Catalyst gains on exchange offer; Clear Channel stays active, firm; Lyondell keeps creeping up

By Stephanie N. Rotondo

Portland, Ore., Nov. 24 - Catalyst Paper Corp. got a boost Tuesday, after the company announced a debt-for-debt swap late Monday.

The news gave the paper company's bonds a 5-point gain, traders reported, in active trading.

Meanwhile, Clear Channel Communications Inc.'s debt continued to be active - and better. Still, there was no news out to explain why the bonds have been on a run.

LyondellBasell's bonds remained on an upward track during the session, though trading volume dropped off considerably from Monday's session. The company's bank debt also continued to be volatile, as rumors circulated that Reliance Industries might have some competition.

Though Wednesday is not an official early close, many market players expect that desks will be cleared out early ahead of the Thanksgiving holiday. The markets will be closed Thursday in observance of the day and will reopen Friday.

Catalyst gains on exchange offer

Catalyst Paper announced an exchange offer for its 8 5/8% notes due June 15, 2011 late Monday. Come Tuesday, that news acted as a catalyst for a 5-point gain in the bonds, traders reported.

A trader said there was "a lot of trading in round lots" in the issue at 75 bid, 76 offered, up from levels around 70 on Monday. However, the trader noted that the bonds had started to improve Monday, with its closing levels up from 65 bid, 66 offered.

"The cat was probably out of the bag," the trader said of Monday's gains.

Another trader also placed the debt in the mid-70s, up from the high-60s.

Under the terms of the debt swap, holders of the 8 5/8% notes that tender their paper will receive new 10% senior secured notes due Dec. 15, 2016. For each $1,000 tendered, holders will receive $700 in new notes and 269 common shares.

Bondholders who tender by the early deadline - 5 p.m. ET on Dec. 9 - will also receive an additional $25 in notes.

Should the offer be successful, the Richmond, B.C.-based company will issue approximately $256.82 million in new notes and approximately 95.28 million common shares.

Catalyst is also soliciting consents from noteholders in an effort to eliminate certain negative covenants from the indentures.

And, upon completion of the exchange offer, Catalyst will conduct a rights offering for shareholders for up to C$100 million.

Clear Channel remains active, firm

Clear Channel Communications' debt was "active again today," according to a trader. There was still no news to explain the recent momentum of the bonds.

The trader said the 11% notes due 2016 were trading up to around 50, compared with 46 bid, 47 offered in the previous session. Another trader echoed that market, calling the notes up 3 points on the day.

Clear Channel Communications is a San Antonio-based media company.

Lyondell keeps creeping up

LyondellBasell's debt continued to gain ground, as news emerged that TPG and Sinipec were considering a rival bid for the bankrupt chemical maker.

The debt had started to move up Monday, when it gained about 10 points on news that Reliance Industries had made a cash offer of up to $12 billion for a controlling stake in the company post-bankruptcy exit.

A trader said issues like the 9.8% notes and the 10¼% notes were trading up around 85, while the 8 3/8% notes firmed to 26 bid, 28 offered from levels around 26.

Another trader quoted the 9.8% notes, et al, at 83 bid, 85 offered.

"They crept up a little more," he said.

The first trader noted that trading activity in the credit was much lighter than Monday.

Meanwhile, LyondellBasell's pre-petition CAM saw more volatility, according to traders.

The CAM was quoted by one trader at 72 3/8 bid, 73 3/8 offered, up from 68½ bid, 69¾ offered, with the high of the day being 75 bid, 77 offered.

Meanwhile, a second trader was quoting the CAM at 73 bid, 74 offered, up from 68¾ bid, 69¼ offered, and he put the high of the day at 74 bid, 76 offered.

On Monday, the CAM was also all over the place, and the movement was attributed to confirmation of a preliminary non-binding offer from Reliance Industries to acquire for cash a controlling interest in the company.

Monday's CAM levels were seen in the 68½ bid, 70½ offered context by the end of the day but there was talk that the debt traded as high as 75 or 78, depending on who was asked.

The Reliance purchase would be done contemporaneously with LyondellBasell's emergence from Chapter 11.

LyondellBasell is a Netherlands-based polymers, petrochemicals and fuels companies.

Broad market mixed

Elsewhere in the world of distressed debt, a trader said Lehman Brothers Holdings Inc.'s bonds were "kind of active" and trading "up slightly" around 20.

Another trader said Spheris Inc.'s 11% notes due 2012 traded around 56.

"That has been trading right in that 54-56 range," he said.

Also, General Motors Corp.'s 8¼% notes due 2023 were seen slipping a point to 21 bid, 22 offered. The loss followed news that the company's planned sale of its Saab unit was not going well.

Among retailers, Bon-Ton Stores Inc.'s 10¼% notes due 2014 were "sliding a little bit" to around 90.5, compared with 91 bid, 92 offered before, a trader said.

The trader also saw Neiman Marcus Group Inc.'s bonds "just up slightly" at 90 bid, 90.5 offered.

Sara Rosenberg contributed to this article.

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