Neiman paper higher on numbers; Rite Aid debt mixed; Bon-Ton bonds gain, sales 'disappointing'

By Stephanie N. Rotondo

Portland, Ore., Dec. 3 - Monthly sales results seemed to be the catalyst for most of the activity in the distressed debt realm Thursday, as retailers started to post their holiday sales numbers.

Though it saw a decline year-over-year, investors seemed pleased with Neiman Marcus Group Inc.'s results. In reaction to the news, the bonds and bank debt were pushed higher.

Rite Aid Corp. also reported its sales for the first month of the holiday season. But the results came with mixed trading in the company's debt. As the bonds drifted lower and the bank debt went in the opposite direction.

Also, Bon-Ton Stores Inc. came out with numbers, which one market source deemed "disappointing." Still, the bonds shrugged off the report and headed north.

As has been typical of late, some credits - like Clear Channel Communications Inc., Smurfit-Stone Container Corp. and General Motors Corp. - continued to be among the day's most active names. But there continued to be little news out to explain why said names have been so busy recently.

Neiman paper moves up

Neiman Marcus Group's debt headed for higher ground during Thursday trading as the company released its November sales results.

A trader said the bonds - both the 10 3/8% and 9% notes due 2015 - were a "touch better" around 93. Another source deemed the 10 3/8% notes up 1.5 points, also to with a 93 handle.

The Dallas-based luxury retailer's term loan B was also stronger, according to traders, despite the company showing a slight year-over-year decline in November revenues.

The term loan B was quoted by one trader at 85½ bid, 86 offered, up from 84½ bid, 85½ offered, and by a second trader at 85½ bid, 86 offered, up from 85¼ bid, 85¾ offered.

For November, total revenues were $305 million, down 5.9% from $324 million in the comparable period last year.

And, comparable revenues for the month were $299 million down 7.5% from $323 million in November 2008.

From a liquidity standpoint, the company's cash balance as of Nov. 28 was over $335 million compared with $175 million in the prior year and its $600 million asset-based revolver was undrawn.

Rite Aid debt mixed

Rite Aid also posted its sales results, but the numbers resulted in mixed trading for the company's debt structure.

A trader called the 9 3/8% notes due 2015 "a smidge lower" at "close to 84." At another desk, the 8 5/8% notes due 2015 were seen down over a point to 84 bid.

However, the Camp Hill, Pa.-based drugstore chain's bank debt shrugged off the monthly report, with one trader claiming that the rise probably had to do with the market in general feeling a little better.

The tranche 2 term loan was quoted by traders at 86 3/8 bid, 86 7/8 offered, with one trader saying it was up three eighths of a point on the day and another trader saying it was up from 86 bid, 86¾ offered.

The tranche 3 term loan was quoted by traders at 92½ bid, 93¼ offered, with both traders placing the paper higher by a quarter of a point on the day.

And, the tranche 4 term loan was quoted by traders at 103¼ bid, 103¾ offered, with both traders claiming the debt was up from 103 1/8 bid, 103 5/8 offered.

For the month of November, Rite Aid's same store sales decreased 0.8% over the prior-year period.

Total drugstore sales for the five-week period decreased 2.1% to $2.425 billion compared with $2.476 billion for the same period in 2008.

For the 13-week quarter ended Nov. 28, same store sales decreased 0.5% over the prior-year period.

And, total drugstore sales for this 13-week third quarter decreased 1.8% to $6.329 billion from $6.444 billion last year.

Bon-Ton gains, sales 'disappointing'

Bon-Ton Stores' also reported its monthly figures and, according to one market player, the numbers were not good, but the bonds improved anyway.

"Despite what looked like disappointing numbers, those bonds were a smidge better," he said of the 10¼% notes due 2014.

The source quoted the issue at 91 bid, 92 offered.

For the four weeks ending Nov. 28, the York, Pa.-based retailer saw its comparable store sales fall 6%, while its total sales dipped 6.4% to $310.8 million from $332.2 million the year before.

Year-to-date comparable sales dropped 6.8%, according to a press release. For the entire year, sales were also seen declining, down 6.7% to $2.26 billion from $2.43 billion in 2008.

Bon-Ton ended November with $361 million available under its revolving credit facility.

"We achieved our November sales plan," said Tony Buccina, vice chairman and president of merchandising, in the release. "November sales were negatively impacted by the warmer weather, as evidenced by a poor performance of outerwear. Sales trends in furniture and missy better sportswear continue to be unfavorable. November ending inventory was down 6.7% on a comparable store basis and clearance inventory was down 24%, which continue to benefit our margin.

"We enter December with fresher inventories than prior year and well positioned to achieve our sales and margin goals," he concluded.

Majestic investors nonplussed by numbers

Among other companies reporting financials Thursday, Majestic Star Casino LLC announced its third-quarter results, but the filing did little to entice investors.

A trader said there was only one trade in the 9¾% notes due 2011, pegging them at 10.25 bid, 10.5 offered.

For the quarter ending Sept. 30, the bankrupt casino operator posted an operating loss of $1.94 million on $74.83 million in operating revenues. That compares to an operating loss of $36.43 million for the same quarter of 2008, on revenues of $82.67 million.

Net loss was narrower, however, at $19.39 million, versus $52.2 million the year before.

The Las Vegas-based company filed for Chapter 11 protections on Nov. 23.

CCU, Smurfit, GM still busy in trading

Several recently active names remained so during the session, with little to no news driving the movements.

A trader said Clear Channel Communications' 10¾% notes due 2016 remained busy, though they ended their several-session run-up by ending unchanged at 67 bid, 68 offered. Another trader echoed that market.

The bonds have been active off and on for a couple of weeks now. Some have previously speculated that the activity was due to the company considering a new issue, the proceeds of which could be used to pay down existing debt.

Smurfit-Stone Container's 8% notes due 2017 were also active, as they were earlier in the week when the company filed its plan of reorganization.

"They are kind of grinding higher," a trader said, placing the issue around 84.75.

Also, General Motors' benchmark 8 3/8% notes due 2033 were also a big mover - volume-wise - but ended steady "in that 22-23 zone."

First Data Corp.'s 9 7/8% notes due 2015 were an addition to the day's active list, according to a source.

"They are back to being active," the source said, quoting the notes at 90 bid, 91 offered.

Sara Rosenberg contributed to this article.

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