Merisant bonds sweeter; Portrait Corp. boosted on sale; Solutia down; MagnaChip gains

By Stephanie Rotondo

Portland, Ore., May 2 - How sweet Wednesday was for Merisant Co., as traders saw its bonds gain after a "positive" conference call.

The upbeat discussion regarding the company's 2006 annual earnings comes despite the company posting a nearly $40 million net loss.

Meanwhile, Portrait Corp. of America's bonds were boosted by buyout news announced Tuesday. The sole operator of portrait studios located inside many Wal-Mart stores will sell its business to the nation's largest preschool portrait photographer for $100 million in cash.

Wednesday saw a quieter trading day in Solutia Inc.'s debt, though a trader said the notes were still active. The bonds, which saw major price fluctuations at the beginning of the week, closed slightly lower than the previous day.

A trader said MagnaChip Semiconductor LLC's upcoming presentation at a conference was what was prompting gains in its bonds. But another trader said there was no reason for the gain in the chip maker's debt.

Still, the distressed bond market was lacking in activity, traders said, as one attributed the calm to earnings.

"Earnings are either coming or are going to be coming," he said. Given the vast amount of uncertainty out there, "people don't want to buy in front of numbers."

Merisant bonds sweeter

Things are getting sweeter for Merisant, as its bonds were seen 2 points better after Wednesday's earnings conference call. According to one trader, the 9½% notes due 2013 closed in the 91 area.

The trader said the call was a "positive show," despite the company's posted net loss of just more than $39 million.

Still, many ratings agencies have a negative outlook of the sweetener manufacturer. Standard & Poor's affirmed the CC senior subordinated note ratings on Merisant and its holding company, Merisant Worldwide Inc., last month, noting the company's highly leveraged financial profile, limited financial flexibility, narrow product focus and intensely competitive industry conditions.

Portrait Corp. boosted on sale

Portrait Corp.'s bonds were seen higher after Tuesday's announcement that the company was being bought by CPI Corp., a preschool portrait photographer, for $100 million in cash.

A trader quoted the 11 7/8% notes due 2009, which trade under the PCA LLC name, at 4 bid, 5 offered, which he called "no big figure."

The sale, which is subject to the assumption of certain liabilities and the approval of a bankruptcy judge and regulators, is expected to close in June.

Solutia down, still active

Solutia's bonds were seen "totally quieting down," according to one trader, who said the notes saw a "little flurry in the morning."

At another desk, however, a trader said the bonds were still "trading actively." He quoted the 7 3/8% notes due 2027 "a couple points lower" at 86.

The St. Louis-based company's debt saw wild gyrations earlier in the week, prompted by a clash between the company and its stockholders and bondholders. Two court rulings given Tuesday dealt a serious blow to the bonds, which traded as high as 106, only to fall about 20 points.

In other Solutia news, the company announced Wednesday that it had completed its purchase of Akzo Nobel NV's 50% interest in Flexsys, a 50/50 joint venture between Solutia and Akzo Nobel.

MagnaChip bonds gain

A trader said MagnaChip's floating-rate notes "keep going up," as the Seoul, Korea-based chip maker prepares to present at next week's UBS Leveraged Finance Conference in Las Vegas.

The trader quoted the bonds due 2011 at 89. Another market source pegged the 6 7/8% notes due 2011 also higher at 85.

At another desk, a trader saw the 8% notes due 2014 up 3 points at 68 bid, 69 offered. The trader said he did not know why the bonds were up.

The semiconductor manufacturer posted its first-quarter numbers last week. Despite a wider loss than the previous year, the figures came as no surprise. The company had warned that the results would be poor when it filed its 10-K.

Hines Horticulture dips

A trader called Hines Horticulture Inc.'s notes down about a point, pegging the 10¼% notes due 2011 at 78.5 bid, 79 offered.

The trader said there was no fresh news out to prompt the move but said that earnings were expected "anytime now."

The earnings, which were scheduled and delayed twice in March, have not been released because audits had not yet been completed, the company said in a press release issued in late March. In April, the company received a letter from Nasdaq Global Markets, sating the nursery supplier was out of compliance because it had not posted its 10-K and was in danger of being delisted.

Movie Gallery down

Traders said that Movie Gallery Inc.'s bonds were down about 2 points, blaming investor reaction to the wider-than-expected loss posted by industry leader Blockbuster Inc. The 11% notes due 2012 were seen around 86 bid, 87 offered.

Dura bonds in reverse

Dura Automotive - whose bonds had lately been firming - were driving in reverse on Wednesday. The company's 8 5/8% notes due 2012 were seen by one trader having dropped to 31 bid, 33 offered from prior levels at 36 bid, 38 offered, while its 9% notes due 2009 lost 1.5 points to 6 bid, 7 offered.

Another trader saw those notes 1 point lower, at that same level, but said that the senior bonds were down about 2 points on the day at 32 bid, 33 offered. He said that "April's operating numbers were bad for Dura," attributing the figures as the catalyst for the dip.

The first trader saw nothing doing in the bonds of other bankrupt or distressed auto component companies, such as Delphi Corp., Dana Corp. or Remy International Inc.

Broad market mixed

Le-Nature's Inc. 9% notes due 2013 were seen having fallen to 41 bid, 43 offered from prior levels at 44 bid, 46 offered, although the trader was not aware of any news that might explain that fall.

He said Calpine Corp., after having retreated on Tuesday, was "back up," with its 8½% notes due 2008 at 117 bid, 118 offered, a gain of about 2 points, and its convertible debt higher as well, with the 7¾% notes due 2015 up 2 points at 126 bid, 128 offered.

Tembec Inc.'s bonds were down 1 point on the session. Its 8 5/8% notes were pegged at 60 bid, 62 offered and its 8½% notes due 2011 at 55.5.

Airlines mixed

Among the airlines, a trader said that Delta Air Lines Inc.'s 8.3% notes due 2029 seemed not to be trading, apparently having been equitized as part of its emergence from bankruptcy, but he said that 8.3% stubs, which might entitle the holders to additional payment beyond what they got for the actual bonds, were at 45.5 bid, 46.5 offered.

He saw Northwest Airlines Corp.'s 10% notes due 2009 initially fell 2 points to 71 bid, 73 offered but then bounced back to actually end a point higher on the day at 74 bid, 75 offered.

Allied Holdings adds loan

Allied Holdings, Inc. added a $50 million second-lien term loan tranche to its senior secured debtor-in-possession financing facility that is convertible into an exit facility, downsized its first-lien term loan B by $50 million and increased pricing on its first-lien institutional debt, according to a market source.

The new $50 million second-lien term loan is being talked at Libor plus 750 bps and will have call protection, although exact premium terms are still to be determined, the source said.

Meanwhile, the first-lien term loan B is now sized at $180 million, down from $230 million, and pricing was flexed up to Libor plus 400 bps from original talk at launch of Libor plus 350 bps, the source continued.

Of the total first-lien term loan B amount, $25 million will be delayed draw. This unfunded first-lien term loan debt will carry a 175 bps unused fee and will be available for general corporate purposes.

Also on the list of deal changes was an increase in pricing on the $50 million synthetic letter-of-credit facility to Libor plus 400 bps from original talk of Libor plus 350 bps, the source remarked.

The company's $315 million DIP facility also includes a $35 million first-out revolver that is priced at Libor plus 200 bps.

Recommitments from lenders are due by the end of this week.

Goldman Sachs is the lead bank on the deal that will be used to refinance the company's existing DIP facility.

Allied Holdings is a Decatur, Ga., distributor of new and used vehicles.

Sara Rosenberg and Paul Deckelman contributed to this article.

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