NXP paper weaker; Dana, Calpine follow the crowd, drawing down; Six Flags dives; Tropicana notes up

By Stephanie N. Rotondo

Portland, Ore., Oct. 2 - Concerns about the economy and whether Main Street would pass a revived bailout plan continued to weigh on the distressed bond market Thursday.

One trader characterized the day as "a lot of tail chasing," adding that the "buyer strike" was hurting volumes.

"There is more pain in the market," said another trader. "Things just got obliterated."

NXP Semiconductors debt took a hit, even as the company's credit rating was affirmed. The bonds ended down anywhere from 1.5 points to 4 points, depending on whom you asked.

Meanwhile, Dana Holding Corp. and Calpine Corp. joined the ranks of those drawing down their credit facilities. Both companies saw their term loans heading lower, but some speculated that the dip was more due to the general market then the news of the revolver withdrawal.

Amusement park operator Six Flags Inc. saw its bonds dive at least 8 points during the session. But there was little news to explain the move, aside from an asset sale gone awry.

Tropicana Entertainment LLC's bonds inched up as the casinos' former owners said they would try to retake the gaming center they were stripped of last year. The former owners claim a recent bid on the Atlantic City property was too low and instead want to revamp the underperforming casino.

NXP Semiconductors slips

NXP Semiconductors' bonds took a hit, despite its credit ratings being mostly affirmed by Standard & Poor's.

One market source quoted the 9½% notes due 2015 at 48 bid, 49.5 offered, down 1.5 points.

But another source pegged the bonds at 48 bid, 50 offered, down from 52 bid, 54 offered at month-end.

S&P affirmed its B- long-term corporate credit rating on the chipmaker, but the ratings on the secured notes were cut to B- from B. The agency also revised the recovery rating to 3 from 2 due to the belief that, should a default occur, secured debtholders would have to share more-than-expected recovery funds with unsecured noteholders.

However, S&P also stated that it believes the company will have more than enough cash on hand after its mandatory debt repayments to see its restructuring plan through.

Dana, Calpine follow crowd

Dana and Calpine jumped on the bandwagon and announced drawdown under their revolvers, and while both their term loans traded lower on Thursday, traders said that the slide was probably a result of the cash market in general being down, not the news.

Dana's term loan was quoted at 82 bid, 85 offered, down from Wednesday's levels of 84 bid, 86 offered, traders said.

Calpine's term loan was quoted at 82 bid, 84 offered, down from Wednesday's levels of 83 bid, 86 offered, traders continued.

"So many companies have been doing this recently," one trader remarked about the drawdown news. "No effect. Not really fazing anyone."

On Thursday morning, Dana, a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets, announced that it borrowed $200 million under its existing $650 million secured revolver.

And, late Wednesday night, Calpine, a San Jose, Calif.-based power company, announced that it borrowed $725 million under its $1 billion senior secured revolver.

Both companies attributed the decision to draw the funds to a desire to strengthen liquidity in the face of uncertainty in the capital markets.

Six Flags debt takes a ride

Six Flags' paper lost a good 8 points on the day, market sources reported. But other than a report on a dissolved sale of its New Orleans property, there was little news to prompt the move.

A source saw the 9 5/8% notes due 2014 drop almost 9 points to close at 44.75 bid. Another trader said the notes fell into the mid-40s from 52 bid, 53 offered previously.

Southern Star Amusement had previously been negotiating with New York-based Six Flags to come to an agreement on the amusement park in New Orleans that has been closed since Hurricane Katrina hit.

But the talks reportedly fell apart about two weeks ago when the two companies could not agree on a price.

On Southern Star's web site, Christopher Sweeney, vice president of the interested party, said, "It has been a busy 10 months as we have worked to revive the former Six Flags New Orleans property. After working very diligently, we have reached a point in this project where we are no longer able to pursue reopening this park. We cannot comment as to any situations that have or may have impacted our decision. We remain committed to pursuing opportunities along the Gulf Coast and have not given up on our plans on establishing a park here."

Tropicana gains

Tropicana's former owners are still trying to take back control of the casino they lost late last year and are further contending that some of the assets are worth more than some think.

The news seemingly bolstered investors' spirits, as the company's bonds gained nearly 2 points on the day.

A trader pegged the 9 5/8% notes due 2014 around 8, which he called "a little higher" from the previous session, when the notes were trading with a 6 handle.

Another trader also placed the issue around 8.

The Atlantic City casino, which has been under a court-appointed trustee's care since the New Jersey Casino Control Commission stripped the company of its gambling license, is worth no less than $950 million, the former owners contend. That figure is much higher than the $700 million Cordish Co. offered for the company last week.

As such, the former owners want to regain control of the casino and, instead of selling the property, "reinvigorate the management of the property, make significant investments in needed upgrades, and assess the options," said Tropicana's top executive, Scott Butera.

To that end, Butera and his cohorts told a Delaware judge on Thursday they would ask the gaming board to reinstate its license, thus handing control back.

Elsewhere in the world of casinos, Station Casinos' 6% notes due 2012 fell more than 5 points to 50 bid.

Broad market still weak

Constar International Inc.'s 11% notes due 2012 hit "a new low," according to a trader, around 18. When asked what caused the decline, the trader said it was "more of the same. People expect a restructuring."

General Motors Corp.'s 7 1/8% notes due 2013 slipped more than 5 points to 37.75, while its benchmark 8 3/8% notes due 2033 closed just half a point lower at 36 bid, 37 offered. Meanwhile, GMAC LLC's 6 7/8% notes due 2012 were 3 points weaker at 37 bid.

Spectrum brands Inc.'s 7 3/8% notes due 2015 continue to wobble, losing 5 points during the session to 40 bid.

"Retailers are still getting whacked," a trader said, quoting Michael's Stores Inc.'s 10% notes due 2014 at 59 and its 11 3/8% notes due 2016 at 39.

"I think the only thing that was up today was Washington Mutual [Inc.]," the trader continued. He said the holding company's subordinated debt ended at 24, up 6 points, while the senior paper gained 4 points to finish at 66.

Sara Rosenberg contributed to this article.

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