Smurfit-Stone gains as plan filed; Freescale heads higher; GM notes improve post-sales results

By Stephanie N. Rotondo

Portland, Ore., Dec. 1 - The distressed debt market ended with a positive tone Tuesday, as good news permeated the marketplace.

Smurfit-Stone Container Corp. announced it had officially filed its plan of reorganization and disclosure statement. The terms of the plan give the majority of new equity to unsecured creditors. Following the news, the company's bonds traded up as much as 4 points, though they ended up giving back some by the end of the day.

Meanwhile, Freescale Semiconductor Inc. is seeking an amendment from lenders that would allow the company to issue more debt and extend maturities. That news was given credit for gains in the bonds and bank debt.

General Motors Corp. released its November sales results during Tuesday's session. That positive news helped the bonds improve slightly, according to traders. However, the notes have not yet had an opportunity to react to news that came out post-close regarding the departure of a top executive.

Smurfit gains as plan filed

Smurfit-Stone Container's bonds moved higher in trading, following the company's filing of its reorganization plan.

Shortly before the market closed, a source pegged the 8 3/8% notes due 2012 at 82 bid, 83 offered, up 4 points on the day.

But after the close, a trader saw the bonds coming off those highs, placing the 8¼% notes due 2012 at 79 bid, 80 offered.

"That's up two bucks," he said.

Yet another market source deemed the 8¼% notes up 1.5 points to 82 bid.

The Chicago-based paperboard manufacturer filed for Chapter 11 protections in January. The company said it is hoping to emerge from bankruptcy in early 2010.

Under the plan, nearly all unsecured debt will be converted to new stock in the reorganized company, "resulting in a significant reduction of total long-term debt," the company said in a press release.

"The filing of our plan of reorganization and disclosure statement is an important step toward Smurfit-Stone's successful emergence from the reorganization process," remarked Patrick J. Moore, chairman and chief executive officer, in the release.

"Our employees, customers, suppliers and other supporters have been instrumental in our ability to reach this important milestone. We will remain focused on tackling the many challenges that remain ahead."

Freescale debt heads higher

Freescale Semiconductor's debt got a boost on news the Austin-based chipmaker was proposing an amendment to lenders that would allow for the issuance of new debt and for the extension of maturities.

A trader said there were 'a couple trades, but not many" in the credit, with the 8 7/8% notes due 2014 gaining a point to close at 85.5 bid, 86.5 offered.

Another source called the issue up 1.5 points to 86.5 bid.

Freescale's term loan was also better, according to traders.

The term loan was quoted by one trader at 84¼ bid, 85¼ offered, up from 82¼ bid, 83¼ offered, and by a second trader at 84¼ bid, 85¾ offered, up from 82 bid, 83 offered.

Under the amendment proposal, the company is seeking the ability to issue secured and unsecured debt to reduce its term loan dollar-for-dollar.

In addition, the amendment would give the company the ability to amend and extend its credit facility at a later date.

Citigroup is leading the amendment.

Responses are due on Monday. In return for consents, lenders will be paid a 7½ basis point amendment fee.

GM improves post-sales results

General Motors' benchmark 8 3/8% notes due 2033 were dubbed the day's "fourth most active bond" by one trader as the formerly bankrupt carmaker posted November sales results.

The trader quoted the paper at 20 bid, 21 offered, which he called "up slightly."

"Those things have been bouncing around," he added, noting that the bonds had been trading in a 20 to 22 range for some time.

At another desk, the notes were seen at 21.5 bid, 22.5 offered, up a point.

For the month of November, GM's sales fell 2% year-over-year, delivering 151,427 vehicles.

However, total sales for the company's Chevrolet, Buick, GMC and Cadillac brands were up 6% from 2008.

"Consumer interest in our launch vehicles remains solid," said Susan Docherty, GM vice president, U.S. Sales, in a press release. "We're working to strengthen our Chevrolet, Buick, GMC and Cadillac brands by providing cars, crossovers and trucks with the sales and service experience that our customers deserve. We have more to do, but we're committed to earning consideration and future sales by delivering great products in every segment."

In other GM news, the world learned late in the day that the company's CEO, Fritz Henderson, had resigned his post.

The announcement was made at a press conference late Tuesday. Ed Whitacre Jr. - the chairman installed after the company received a government bailout - will replace Henderson on an interim basis.

Primus quiet on issue buzz

There was little action seen in Primus Telecommunications Group Inc.'s bonds, despite chatter the company was looking to price a $130 million seven-year secured note deal next week.

One trader speculated that the lack of action was because "the news had been out there for awhile." However, he also pointed to an aversion to deal with the company's higher-ups.

"Really with that name very few people care because dealing with management sucks," he said.

Another trader said there were not trades in the name, though he saw a 96 bid for the 14¼% notes due 2013.

Dubai World fears subsiding

For a second straight session, a trader said that Dubai World's Nakheel Development was "the big trader of the day, still" - but unlike the past two sessions, which have seen the bonds of the Dubai World property unit in retreat on investor angst about the company's ability to handle its debts, on Tuesday, the bonds were unchanged to higher, apparently given a boost by the news that Dubai World plans to restructure some $26 billion of its $59 billion of outstanding debt.

The plan will cover the debt of Dubai World's main property subsidiaries, Nakheel and Limitless. Announcement of the restructuring plan late Monday helped calm investors rattled by last week's initial announcement by the Dubai government that Dubai World would ask creditors to agree to a standstill on billions of dollars of debt owed - including $3.52 billion of Nakheel bonds slated to come due in about two weeks - as well as by the assertion earlier Monday by a government official that the Dubai government disclaimed responsibility for Dubai World's debts, crushing assumptions by creditors that the emirate would guarantee its liabilities.

With the news picture looking a little brighter, the trader saw Nakheel's 3.172% euro-denominated notes slated to come due on Dec. 14 going out at 58 bid, 60 offered, unchanged from Monday's close, but well up from the 52 bid level at which they began the session. Those bonds - which had traded as high as 110 bid last week before Wednesday's Dubai government announcement of a delay in debt payments - had fallen to the 80s at the end of last week and plunged further, to a low of 55, on Monday.

He also saw the 2¾% euro-denominated notes due 2011 trading in a 45 to 47 range, which he called up about 5 points from Monday's lows around 42.5. Those bonds, too, had plunged badly on news of Dubai World's problems, dropping as low as the lower 40s Monday from the mid-50s at the end of last week and the mid-80s pre-news last week.

The trader said both issues were "active" Tuesday "at all of the big desks, which traded all kinds of paper."

Sara Rosenberg and Paul Deckelman contributed to this article.

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