CalGen third-lien called 'big mover'; Milacron better; Tekni-Plex bonds gain; Solutia up

By Stephanie N. Rotondo

Portland, Ore., Oct. 5 - With the Columbus Day holiday approaching - and the distressed bond market taking an early close - traders reported that Friday's activity was quieter than usual.

"It was the quietest day in a long time," one trader said. There was "absolute zero going on."

But while the market was unusually quiet, most names seemed to be unchanged or better on the day.

Despite the lack of activity, traders noted big activity in Calpine Generating Co. LLC's third-lien notes. One trader called the bonds the "big mover" on the day, gaining as much as 3.5 points, while others called the debt "up big."

As for the reasons for the gains, traders had different ideas on what prompted the move.

Meanwhile, a private equity firm's purchase of preferred shares was deemed the catalyst for movement in Milacron Inc.'s bonds. A trader said the bonds were up 2 points on Wednesday's news.

In late September, Tekni-Plex Inc. posted poor numbers for fiscal 2007, despite an increase in sales. But investors are shaking off the disappointing results and, subsequently, the bonds have been slowly moving higher over the week.

Solutia Inc.'s bonds were also seen gaining Friday.

The distressed bond market will be closed Monday.

CalGen dubbed 'big mover'

Calpine Generating, also known as CalGen, saw its third-lien floating-rate notes due 2011 dubbed the "big mover" of the day in an otherwise quiet distressed market.

A trader pegged the bonds up 3.5 points to 41.5 from 38. Another trader quoted the notes at 41 bid, 42 offered.

The first trader attributed the gains to a court hearing Wednesday.

"Too many people were away [at the Deutsche Bank high-yield conference in Arizona] to notice," he said of the delayed response.

At the hearing, the trader said, the judge ruled on a motion to pay penalty interest on the third-lien debt and recovery subsequently went "from a 30 handle to a 40 handle."

The second trader called that "interesting," but said a bondholder call held Thursday was a bigger factor in the bond's move.

According to the trader, discussions during the call revolved around potential settlements. He said the company, a subsidiary of Calpine Corp., was looking to resolve the matter soon.

Meanwhile, Calpine's 8½% notes due 2011 were called unchanged at 117 bid, 118 offered. Another trader said the bonds were trading but there was "nothing crazy in the markets."

Milacron notes up

A trader said Milacron bonds were 2 points better on Wednesday's news that a private equity firm had bought into the preferred structure.

The trader said the 11½% notes due 2011 traded at 95.5. He gave a market of 94 bid, 96 offered but was not sure how accurate that was.

The plastics and industrial fluids company said its board approved the sale of over half of the company's 6% series B convertible preferred stock to Bayside Capital Inc.

Tekni-Plex recovers from poor earnings

Investors are "shrugging off" poor earnings from Tekni-Plex, a trader said, as the bonds continue to move up.

The trader quoted the 8¾% notes due 2013 at 93 bid, 94 offered, up 1 point on the day, 2 points over the week.

On Sept. 28, the packaging provider saw a 4.1% increase in net sales for fiscal 2007, to $773.3 million from $742.7 million in fiscal 2006. Still, the company posted a net loss of $61.3 million - which was still better than its 2006 net loss of $84.3 million.

In other news, B. Riley & Co. LLC issued a buy recommendation on Tekni-Plex's 12¾% subordinated unsecured notes.

Solutia edges higher

About a week after the company announced it was set to exit Chapter 11 protection by the end of the year, a trader saw Solutia's bonds moving up.

Halfway through the trading day, the trader quoted the 7 3/8% notes due 2027 at 95 bid, 97 offered. Come the market's close, a source called the bonds up a half point to 94.

The specialty chemicals company announced on Sept. 26 that it had reached a deal with key players in its bankruptcy case. The deal creates a consensual plan of reorganization - which includes a $250 million new investment - that would allow the company to emerge form bankruptcy by year's end.

Delphi, Federal-Mogul better

Delphi Corp.'s bonds continue to move higher, a trader said, placing the 6.55% notes that were to have come due last year at 95 bid, 96 offered.

"Bondholder recovery looks better," he said.

With that, Federal-Mogul Corp.'s bonds were also better. The trader said the notes - which tend to trade in line with each other - closed at 88 bid, 89 offered. Another market source, however, called the bonds a half point lower at 88.5.

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