Thornburg notes riding high; Tropicana, Herbst lose ground; Delphi loan, Cooper bonds better

By Stephanie N. Rotondo

Portland, Ore., April 1 - It was no April Fools for Thornburg Mortgage Corp. as its bonds jumped nearly 10 points on news it completed its financing deal.

The announcement came late Monday that the lender had raised $1.35 billion in new capital, a move aimed at placating its lenders. The deal finally got done after the company received two extensions on its deadline. On Monday, the bonds slipped as market players worried things would fall through.

Meanwhile, the gaming sector continued to deteriorate as the rest of the distressed bond arena firmed. Tropicana Entertainment LLC's debt was lower to unchanged, despite news that it had entered into an agreement to sell one of its casinos. Herbst Gaming also saw its debt decline as the company looked to obtain a forbearance on its credit facility.

After breaking for trading during Monday's session, Delphi Corp.'s first-lien term loan gained some ground. There was no clear reason for the move, with a trader assuming the debt was following the broad market trend.

Also in the automotive corner, Cooper-Standard Automotive Inc. reported its fourth-quarter and full-year numbers, which one trader deeded as "good." As a result, the company's bonds closed the day higher.

Thornburg riding the high

Thornburg Mortgage's bonds continued on their rollercoaster, this time climbing up.

The gains came after the late announcement Monday that the company had in fact completed its financing plan.

"They got their deal, and the bonds are up," said one trader.

"The world is a better place," quipped another source, pegging the 8% notes due 2013 up about 10 points at 68 bid, 70 offered.

Another trader quoted the bonds at 66.75 bid, 69 offered, while another saw the debt 9 points better at 68.

The company's stock also improved on the news, closing 24 cents, or 19.83%, better at $1.45, although one trader attributed the increase to short covering.

Thornburg, which has teetered on the brink of bankruptcy since it failed to pay $610 million in margin calls, raised $1.35 billion by issuing new bonds, warrants and interests in mortgage assets. The company was forced to come up with the new capital after entering into an agreement with five of its lenders to cease their margin calls and other repayment demands. In turn, Thornburg was to raise nearly $1 billion in new capital.

With the plan completed, the company's financial situation has improved, allowing the lender to resume lending. According to a Wall Street Journal report, Larry Goldstone, chief executive officer of the company, said Thornburg would begin lending "within days, if not weeks."

Thornburg Mortgage is a Santa Fe, N.M.-based mortgage lender specializing in jumbo home loans.

Elsewhere in the financial realm, Residential Capital LLC's 8 7/8% notes due 2015 jumped 2 points to around 51.

Tropicana, Herbst lose ground

Tropicana Entertainment on Monday announced that it had agreed to sell its Casino Aztar in Evansville, Ind.

The news did little to immediately move the bonds Monday. However, a trader said the bonds slipped during Tuesday's session. He quoted the 9 5/8% notes due 2014 at 51 bid, 52 offered after opening at 52 bid, 54 offered.

"Considering the market is up 2 points on average, that's horrible," he said.

At another desk, a trader called the bonds "about the same" at 51.75 bid, 52.75 offered.

The Crestview Hills, Ky.-based casino operator plans to sell its riverboat gambling center to Eldorado Resorts, LLC, a Reno, Nev.-based company. The $245 million sale will include cash, financing and incentives. Proceeds from the sale will be used to pay down outstanding debt.

Under the agreement, Tropicana can decide to sell to a higher bidder until Eldorado secures the funding. The Indiana Gaming Commission must also issue Eldorado a gaming license for the sale to close.

Meanwhile, Herbst Gaming is looking to obtain a forbearance agreement with its lenders.

Whether prompted by that news or not, the Las Vegas-based slot operator's bonds fell, with one source placing the 7% notes due 2014 at around 18. Another source deemed the debt down 2 points to 14.

Herbst is hoping its credit agreement lenders will agree to the forbearance related to the going-concern qualification and the company's end-of-year financial statements. Without the forbearance, the lenders could accelerate payment on the $875 million facility, which would in turn trigger a default on its subordinated debt.

Delphi loan, Cooper bonds better

Delphi's $2 billion seven-year first-lien term loan (Ba2) gained some ground during its second day in the secondary as the market in general felt better in sympathy with equities, according to a trader.

The Troy, Mich.-based automotive electronics manufacturer's first-lien term loan was quoted at 94 bid, 95 offered, up from 93½ bid, 94 offered on Monday, the trader said.

The first-lien term loan is priced at Libor plus 575 bps, with a 3.25% Libor floor for life and call protection of 102 in year one and 101 in year two. The paper was sold to investors at an original issue discount of 92.

"Everything kind of feels a bit up today," the trader added.

Elsewhere in the autosphere, a trader said "good numbers" helped push up Cooper-Standard Automotive's debt.

The trader quoted the 8 3/8% notes due 2014 at 75.5 bid, 76.5 offered and the 7% notes due 2012 at 86.5 bid, 87.5 offered.

Net sales increased 16% to $2.51 billion for the 2007 fiscal year, the company said in a press release. Gross profit of sales also increased nearly 16% to $397 million. For the full year, the company posted a net loss of $151 million, compared to a net loss of $8.4 million in 2006.

Quarterly revenues hurt, not help

As the second quarter of 2008 began, financial statements from the last quarter of 2007 continue to trickle in - with mixed results.

Hawaiian Telcom Communications Inc. released its figures in the previous session, prompting its bonds to fall 20 points on the day. However, a trader said the floating-rate notes due 2013 "stabilized" during Tuesday trading, quoting the notes at 45 bid, 47 offered.

Franklin, Tenn.-based Spheris Inc. posted its earnings late last week.

"Their numbers were bad again," a source said. The company's 11% notes due 2012 slipped to 82.5 bid, 83 offered from 84.5 bid, 84.75 offered.

Meanwhile, Nielsen Media Research Inc. reported "good numbers" related to its advertising revenue, a trader said. The 0% discount notes due 2016 edged higher to 64.5 bid, 63.5 offered.

Broad market mostly better

A trader said Wolverine Tube's 7 3/8% notes due August 2008 traded up 2 points to 96.5 from the last context.

"They haven't traded in a long time," he noted.

Duane Reade Inc.'s 9¾% notes due 2011 ended the day at 84.75.

A trader said Idearc Inc.'s 8% notes due 2016 were "not much moved, maybe lower" at 65 bid, 66 offered. Another source, however, called the bonds up 1 point at 66.

Meanwhile, sector peer Dex Media Inc., a subsidiary of R.H. Donnelley, saw its 8% notes due 2013 likewise a point better at 74.5.

Sara Rosenberg 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.