady

While the broad market seemed weaker overall, Tembec managed to stay firm, a trader said.

The trader pegged the 8 5/8% notes due 2009 at 60.75 bid, 61.75 offered, the 8½% notes due 2011 at 54.5 bid, 55.5 offered and the 7¾% notes due 2012 at 53.75 bid, 54.75 offered.

At another desk, a trader said the bonds "continue to say relatively firm," quoting the 8 5/8% notes at 60.875 bid, 61 offered. He said the 7¾% paper was the more active issue, trading in the 54 level all day.

The second trader said the company is looking into more exports into the United States, and, given the increased value in the Canadian dollar, that could mean more income. However, he added that the company was still highly leveraged.

The trader mentioned a $300 million settlement the forest products company had received a few months ago, which helped the debt move into the 80 levels. But, "that $300 million disappeared fairly quickly," he said. "They have severe liquidity constraints."

"It's a volatile industry," he added. "There is a demand problem."

No movement in Bally

A new hire over at Bally did little to help the fitness operator's debt, traders reported, with one source noting that its 10½% senior notes due 2011 hardly traded.

The source said the bonds had closed Tuesday at 103.5 bid, 104.5 offered. He said the 9 7/8% subordinated notes due 2007 traded in odd lots, which he last saw trade at 97.5.

However the Chicago-based company's equity spiked on the news that it had hired Michael Feder as its new chief operating officer. The stock closed up 13 cents, or 18.25%, to $0.81.

Technical Olympic quiet on news

News that Technical Olympic had agreed to become the sole owner of its Transeastern joint venture with Falcone Group did little to prompt activity in the homebuilder's debt.

A trader said he did see some bids circulating on the back of the news, but he was "not sure if it actually moved anything."

"It's great that it got done," the trader said of the expected outcome, "but it really did not force anything one way or another."

Sure enough, the trader said the 10 3/8% notes due 2012 hardly moved in the last two days, while the 7½% notes due 2011 were trading around 74.

A market source pegged the 10 3/8% notes as unchanged at 80, while the 7½% subordinated notes fell a point to 74. The source also saw the 9% notes due 2010 at 95.25, off about a quarter of a point, on light volume.

Another trader, who remarked that it was "quiet" in the bonds, said it was "hard to rationalize why people are not doing anything," but the lack of activity was likely due to the fact that market players were expecting the news.

Meanwhile, the bid on Transeastern's term loan headed higher in reaction to the news, a trader said.

The term loan ended the day at 99.5 bid, par offered, up from previous levels of 99 bid, par offered, the trader said.

Currently, Falcone owns a 50% stake in Transeastern.

This agreement with Falcone is subject to reaching settlements with Transeastern's lenders and the payment by the joint venture of amounts needed to take down the properties specified in the agreement.

Technical Olympic is a Hollywood, Fla., designer, builder and marketer of single-family residences, town homes and condominiums.

Six Flags gains

A late investor call on Wednesday was given credit for pushing Six Flags' bonds upward, a trader said, as investors were expecting to hear good news.

The trader slated the 8 7/8% notes due 2010 at 102 bid, 102.5 offered, adding that there is an expectation that those notes will get taken out early. He also saw the 9 5/8% notes due 2014 at 95.75 bid, 96.75 offered and the 9¾% notes due 2013 at 97 bid, 97.5 offered.

The mid-quarter conference call discussed the company's year-to-date performance and current business trends.

"While we originally intended to hold this year's mid-quarter update closer to the end of the month, our intention to utilize our asset sale proceeds to reduce our debt levels and consider other refinancing opportunities necessitates our moving it up," Mark Shapiro, president and chief executive officer, said in a press release issued Monday. "This will ensure that the market has the most up-to-date information on our operational performance."

Just before the call, the company posted a press release that reflected the key points of its update. The company stated that for the year-to-date period ended June 3 - which included the Memorial Day holiday - total revenues increased 5% to about $12 million, compared with the same period last year. Attendance, however, was flat at 5.9 million but included 6% fewer operating days.

Broad market mixed

Trump Entertainment Resorts Inc. held on to its recent gains, despite the overall market being generally lower, a trader said. He pegged the 8½% notes due 2015 at 103 bid, 103.5 offered.

Hines Horticulture Inc.'s bonds, which have been quiet of late, were seen with an 82 bid on the 10¼% notes due 2011.

Meanwhile, Movie Gallery Inc.'s debt garnered an offer of 86 on its 11% notes due 2012.

A source saw Duane Reade Inc.'s 9¾% notes due 2011 at 98.75 bid, 99.75 offered, down slightly from the previous day.

And, up in the sky, Delta Air Lines Inc.'s 8.3% stubs are seen at 6.5 bid, 7.5 offered, also down a bit.

Sara Rosenberg contributed to this article.

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