Trump unchanged, Greektown dives; Calpine structure mixed; Linens unchanged, Michael's up

By Stephanie N. Rotondo

Portland, Ore., May 30 - Trump Entertainment Resorts Inc.'s bonds continued to see relatively active trading Friday, just one day after the company announced an asset sale.

Trump's debt remained unchanged but was still considered "strong." However, Greektown Casinos announced that it filed for bankruptcy Thursday, and the company's bonds responded by dropping 20 points.

Calpine Corp. said that it declined NRG Energy Inc.'s buyout offer Friday, though it was not opposed to further negotiations. The company's bank debt experienced a bit of a slide on the news, though its corporate debt was still trending higher.

Meanwhile, NRG's bank debt ended unchanged and its bonds inched just slightly lower.

After receiving court approval to go ahead with its liquidation plans, Linens n'Things Inc.'s paper moved up. By the end of the day, however, the bonds had come back down to close unchanged to slightly weaker.

Among other distressed retailers, Michael's Stores Inc. reported its first-quarter financials late Thursday, and the company's notes subsequently gained in Friday trading.

Trump unchanged, Greektown dives

Trump Entertainment's notes continued to be strong the day after the company announced an asset sale.

A trader placed the 8½% notes due 2015 at 68 "up and down," while another saw the debt get as high as 68 bid, 68.5 offered before ending the session at 67.5 bid, 68 offered.

"That's pretty much the same level, but still strong," the trader said.

At another desk, a trader quoted the bonds at 67.5 bid, 68 offered.

On Thursday, it was announced that Coastal Marina LLC would purchase Trump Marina Hotel and Casino in Atlantic City for $316 million. The establishment will be rebranded under the Margaritaville moniker.

"Our initial read is that the sale may not implicate the Extraordinary Asset Sale covenant in the second mortgage notes indenture and we are also looking into other tax ramifications," wrote Gimme Credit analyst Kim Noland in an afternoon report. "For now it appears the sale gave the company some needed breathing room as we felt liquidity - while adequate - could use bolstering as the Taj Tower construction project nears completion."

Elsewhere in the gaming arena, Greektown Casino filed for Chapter 11 protection due to excessive construction costs associated with the company's expansion plans.

On the news, a trader said the 10¾% notes due 2013 fell about 20 points to the 68 area.

In its filing with the U.S. Bankruptcy Court in Detroit, the company said that it is unable to borrow more money and estimates it needs an additional $140 million to complete its expansion project. The company was forced into filing Chapter 11 because it was out of compliance with its credit line with Merrill Lynch.

"Significant delays and cost overruns in connection with the completion of the expanded complex have adversely affected Holdings' businesses, Greektown Casino's operations and Holdings' financial condition and cash flow," the filing said.

Meanwhile, Harrah's Operating's 10¾% notes due 2016 traded in the 87 context, a trader said.

Calpine loan slips, bonds gain

Calpine's term loan inched lower during a relatively quiet trading session on Friday as the company said that it would not be taking NRG Energy up on its buyout proposal, according to a trader.

The term loan was quoted at 96¾ bid, 97¼ offered, down from 97 bid, 97½ offered, the trader said.

Meanwhile, NRG's strip of institutional bank debt was unchanged on the news at 96 bid, 96½ offered, the trader remarked.

"Even though they rejected the offer they still sort of left the door open whether it be with a higher bid or whatever the case may be," the trader added.

On the corporate side, Calpine's stub debt moved up to around 24.5, a trader said. Another trader saw the 10½% notes that were to have matured in 2006 at 110 bid, 112 offered.

Elsewhere, NRG's 7 3/8% notes due 2016 fell a quarter point to 98.25 bid.

On Friday morning, Calpine announced that after thoroughly reviewing the proposal from NRG it was unanimously decided by the company's board of directors and financial and legal advisers to reject the merger.

"NRG's proposal is inadequate and materially undervalues the company's unique asset portfolio and future prospects," Calpine said in a news release.

However, Calpine's advisers have been authorized to contact NRG to figure out whether there is a basis for discussions between the two companies to explore a business combination.

Under the recent NRG proposal, NRG offered to buy all of Houston-based Calpine's outstanding capital stock in an all-stock transaction. The proposed fixed exchange ratio was 0.534 NRG shares, which represented about $23 per Calpine share as of May 14.

NRG said that the combined company would be a more than 45,000 Megawatt, $38 billion enterprise value, $20 billion market cap company.

Princeton, N.J.-based NRG also said that the merger would have reduced the leverage of the combined company, significantly enhancing consolidated credit metrics.

As part of the proposal, NRG was willing to contribute $2.5 billion in current liquidity and more than 10 major counterparties in its first-lien structure.

Linens dips, Michaels gains

A trader said Linens n'Things floating-rate notes due 2014 got as high as 45.5 before coming back down to 43 bid, 44 offered after the company won approval to start liquidating 120 of its stores.

Another trader also pegged the bonds at 43 bid, 44 offered, which he called "just a smidge lower," though there was "not too much action" in the name, he said.

Linens received court approval to appoint a Tiger Capital/SB Capital joint venture as the liquidating agent for its going-out-of-business sale. The Clifton, N.J.-based company is planning on closing 120 of its 500 stores.

Also in the retail sector, Michael's Stores posted a narrower first-quarter loss late Thursday and, come Friday, a trader saw the bonds inching upward.

The trader said the bonds gained about a point on the day, the 10% notes due 2014 at around 93 and the 11 3/8% notes due 2016 at around 86.

The privately held Irving, Texas-based company reported a loss of $20 million for the first quarter ended May 3 versus a loss of $23 million the year before. Net sales gained 1% to $847 million, compared to $839 million in the first quarter of 2007.

Among other retail names, Rite-Aid Corp.'s 9 3/8% notes due 2015 were "up a good hunk," a trader said, at 78.25 bid, 78.5 offered.

Broad market mixed

Constar International Inc.'s 11% notes due 2012 were weaker, according to one trader, at 56.5 bid, 57 offered. The trader said the bonds have grown continually lower in recent sessions.

On the upside, Charter Communications Inc.'s debt "continues to climb up," another trader said. He said the 10¼% notes due 2010 closed around par, while the 9.92% notes due 2011 ended at 63.5.

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.