CIT Group's new issue dominates; American Axle's old debt steady; Aventine paper loses steam

By Stephanie N. Rotondo and Paul Deckelman

Portland. Ore., Dec. 10 - The big news of the day Thursday was CIT Group Inc.'s emergence from Chapter 11 protections and the subsequent launch of its new securities.

According to traders, the new bonds - given to stakeholders in place of their old notes - dominated trading and inched up some from its opening levels.

Meanwhile, American Axle & Manufacturing Inc.'s new issue also came to market. The bonds traded up out of the gate, but the company's existing issues held their ground.

Aventine Renewable Energy Holdings Inc.'s bonds lost their upward momentum in Thursday trading. The paper had gained somewhere in the neighborhood of 20 points in the last two sessions but gave back some of those gains, as a stockholder attempted to get the company to consider alternative reorganization plans.

Overall, traders saw "more of the same year-end stuff," meaning that investors were cleaning up before 2009 merged into 2010.

CIT new issue dominates

CIT Group emerged from bankruptcy protection Thursday and its new securities issued to holders of the old debt "came and are trading," a trader said.

"They were by far the most active," the trader added, placing the 7% notes due 2017 at 85.5 bid, 86 offered.

Another trader said there was "lots of trading" in the issue. He said the paper opened around 85 and ended at 86 bid, 87 offered, but not before hitting a low of 83.75.

Yet another trader called Thursday "CIT Day," in honor of the New York-based commercial lender's formal emergence from Chapter 11. "Hundreds and hundreds of millions [of dollars of bonds] traded, all across their capital structure.

Among the company's five issues of new series A 7% coupon bonds, the ones coming due in May 2013 were at 94 bid, 95 offered; the 2014 bonds were at 91 bid, 92 offered; the 2015 bonds were at 89 bid, 90 offered; the 2016 bonds were at 87 bid, 88 offered; and the bonds maturing in May 2017 were at 86 bid, 87 offered.

He said that all five issues of CIT's new Series B 10¼% coupon bonds, with the same maturities as the 7% paper, "were at a premium," trading between par and 102 or between 101 and 103, with the shortest maturity, the May 2013, at the highest price and the May 2017 at the lowest price, "so they trade in a tighter range" than the 7% issues.

All of the new bonds from both series, however, "were up points on the day" on "a lot of volume."

The trader also said that CIT's old bonds, like its like its 5.60% notes due 2011 or its 5.65% notes due 2017, would be quoted at 75 bid, 76 offered, which he said was unchanged from their recent levels, if they are trading, but he added that "if they're still out there, it doesn't really matter. I don't know how much longer they can trade" before they go away as part of the just-completed restructuring. "I'm not even looking at those anymore."

CIT Group is a New York-based lender to small and middle market businesses.

American Axle's old debt steady

In other new issue news, American Axle & Manufacturing's new 9¼% notes due 2017 broke for trading. The new bonds traded up during the session, but the Detroit-based company's old issues held their ground.

A trader said the new issue was "up a couple points" from its original issue price of 98.715 to 100.75 bid, 101.25 offered.

"That's holding perfectly fine," he said.

In the old notes, the trader quoted the 5¼% notes due 2014 at 85 bid, 85.5 offered and the 7 7/8% notes due 2017 at 82.75 bid, 83 offered.

At another desk, a trader saw the bonds around 101 on the new issue, adding that "it got pretty tight" after the bonds broke. He also saw the 7 7/8% notes at 82 bid, 82.5 offered.

Proceeds from the new issue are expected to be used to repay debt.

Aventine loses momentum

Aventine Renewable Energy's 10% notes due 2017 gave back some of its recent gains, traders reported, as a company shareholder asked the Pekin, Ill.-based company to consider reorganization alternatives.

A trader said the bonds were "down a little" around 92, compared to 95 bid, 96 offered on Wednesday. Another trader echoed that level.

On Tuesday, Aventine's bonds were dubbed a "huge mover," gaining as much as 18 points to end in the low-90s. Those gains continued through Wednesday, as the bonds inched up another 5 points.

On Thursday, it was learned that stockholder Andrew Shirley had sent a letter to the company's board on Dec. 3, asking them to consider alternative plans that would preserve stockholder value.

Shirley contends that the market conditions that were present pre-bankruptcy are no longer there and, as such, offered a plan that would allow some recovery for stockholders.

"My analysis shows that Aventine pre-petition equity has substantial value, potentially more than $10 per share, and that a fair and equitable plan of reorganization can be structured to benefit all stakeholders, including shareholders," Shirley wrote in his letter.

Aventine filed its reorganization plan and disclosure statement Friday. According to the plan, the company intends to issue a new $105 million note. 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.

Aventine further asked the court to authorize an extension of its exclusive period to file a plan of reorganization to March 4 from Dec. 4, and to extend the exclusive period for soliciting support for its plan to May 3 from the current Feb. 1 deadline "to allow the confirmation process to continue unhindered by competing plans."

Stone bonds improve

A trader said Smurfit-Stone Container Corp.'s debt - like its 8 3/8% notes due 2012 - gained "a couple of points" to end around the 88 mark.

He said there was news late in the day, but was not sure what it was.

YRC notes trend up

A trader said that said YRC Worldwide Inc.'s 8½% notes due 2010 's had moved up to a 64 bid, 64.5 context, which he called up about 5 points on the day, with "a lot of them traded," in apparent continued reaction to the Overland Park, Kan.-based trucking line operator's Wednesday announcement that it would extend its pending debt-for-equity exchange offer until 11:59 p.m. next Tuesday, in hopes of getting enough bondholder support for the transaction to put it over the required 95% minimum threshold. As of Wednesday, some 72% of the holders of the 8½% bonds and several convertible issues due in 2023 had tendered their bonds to the company.

The trader reiterated that "they had real good volume."

Nakheel paper higher, but trading flat

Dubai development company Nakheel PJSC's paper remained "pretty busy," according to a trader, seeing its 3.172% notes slated to come due on Dec. 14 push up to 54 bid, 57 offered from, Wednesday's 45 bid, 47 offered, the bond's biggest gain in nine months. Meanwhile, its 2¼% notes due 2011 rose to a 39 bid, 44 offered context from Wednesday's levels around 35 bid, 38 offered. The company's floating-rate notes due 2010 were at 30 bid, 33 offered, also higher than recent levels.

However, it was not good news that was pushing those bonds up from their recent lows; the trader noted that the bonds were now all trading flat, or without their accrued interest, a situation which frequently results in a rise in the nominal price of a bond that has defaulted or that is expected to default.

On the news front, there were no reported new developments in Dubai's efforts to negotiate a six-month debt-payment "standstill" on behalf of the emirate's state-run Dubai World development arm and the latter's subsidiaries such as Nakheel. Unless an agreement is reached, the latter will either have to pay off the $3.52 billion of 3.172% bonds on Monday, or default on them.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.