CIT up, plan confirmed; Aventine 'huge mover'; Sprint steady; McClatchy firm on positive buzz

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., Dec. 8 - CIT Group Inc. had another run-up Tuesday, as the company's plan of reorganization was approved.

A trader said the bonds inched up on the news. Another trader noted that the new securities - which are to be issued according to the reorganization plan - are expected to be trading on a when-issued basis.

But it was Aventine Renewable Energy Holdings Inc. that was dubbed the day's "huge mover" - at least pricewise. The company's bonds jumped as much as 18 points on the day, just one day after the company said it had filed its plan of reorganization.

Meanwhile, Sprint Nextel Corp.'s notes finished the day unchanged, even as its equity counterparts experienced some softness. The declines in the equity came as an analyst downgraded the stock, but according to one bond trader, that news didn't "have much of an impact."

McClatchy Co. presented at a conference Tuesday. Positive chatter related to comments made by the company's top executive was credited with giving the newspaper publisher's paper a boost.

Also, American Axle & Manufacturing Inc.'s notes gave back some of the gains incurred Monday. The bonds had run up in the previous session on news the company secured a bank amendment and that it as planning a capital raise.

December doldrums

As the year is gearing up to end, traders have seen a quiet distressed debt market - which is expected to last until the beginning of 2010.

"I think people are focused on the calendar," said one trader. "But they are not trying to do anything new or creative because of year-end.

"Everybody has had a good year after a bad one, so nobody wants to mess it up," he added.

On Monday, a trader told Prospect News he expected the winter doldrums to last at least through the end of the year, though he did opine that some "opportunistic buying" would occur.

CIT up as plan confirmed

CIT Group's bonds "continued to trade up," a trader said, as the bankruptcy judge overseeing the middle market lender's case approved its pre-packaged plan of reorganization.

The trader said the bonds were trading at 75 bid, 76 offered, generically.

Another trader mentioned he was hearing that CIT's new securities - the ones issued as part of the plan - "might be trading when-issued." The first trader said that he also heard that, adding that the new debt was expected to trade in a mid-80s to low-90s ballpark.

At another desk, a trader said that the bonds mostly finished around 75, up a little from where they had been on Monday, while CIT's 6.10% subordinated bonds due 2067 gained 1.5 points on "very good volume" to end the day at 11.5. He said the issue "equates to the equity of CIT, so obviously, people are feeling good about how CIT is coming out of bankruptcy."

He saw some $20 million of the 6.10% notes trading, quoting them between 10.5 and 11.875. Meanwhile, he saw its 4% notes due 2010 trading between 75 and 76, which he called "up probably a good point or 1.5 points, on $16 million traded.

He further saw about $16 million of its floating-rate notes due in July of 2011 having finished the day around 76.25 bid - well up from its opening price of 74, and up further still from the 71 to 73.5 range in which those floaters had moved on Monday on "lots of volume."

With the confirmation of CIT's reorganization plan, the company is expecting to end its short-lived bankruptcy run on Dec. 10.

"CIT's successful emergence establishes a strong foundation for the future of the company," said Jeffrey M. Peek, chairman and chief executive officer, in a release announcing the news.

"As a result of the overwhelming support for our plan, CIT now has a stronger capital structure and improved liquidity profile. Our board of directors and management team now have the time and flexibility to execute the balance of CIT's restructuring strategy, including maximizing the value of its existing assets and optimizing the business model."

Under the plan, New York-based CIT will reduce its total debt by about $10.5 billion. The plan also allows for the deferment of maturities for three years. The company's capital ratios will also improve, exceeding regulatory requirements, according to the release.

Aventine a 'huge mover'

A trader said that "there was one huge mover today" - Aventine Renewable Energy's 10% notes due 2017. He said that a little more than $6 million traded on the day, closing at 90.5, which he said was up more than 18 points from the most recent previous print on Trace.

The big gain in the Pekin, Ill.-based ethanol producer's bonds was apparently sparked by the news that Aventine - which had filed for Chapter 11 protection back in April - had finally filed its plan of reorganization with the U.S. Bankruptcy Court in Wilmington, Del., after having been granted two extensions of its exclusivity period by the court.

According to the disclosure statement filed Friday along with the plan, Aventine will issue $105 million in notes on the effective date of the plan that will be used to fund distributions and post-emergence working capital needs. Aventine said in the document that the holders of about 70% of its pre-bankruptcy unsecured notes have agreed to purchase up to $105 million of the new senior secured notes, which will have a coupon of either 13%, payable in cash, or 15% if the company elects to pay the interest in kind through the issuance of new notes.

The senior secured notes will be issued in units containing a $1,000 face amount note and a share of 20% of the total shares of the reorganized company to be issued with the notes.

Aventine also said it will enter into a $20 million asset-based lending facility to fund post-emergence liquidity and working capital needs.

Sprint bonds steady

Sprint Nextel's debt held its ground during Tuesday trading, even as its equity counterparts were softening on the back of an analyst downgrade.

One market source pegged the 6% notes due 2016 and the 8¾% notes due 2032 at 87 bid, 88 offered, unchanged, in mostly odd-lot trading. Another source placed the 8 3/8% notes due 2017 around "981/2-ish."

Another trader, speaking to the analyst's equity downgrade, said he didn't "think it has had much of an impact" on the bonds.

On Tuesday, Pali Capital analyst Walter Piecyk dropped his rating on Sprint's stock to neutral from buy. Piecyk cited poor earnings performance for the action.

"Sprint's stock is not expensive...but with [operating profit] in perpetual decline and capital spending at a low, a valuation call is difficult to defend," he wrote in the report.

Sprint Nextel is an Overland Park, Kan.-based wireless telecommunications company.

McClatchy higher on positive buzz

"Favorable chatter" regarding the company's revenue forecast was given credit for some gains in McClatchy's paper, according to a trader.

The trader said the notes were "a little better in the shorter end," deeming the 4 5/8% notes due 2014 3 to 4 points better around 57. The 7 1/3% notes due 2011 were also firmer around 85.

At UBS Investment Bank's 37th annual Global Media & Communications Conference in New York, McClatchy's chairman and chief executive Gary Pruitt said that while ad revenues in the fourth quarter will be down, they are expected to improve for the second consecutive quarter. Pruitt said the company's move to a hybrid online/print publication is helping stem the loss of ad sales.

In addition, Pruitt said that all 30 of the company's newspapers are profitable and revenues were moving up.

American Axle gives back

American Axle & Manufacturing bonds saw "a little bit of activity," a trader said, but "they probably gave back [some of Monday's gains]."

The trader quoted the 5¼% notes due 2014 at 84 bid, 85 offered and the 7 7/8% notes due 2017 at 81 bid, 81.5 offered.

A trader saw American Axle & Manufacturing Inc.'s 7 7/8% notes due 2017 trading at 81.5 with "a couple of million traded," which he called down half a point on the day, and saw the company's 5¼% notes due 2014, which had gotten as good as 87 on Monday, trading around the 84 level Tuesday. He said the latter bonds were more active than the 2017 issue.

"You had a couple of million trade at 87 - and then the next trade we saw today, it was trading down at the 84 level," he said.

He suggested that the bonds might have risen Friday and Monday because "somebody may have been covering a short, you never know." An alternate theory was that the bonds had risen on the news of the company's new deal, but then faded Tuesday as that momentum died out - and as investors realized that the new bonds, which are first-lien senior secured, will rank ahead of the current bonds in the capital structure, pushing the latter's holders further to the back of the payment line in the event of an event of default.

The Detroit-based company announced on Monday it had amended its credit facility, which had given its debt structure a boost. Also on Monday, it was learned that the company was looking to launch the new issue, as well as to sell 14 million common shares.

Proceeds from the capital raise are expected to be used to pay down bank debt.

Freescale loans mixed

Freescale Semiconductor Holdings I Ltd.'s old term loan was higher and its new term loan was lower as its amendment proposal failed to get lender approval by the Monday consent deadline, according to traders.

The old term loan was quoted by traders at 87¼ bid, 88¼ offered, up from 87 bid, 88 offered, while the new term loan was quoted by one trader at 104 bid, 105 offered, down a quarter of a point on the day, and by a second trader at 102 bid, down from 104 bid, 105 offered.

Under the amendment proposal, the company was looking for permission to issue secured and unsecured debt that would be used to reduce the term loan dollar for dollar, and for the ability to amend and extend its credit facility at a later date.

Lenders were being offered a 7½ basis point amendment fee.

Citigroup was leading the amendment.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial and networking markets.

Paul Deckelman and Sara Rosenberg contributed to this article.

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