R.H. Donnelley, Idearc pare losses; Visteon helped by narrower loss; Charter up on Comcast numbers

By Stephanie N. Rotondo

Portland, Ore., July 30 - Idearc Inc. and R.H. Donnelley Corp. recovered some of the losses gained in the previous session after the latter issued a somewhat decent quarterly report Wednesday.

Idearc had posted its dismal quarterly figures in the previous session, which sent the phonebook publisher's debt down 10 points. R.H. Donnelley went along for the ride, losing about 5 points Tuesday. But on the back of R.H. Donnelley's numbers, both companies saw their corporate debt gain about 2 points on the day.

Meanwhile, Visteon Corp.'s bonds were also up a deuce on earnings. The automotive parts supplier narrowed its loss for the second quarter, stating that its restructuring plan was well underway.

Charter Communications Inc.'s bonds inched upward during trading - though traders reported that volume was thin - after rival Comcast Corp. came out with its 10-Q. Comcast increased its quarterly profit, attributing the gains to an increase in phone and internet sales.

R.H. Donnelley, Idearc pare losses

As one market source predicted, Idearc paper regained some ground Wednesday, partially helped by R.H. Donnelley's quarterly report. R.H. Donnelley's bonds were likewise better.

One trader called Idearc's 8% notes due 2016 2 points firmer at 51 bid, 52 offered. R.H. Donnelley's debt was up nearly a deuce, with the 8½% notes due 2010 of its Dex Media subsidiary at 96.5 bid, 97.5 offered and the 8 7/8% notes due 2016 at 48 bid, 50 offered.

Another trader said Idearc came down from its daily high around 51 to end at 50 bid, 50.5 offered. He pegged Donnelley's 6 7/8% notes due 2013 at 50.5 bid, 51 offered and the 8½% notes at 96.75 bid, 97.25 offered.

"They are a bit stronger, which probably didn't hurt Idearc either," he said.

At another desk, Idearc's notes were seen at 50 bid, 51 offered, while Donnelley's 6 7/8% notes ended around 50.5, compared to levels between 48 and 49 Tuesday.

However, Idearc's term loan lost a bit more ground, quoted at 74 bid, 75 offered, down from Tuesday's levels of 74¼ bid, 75¼ offered and from Monday's levels of 77¼ bid, 78¼ offered, a trader said.

For the second quarter, Cary, N.C.-based R.H. Donnelley posted a net loss of $339 million, which was deemed comparable to the same period of 2007. Revenues also fell in line with 2007, coming in at $644 million. However, advertising sales were seen declining 8.6%.

But the good news was that the phonebook publisher managed to reduce its overall debt by $230 million during the period by extending maturities and eliminating debt via a bond exchange.

"That's a big step in the right direction," a trader said.

In an afternoon report, Gimme Credit analyst Dave Novosel called Donnelley's situation improving, though management's adjusted full-year estimates came in at the low end of the scale. Regarding Idearc, however, analyst Shelly Lombard called the outlook stable.

"With $9 billion of debt and EBITDA declining, leverage will come down very slowly," she wrote. "Even if EBITDA stays stable at $1.4 billion, leverage through the bank debt is over 4x, which raises questions about what the bonds are worth."

Visteon narrows loss, bonds gain

Better numbers over at Visteon helped the automotive parts manufacturer's bonds gain as much as 2 points on the day.

One market source pegged the 7% notes due 2014 at 51, while another deemed the debt 2 points better at 52.

The Van Buren Township, Mich.-based company reported a narrower loss for the second quarter at $42 million. That compared to a loss of $67 million the year before. Total sales decreased to $2.9 billion. Still, the figures beat analysts' expectations.

Visteon has undertaken a restructuring plan that has included production cuts and plant closures to help shape up its balance sheet. The company hopes its efforts will save $215 million over the next three years.

However, Gimme Credit analyst Lombard seemed to have mixed feelings on the report. While she noted that the company's turnaround plan has shown some "positive momentum," the auto industry as a whole remains weak, which could put more pressure on the parts supplier. Still, she called liquidity "adequate."

Comcast numbers help Charter

In other earnings-related news, Charter Communications' bonds inched up on the back of rival Comcast Corp.'s 10-Q.

A trader placed the 11% notes due 2015 around 76, though he said there was "not a tremendous amount of broker pictures in them." Another trader echoed that figure.

Comcast's second-quarter profit rose 7.5% to $632 million from $588 million. Free cash flow gained three times over to $1.16 billion, while revenue went up 11% to $8.55 billion for the quarter.

The Philadelphia-based company said the better-than-expected numbers were due to an increase in telephone and internet sales. Comcast gained more than 500,000 digital phone customers and nearly 300,000 internet consumers.

St. Louis-based Charter will release its second-quarter results on Aug. 5. A conference call will be held at 9 a.m. ET.

Airlines, auto loan hurt by oil surge

The airline sector, including such names as UAL Corp., AMR Corp., Delta Air Lines Inc. and US Airways Group Inc., felt weaker during Wednesday's market hours as oil prices surged by more than $4 per barrel, and autos, including Ford Motor Co. and General Motors Corp., slipped as well, according to traders.

For example, UAL, a Chicago-based airline, saw its term loan quoted at 72¼ bid, 74¼ offered, down from 73 bid, 75 offered, traders said.

AMR, a Fort Worth, Texas-based airline, saw it term loan quoted at 90 bid, 92 offered, down from 90½ bid, 92½ offered.

Delta Air Lines, an Atlanta-based airline, saw its first-lien term loan quoted at 82½ bid, 84½ offered, down from 83 bid, 85 offered, traders continued.

And, US Airways, a Tempe, Ariz.-based airline, saw its term loan quoted at 65¼ bid, 67¼ offered, down from 65½ bid, 67½ offered.

As for autos, Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 79 bid, 79½ offered, down from 80 bid, 81 offered, traders said.

And, General Motors, a Detroit-based automotive company, saw its term loan quoted at 78 bid, 80 offered, down from 81 bid, 82 offered, traders added.

Broad market mostly lower

Claire's Stores Inc.'s bonds "continued to drift lower," a trader said. "Retailers [in general] feel a little bit better for sale."

The trader placed the specialty retailer's 9¼% notes due 2015 at 46 and the 10½% subordinated notes due 2017 at 32.

Meanwhile, Trump Entertainment Resorts Inc.'s 8½% notes due 2015 were called active and weaker on the day. The trader saw the debt lose close to 2 points to 50.5, while another quoted the bonds at 50 bid, 50.5 offered.

Station Casinos' bonds, which have been relatively active lately, were deemed "pretty stale" by a trader during Wednesday's session. He saw the 6 7/8% notes due 2016 "kind of wide" at 44 bid, 47 offered, the 6% notes due 2012 offered at 70 and the 7¾% notes due 2016 offered at 67.5.

Station will report its earnings on Thursday. Trump is scheduled to report on Aug. 5.

In the rest of the gaming sector, Isle of Capri Casinos' 7% notes due 2014 "popped of their lows" to 69.25 bid, 70.25 offered, up a point.

Vertis Inc.'s paper lost a couple points, according to a trader. He said the 10 7/8% notes due 2009 fell to around 14.

Sara Rosenberg contributed to this article.

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