Bon-Ton gains, Neiman falls on sales numbers; MGM slips, looks to cut debt; Lyondell loan lower

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Jan. 8 - Distressed bonds were once again weaker on Thursday, following the trend of the broader market.

However, traders saw some names rebounding slightly by the end of business.

"The market opened weaker," a trader said, "particularly in the names that have been leading the rally. But it seemed to firm up by the end of the day."

Another trader said the market had fallen generally 2 to 3 points before regaining about a point of those losses.

Bon-Ton Stores Inc.'s bonds were one of a few names that actually traded higher during Thursday's session. Traders deemed the debt 1 to 3 points better following better-than-expected December sales figures. However, Neiman Marcus Group Inc.'s corporate debt dropped as much as 3 points on the day after its own dismal sales report was released.

Among casinos, MGM Mirage's paper slipped some as the company said it was looking to cut debt and possibly even sell more assets. In a Bloomberg article, the company's new chief executive officer said he had plans to "dramatically" cut debt and would not rule out a casino sale.

Meanwhile, LyondellBasell Industries AF SCA's term loan lost some weight, as well. The recently bankrupt company's bank debt fell about 3 points by market close.

Bon-Ton gains, Neiman falls

December sales numbers started to come out Thursday and, overall, the news was grim.

But Bon-Ton Stores' sales report was "not as bad as expected," one trader said, resulting in a 1- to 3-point gain in the retailer's bonds. The trader quoted the 10¼% notes due 2014 at 16 bid, 17 offered, up 3 points.

At another desk, a trader said activity in the name was "busier," with about $12 million of the debt trading hands around the 15 level. Several other sources also placed the debt around that number, calling it about a point better from 13 bid, 14 offered on Wednesday.

For the five weeks ending Jan. 3, York, Pa.-based Bon-Ton saw its comparable-store sales fall 5.8% year over year. Total sales equaled $527.2 million, versus $558.2 million the year before. The previous month, the company had seen its sales fall a hefty 16%.

Consumer caution and the state of the economy were blamed for the sales decline.

"The three weeks prior to the holidays were challenged by a cautious consumer, competitive and economic pressures across the retail sector and unfavorable weather, which included the final weekend before Christmas," said Tony Buccina, Bon-Ton's vice chairman and president of merchandising.

Still, sales during the week of the holiday and after were relatively strong as the company increased its promotions, Buccina added.

Elsewhere in the sector, things were not as positive.

Neiman Marcus' debt lost some weight, though traders saw the bonds recovering some by the end of the day.

A trader quoted the 9% notes due 2015 at 49 bid, 50 offered, down from 53 bid, 55 offered previously. Yet another trader saw the bonds end around 50, up from intra-day lows in the mid-40s.

Another source also saw the debt trading around the 50 mark, deeming that down more than 3 points.

Neiman Marcus's term loan also fell a couple of points. One trader quoted the term loan at 66 bid, 69 offered, down from 68 bid, 71 offered on Wednesday, while a second trader quoted the loan at 69 bid, 71 offered, down 2 to 3 points on the day.

The Dallas-based retailer's same-store sales dropped 27.5% in December, the company said. Along with consumer caution and economy woes, the company said a shift of reporting periods also affected the results. Total sales fell 26.4% to $532 million.

For the sector at large, December sales declined 1.7%, according to the International Council of Shopping Centers. During the last two months of 2008, sales dropped 2.2%, the biggest loss since the group started tracking the data in 1969.

Even stores like Wal-Mart, which had previously done remarkably well in the current economic meltdown, posted disappointing sales for the holiday month. Holiday shopping typically accounts for about half of the quarter's sales.

Claire's Stores Inc.'s term loan also traded with the overall market, according to a trader.

The term loan was quoted at 39½ bid, 40 offered, down from 40½ bid, 41 offered, the trader said.

"Retail numbers were bad but that wasn't unexpected," the trader said. "[Market] was heavy. We had a nice rally for the last week or so, so natural that people are taking some profits. But, volumes are picking up so that's good."

Yankee Acquisition Corp.'s 8½% notes due 2015 closed at 51 bid, 52 offered.

MGM Mirage bonds dip

MGM Mirage's bonds were "a little lower, but not much," according to a trader, after the company said it was looking to cut debt and possibly sell off some assets.

The trader pegged the 13% notes due 2013 at 97 bid, 98 offered, down from around 101 earlier in the week. He also saw the 7 5/8% notes due 2017 at 68 bid, 69 offered.

Another trader placed the 6 5/8% notes due 2015 around 68, down from around 70 previously.

The casino operator's new top executive, James Murren, said he plans to "dramatically" reduce debt in his mission to fix his company's bottom line, according to a Bloomberg report. Murren hopes to refinance debt as credit markets start to reopen.

"We're going to pull every lever we feel like we should pull to strengthen this company, to not only weather the recession, but come out of it stronger," Murren said. "We are certainly not looking to aggressively sell assets, but the point is that we do have assets that are attractive and we are going to be very responsive."

Elsewhere in the world of gambling, Tropicana Entertainment LLC's opco term loan headed lower on Thursday as the company filed its plan of reorganization, according to a trader.

The term loan was quoted at 23 bid, 23½ offered, down from previous levels of 26 bid, 26½ offered, the trader said.

"Traded sown in anticipation of the [plan of reorganization]. No disclosure statement in it. Not enough detail to say anything about it," the trader added.

Under the plan, the company will do a $100 million common stock rights offering for holders of unsecured noteholder claims, issue $100 million of new notes and issue four-year warrants equal to 15% of the value of the common stock outstanding on the confirmation date.

Tropicana is a Fort Mitchell, Ky.-based gaming entertainment provider.

Lyondell loan falls

LyondellBasell Industries' term loan B debt also lost some ground in trading on Thursday, according to a trader.

The term loan B debt was quoted at 42½ bid, 44½ offered, down from around 45 bid, 46 offered, the trader said.

Lyondell Chemical Co., the U.S. subsidiary of Lyondell Basell, recently requested court approval of $8.015 billion in debtor-in-possession financing consisting of $3.25 billion in new term loans, $3.25 billion refinancing obligations under its existing senior secured credit facilities and a $1.515 billion asset-based revolver.

Pricing on the new term loans is Libor plus 1,000 basis points and the revolver pricing is Libor plus 700 bps. There is a 3% Libor floor.

A group of Lyondell's secured lenders raised an objection to the DIP financing, claiming that the proposed financing would allow the DIP lenders to provide $4.334 billion in interim financing on less than 24 hours notice and to prime the senior secured claims of the non-participating senior secured lenders without consent.

The remaining senior secured lenders said they would not receive any meaningful adequate protection or a reasonable opportunity to participate in the proposed financing.

LyondellBasell is a Netherlands-based polymer, petrochemicals and fuels company.

Broad market weaker

Ford Motor Co.'s 7% notes due 2013 traded around 69, with $5 million changing hands, a trader said.

The trader also saw GMAC LLC's 5 5/8% notes due 2009 trade around 95.5.

But another trader said GMAC paper was "unchanged and inactive," with only three of the company's many issues trading. The trader pegged the 5 5/8% notes coming due in May at 95 bid, 96 offered and the 7% notes due 2018 at 42 bid, 43 offered.

First Data Corp.'s 9 7/8% notes due 2015 fell 3 to 4 points to 61 bid, 62 offered, according to a trader.

Freeport-McMoRan Copper & Gold Inc.'s debt was once again listed as the most active. One trader said about $45 million of the 8 3/8% notes due 2017 moved. He placed the bonds around 82.5, "down from the high-80s a week ago, but kind of where it's been."

Another trader called the issue 2 points lower at 83.

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