Neiman debt improves on numbers; YRC gains as tender extended; American Axle notes unchanged

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Dec. 9 - The distressed debt market was in "clean-up" mode Wednesday, according to one trader.

The day saw "pretty good volume," he said, though aside from tier-one names like Bank of America or Wells Fargo, trades were in small pieces.

"I think we're in that final couple of days were everybody is trying to clean up and get done what they can get done before the end of the year," he said. He added that "big firms have basically closed the doors, they want to keep their books clean and neat."

This type of activity, he continued, would likely last until Dec. 15, but after that, "it's game over."

Neiman Marcus Group Inc.'s debt was part of the "pretty good volume," as the company released its first-quarter results. The bonds traded up more than 2 points on the back of the numbers, while its bank debt also improved.

Meanwhile, YRC Worldwide Inc.'s bonds moved up some during trading. The gains came as the company extended its tender offer for its 8½% notes and contingent convertibles.

Action in American Axle & Manufacturing Inc. has died down since its heavy trading day on Monday. Even price talk on the company's planned new issue did little to pique investor interest, leaving the bonds unchanged on the day.

In other new issue buzz, Clear Channel Communications Inc.'s term loan continued to move higher as the market pondered whether a deal was going to happen or not. It is expected that if the company does launch a new issue that proceeds would be used to pay a soon-to-be-maturing intercompany note, as well as some bank debt.

Neiman debt improves on numbers

Neiman Marcus group's debt traded better during Wednesday's session, following the release of the Dallas-based retailer's first-quarter results.

A source called the 10 3/8% notes due 2015 2.5 points firmer at 96.5 bid. Another market source deemed both the 10 3/8% notes and the 9% notes due 2015 more than 2 points stronger at 96 bid, 97 offered, in active trading.

And, Neiman's term loan B was also better in trading, according to traders.

The term loan B was quoted at 87 bid, 88 offered, up from 86.25 bid, 87.25 offered, one trader said, adding that "EBITDA came out slightly better than expected and cash flow was good."

Meanwhile, a second trader was quoting the term loan B at 87 3/8 bid, 87 7/8 offered, up 1 3/8 points on the day.

For the first quarter of fiscal year 2010, Neiman reported EBITDA of $128.9 million, compared with $138.2 million in the first quarter of fiscal 2009.

At the end of the quarter, the company had cash of $319 million, an increase of more than $200 million from last year.

Net earnings for the quarter were $8.5 million, compared with net earnings of $12.9 million last year.

And, total revenues for the quarter were $868.9 million, compared with $985.8 million in the prior year.

"These numbers (while down overall) look a lot better than last year and consumer spending/sentiment is improving so current bond prices reflect these changes," wrote Gimme Credit LLC analyst Kim Noland in an afternoon comment.

Burlington bank debt firms

Among other retailers, Burlington Coat Factory Warehouse Corp.'s term loan B strengthened on Wednesday following word that the company will be approaching the market with an amend and extend transaction, according to market sources.

The term loan B was quoted by one source at 91 bid, 92 offered, up from 89½ bid, 90 offered, and by a second source at 89¾ bid, 90¾ offered, up three quarters of a point on the day.

Under the term loan B amendment proposal, which is set to launch on Thursday afternoon, the company would extend a portion of the debt to 2015 with pricing of Libor plus 400 bps and 101 soft call protection for two years.

Currently, the term loan B matures in May 2013 and is priced at Libor plus 225 bps.

JPMorgan is leading the term loan B amendment.

Lenders are being offered a 15 bps amendment fee.

In addition to the term loan B amendment, the company will also launch an amendment to its ABL revolver that would extend some of the commitments in exchange for higher pricing.

Burlington Coat Factory is a Burlington, N.J.-based retailer of branded apparel.

YRC gains as tender extended

A trader said YRC Worldwide's bonds were trading up, placing the 8½% notes due 2010 in a 59 to 62 range, which he called up 3 points.

Another trader said "a bunch" of the 5% convertible notes due 2023 were offered around 51, while the 8½% notes were at 60 bid.

The improvement in the Overland Park, Kan.-based trucking company's debt came as the company extended its previously announced exchange offer for both the 5% converts and the 8½% notes. YRC is now giving noteholders until 11:59 p.m. ET on Dec. 15 to validly tender their debt.

Thus far, the company has received "significant" participation, according to a press release.

"[The company] is encouraged by the response to the exchange offers, which the company commenced following several months of ongoing, active implementation of its comprehensive plan," the press release said.

"The plan is designed to place the company on a more solid financial base with an enhanced capital structure and improved operations and cost structure, making it more competitive and well positioned to take advantage of any upturn in the economy."

American Axle unchanged on price talk

American Axle & Manufacturing's notes finished the day "roughly unchanged, maybe a point better," according to a trader, as price talk on the Detroit-based company's planned new issue emerged.

The trader said "a couple" of the 7 7/8% notes due 2017 traded around the 82.5 level.

But another trader said the debt was "not really active," and opined that the massive interest seen earlier in the week on the back of the new issue - and loan amendment - news was a one time thing.

"It rearranged what needed to be rearranged," he said.

The automotive parts supplier is planning a $400 million issue and expectations are that the proceeds will be used to repay bank debt. Price talk is currently 9½% to 9¾%, with a 1-point original issue discount.

Clear Channel loan still up

Clear Channel Communications' term loan B was once again higher on continued chatter regarding the company's plans to sell about $2.5 billion in bonds, according to traders.

The term loan B was quoted at 79¼ bid, 80¼ offered, up from 79 bid, 80 offered, traders said.

Levels on the term loan B have been steadily rising over the past week or so as investors have been reacting to the bond buzz.

For example, this past Monday, the term loan B was seen at 78¼ bid, 79¼ offered, a point lower than it was seen on Wednesday.

Based on the chatter, the market is expecting the bonds to be issued at the company's outdoor unit and proceeds will be used to reduce an intercompany note and maybe repay some bank debt, traders explained.

Clear Channel is a San Antonio-based media and entertainment company.

Fresh news has little impact

It was a news-filled day during the midweek session, but that did not necessarily translate to big moves for specific credits.

Spansion Inc., for example, was on the quiet side, a trader said, even as the company's creditors committee objected to the company's disclosure statement and sought to end the exclusivity period.

"It doesn't look like there was too much action," he said, quoting the floating-rate notes due 2013 at 102.5 bid, 103.5 offered, the 11¼% notes due 2016 at 108.5 bid, 109.5 offered and the 2.25% exchangeable notes due 2016 at 36 bid, 40 offered.

FairPoint Communications Inc. also made headlines, as the company delayed filing its reorganization plan. But a trader said there was little to no trading in the name, adding that the 13 1/8% notes due 2018 were likely still in the 12 bid, 14 offered range.

Among other news-makers, Park-Ohio Holdings Corp.'s 8 3/8% notes due 2014 were seen holding at 76.25 bid, 77.25 offered, despite Moody's Investors Service placing the company on review for possible downgrade.

Broad market unchanged

Elsewhere in distressed territory, a trader saw Finova Financial's 5 1/8% notes due 2017 at 59 bid, 61 offered. He called that unchanged, but added "for some reason they were a little bit active."

Idearc Inc.'s 8% notes due 2016 saw some action, ending around 6.5, a trader said. "But I don't think that's any different," he noted.

Nakheel down again

A trader said that Dubai development company Nakheel PJSC's paper continued to fall on Wednesday, seeing its 3.172% notes slated to come due on Dec. 14 down "another point or so" to 45 bid, 47 offered, versus a 47-49 context Tuesday and a closing level of 52 on Monday.

He saw its 2¾% notes due 2011 dropping a point to a 35-38 context as the bonds were "drifting lower."

A market source at another desk also saw the Dec. 14 bonds at 45, noting that it was a record low for the bonds, which had been trading as high as 110 bid before the Persian Gulf emirate's Nov. 25 announcement that Nakheel's parent, the giant development conglomerate Dubai World, wanted its creditors to agree to a six-month "standstill" of its debt obligations - a warning which threw world financial markets into an uproar for several days immediately afterward, and which continues to loom as a major negative, even though many banks and other financial entities do not have significant exposure to Dubai and its problems.

After its initial announcement, Dubai said that Dubai World was only looking to restructure about $26 billion of its $59 million total debt load, calming the markets somewhat.

The trustee for the 3.172% sukuk Islamic bond due on the 14th, Deutsche Bank AG, held a conference call with Dubai investors on Wednesday, on which bank executives declared that they were seeking some clarity from Nakheel about the restructuring plans. The call reportedly concluded without any discussion of adopting specific recommendations for further action.

Complicating Dubai World's efforts to restructure Nakheel's debt and other company obligations was the news earlier in the week that a group of more than 25% of the holders of the Dec. 14 bonds has informed Dubai that they would not go along with the emirate's request for a standstill in Dubai World's debt and that of subsidiaries like Nakheel; the 25%-plus gives them enough votes to block any plan they do not like. The dissident debtholders warned that they expect to be paid in full when the $3.5 billion sukuk bond matures less than a week from now.

Paul Deckelman contributed to this article.

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