Delphi dips; Burlington Coat hurt by weak sales; Sea Containers' notes steady; E*Trade, ResCap firm

By Stephanie N. Rotondo

Portland, Ore., Dec. 7 - After a relatively busy week of trading, the distressed market fell into a slumber Friday.

One trader said there were "a few things going on," but for the most part, traders depicted the day as quiet.

However, Delphi Corp.'s debt continued to be actively traded. The bonds, which lost around 15 points earlier in the week, had managed to regain some of those losses Thursday. But come Friday, the bonds gave in and slipped another 2.5 to 3 points.

Burlington Coat Factory Warehouse Corp. blamed warmer weather and weaker spending for its lower sales figures for the second quarter. News of the almost 4% dip in sales pushed the bonds down about 2 points on the session.

A victorious Sea Containers Ltd. saw its bonds hold their ground just one day after a key victory in its quest toward exiting bankruptcy was won. The shipping company's bonds had gained about 3 points the previous day.

President George W. Bush's mortgage bailout plan may or may not be the reason the mortgage sector is feeling a little better. Both E*Trade Financial Corp. and Residential Capital LLC's notes edged higher on the day, with one trader noting the gains could be attributed to "a number of factors."

Delphi, Federal-Mogul slip

Delphi bonds gave back some of the gains earned in the previous session, as the bankruptcy judge overseeing its case approved the recent amendments to its Appaloosa-led deal.

One trader said the automotive parts supplier's bonds were generally trading in the high-50s. Another trader said the company's debt fell 2.5 to 3 points, its 6.55% notes that were to have matured last year and its 6½% notes due 2009 at 58.5 bid, 59.5 offered.

Another trader claimed the 6.55% notes dropped to 58 bid, 60 offered from 61 bid 63 offered on Thursday on profit-taking.

Under the newly amended plan, the investor group led by hedge fund Appaloosa will receive equity stakes in the reorganized company. Previously, bondholders and shareholders had opposed the amendments, as they gave more to the Appaloosa group at the expense of the debt and equity investors.

Also, Delphi won approval on its disclosure statement. The confirmation hearing is set to begin on Jan. 17.

Elsewhere in the automotive sector, Federal-Mogul's bonds continue to deteriorate, though there has been no news out on the company.

A trader called the bonds down 1 to 2 points at 71.5. Another trader said that auto names - a few of which have been relatively active over the week - settled down Friday.

Poor sales hurt Burlington

Weaker second-quarter sales pushed Burlington Coat's bonds down, a trader said, amid active trading.

The trader quoted the 11 1/8% notes due 2014 lower by 1.5 to 2 points at 87 bid, 88 offered. He added that the news did little to affect the rest of the struggling retail sector.

Burlington Coat reported net sales for the quarter ended Dec. 1 at $946.6 million, an almost 4% decline over the previous year's quarterly sales of $984.8 million. The company attributed the lower figures to warmer weather and weaker consumer spending.

In a press release, the company said it would release its full second-quarter report on Jan. 15 and hold a conference call at 10 a.m. ET on Jan. 17.

Smooth sailing for Sea Containers

Traders deemed Sea Containers' bonds unchanged after the debt had gained about 3 points the previous day on news that the shipping conglomerate had won its arbitration case.

A trader pegged the 10½% notes due 2012 at 62 bid, 62.5, while another saw the notes trade around 62.5.

On Wednesday, the Bermuda-registered company said it won its arbitration case against GE Capital. In his ruling, the arbitrator said that GE could not force Sea Containers out of the duo's joint venture marine cargo business.

As such, the company said it is close to finalizing a plan that would lead it out of bankruptcy soon.

Mortgage sector firms

It could be the Bush administration's mortgage bailout plan or it could be "a number of other factors" that caused mortgage sector names, such as E*Trade and ResCap, to edge higher Friday.

The trader placed E*Trade's 8% notes due 2011 higher around 86, while ResCap's 6 7/8% notes due 2015 were "a little better" around 67.

And while Bush's plan to help those exposed to subprime mortgages was considered the reason for gains in the previous session, the trader said that the market's general performance over the week could just as well be the cause.

"The market has acted well, there is the possibility of a Fed cut, [and] the jobs report [was good]," he said.

Another trader saw ResCap's 6½% notes due 2013 continuing the gains seen Thursday, rising another 2 points to 67 bid, 68 offered. Its 8 3/8% notes due 2015 were up 1.5 points at 67.5.

Countrywide Financial Corp.'s 6¼% notes due 2016 fell a point to 63.

Tousa up...maybe

Technical Olympic USA Inc.'s bonds were either better or unchanged, depending on whom you asked Friday.

One trader called the senior notes - the 9% notes due 2010 and the 8¼% notes due 2011 - a little better around 45. But another said the homebuilder's debt was "doing nothing."

The Hollywood, Fla.-based company had been seeing gains over the week, though for the most part, traders were at a loss to explain it. Some believed a restructuring plan was due out Friday, but as of press time, no such plan had surfaced.

Another trader said that the company has asked its bondholders to come up with a restructuring proposal.

"They have filed already, they just haven't officially done it," he opined.

Dura amends credit facility

Dura Automotive Systems Inc. came out with some revisions to its credit facility on Friday morning, gave lenders until the close of business to throw in their commitments and is targeting to allocate during the week of Dec. 10, according to a market source.

Under the changes, pricing on the $225 million three-year first-lien term loan B was flexed up to Libor plus 625 basis points from original talk at launch in the Libor plus 550 bps area, and the discount on the paper was increased to 93 from the original offer of 99, the source said.

In addition, pricing on the $75 million 31/2-year second-lien term loan was flexed up to Libor plus 925 bps from original talk in the Libor plus 850 bps area, and the discount on this tranche was also increased to 93 from 99, the source continued.

As was the case since launch, the first-lien term loan carries call protection of 102 in year one and 101 in year two, and the second-lien term loan is non-callable for one year, then at 102 in year two and 101 in year three.

Dura's $425 million senior secured exit financing credit facility also includes a $125 million three-year ABL revolver that is priced at Libor plus 250 bps, which is in line with initial talk.

Goldman Sachs and Barclays Capital are the lead banks on the deal.

Proceeds from the exit facility, combined with a proposed rights offering, will be used to repay the company's debtor-in-possession facility and pre-bankruptcy second-lien term loan and to fund plan distributions.

The company expects that its reorganization plan will be confirmed on Dec. 11 and that it will be able to exit bankruptcy protection by the end of the year.

However, just to be safe, at the end of November, the company requested a two-month extension to its exclusive period, which would give it until Jan. 31 to file a plan of reorganization.

The company said that it asked for the extension in the event that the plan is rejected and more time is needed to pursue all available alternatives, including potentially reformulating, negotiating or soliciting an alternative plan or plans of reorganization.

Dura is a Rochester Hills, Mich.-based automotive parts maker.

Sara Rosenberg and Paul Deckelman contributed to this article.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.