Clear Channel gains on bond issue plans; Smurfit bonds rally; Trump shakes off Icahn-Beal news

By Stephanie N. Rotondo

Portland, Ore., Dec. 11 - Clear Channel Communications Inc. confirmed rumors Friday when it announced that it would in fact be launching a new issue.

Though well below the anticipated $2.5 billion - the issue is expected to be about $750 million - the news still gave the company's bonds a boost. Some issues gained as much as 5 points on the day, according to traders. The bank debt meanwhile ended unchanged to better.

Smurfit-Stone Container Corp.'s bonds were also trading higher during the session. The gains came a day after a judge denied a request to form an equity committee.

Elsewhere, Trump Entertainment Resorts Inc.'s notes shook off news that Carl Icahn had joined forces with Beal Bank. Icahn announced he had purchased a majority of the first-lien mortgage notes held by Beal and that he was supporting a reorganization plan proposed by the bank.

As the week came to an end, traders reported that market was rather quiet. However, one trader noted that volumes came in over $1 billion.

Clear Channel gains on new issue plans

Clear Channel Communications was the "most active, by far" in the distressed debt realm, a trader said, as the company announced it would, in fact, be launching a new issue.

The trader saw the 11% notes due 2016 at 633/4, the 10¾% notes due 2016 around 72 and the 5½% notes due 2014 around 60.

Another trader said "a lot of CCU" moved, with about $60 million to $70 million of the 11% notes trading around that 63.75 level. He deemed that up 3.5 to 4 points on the day.

The trader also called the 10¾% notes up 4 to 5 points around 72, on about $50 million traded.

Meanwhile, Clear Channel's term loan B was unchanged to better, depending on which trader was asked, on the back of the news of the new senior notes offering.

The term loan B was quoted by one trader at 79.5 bid, 80.5 offered, flat on the day, and by a second trader at 80 bid, 81 offered, up from 79.5 bid, 80.5 offered.

On Thursday night, Clear Channel's subsidiary, Clear Channel Outdoor Holdings Inc., said that its subsidiary, Clear Channel Worldwide Holdings Inc. will be selling $750 million of senior notes.

Clear Channel Outdoor will receive the proceeds from the note sale and will use those funds to repay approximately $730 million of debt owed to Clear Channel Communications.

The fact that the company is selling notes is not a big surprise as an offering has been rumored in the market for a little while now. However, the rumors estimated that the offering could be as much as $2.5 billion.

However, the news did result in a rating upgrade from Standard & Poor's. The rating agency upped its corporate credit rating on the company to CCC+ from CCC.

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

Smurfit bonds rallying

A trader said there was "a lot of sniffing around" for Smurfit-Stone Container bonds, just one day after the bankruptcy judge overseeing the Chicago-based company's case denied a motion to form an equity committee.

The trader quoted the 8% notes due 2017 and the 8¼% notes due 2012 at 88 bid, 89 offered.

The trader noted that "the other day people were looking for them," but during Friday's session "there were more for sale today."

Another trader saw the 8¼% notes at 88.5 bid, 89 offered, while another pegged the issue at 86 bid, 88 offered.

On Thursday, Brendan Shannon, the judge, shut down a group of shareholders looking to form a committee in the bankruptcy case in an attempt to get some form of recovery for those stakeholders.

"The court concludes that appointment of an equity committee is not necessary to ensure adequate representation of the interests of shareholders," he said in Thursday's opinion. Shannon cited a report from the company's investment bankers, which claimed that the overall value of Smurfit was not enough to provide recovery for stockholders.

Shannon also noted that the group had enough representation to file a competing reorganization plan.

Trump shakes off Icahn news

Trump Entertainment Resorts' 8½% notes due 2015 were little fazed by news that billionaire investor Carl Icahn had joined Beal Bank in supporting a reorganization plan proposed by the Dallas-based bank.

A trader said there were "very little" of the bonds trading, though he saw them move at 3.25 in odd-lot trading.

Another market source also saw the notes trading with a 3 handle.

Icahn announced that he had purchased a large portion of the $486 million first-mortgage liens on the Atlantic City casino held by Beal Bank. He also reported he is supporting a reorganization plan Beal has proposed, which if approved, would give the bank a majority stake in the company.

"The addition of Mr. Icahn to the Beal team should allay concerns and criticism over the ability of the Beal Plan to move forward," Icahn's office said in a press release.

"We reached out to Mr. Icahn to capitalize on his extensive experience both in the gaming industry and in turning around troubled companies," Andrew Beal, president of the company with the same name, in the statement. "We think that this team now has all of the tools necessary to quickly and successfully emerge from bankruptcy and rebuild a best in class operation."

"Despite the current problems in Atlantic City. I continue to have great faith in the city's future," Icahn remarked. "I have successfully invested in, operated and restructured troubled gaming companies in the past...I believe that, while Trump's operations in Atlantic City have potential, the economic uncertainty, changing competitive landscape and Trump's two bankruptcies in five years demands a measured and conservative approach, including minimizing both outstanding debt and the likelihood of a third bankruptcy.

"This conservative approach, which is the path suggested by the Beal Plan, combined with an experienced operator, will create the best outcome for all stakeholders, including customers, employees and Atlantic City itself," he continued.

"Therefore, we will support, and do everything we can to ensure the success of, the Beal plan. The ad hoc committee's plan, on the other hand, is a 'roll of the dice' to re-leverage these operations which may well turn into a roundtrip ticket to bankruptcy court. The Beal plan offers a new Trump Casino with no debt that will be able to weather the current economic turmoil."

Hayes revises term loan pricing

Hayes Lemmerz International Inc. came out with some updates to its $150 million term loan, including a lift in pricing and a final original issue discount, and then the loan hit the secondary market where it was quoted at 96½ bid, no offers, according to a market source.

Pricing on the term loan was flexed up to Libor plus 950 basis points from initial talk of Libor plus 800 bps, the source said.

Also, the original issue discount was set at 96, the high end of initial talk of 96 to 97, the source remarked.

The term loan has a 2% Libor floor.

Deutsche Bank is the lead bank on the deal that will be used for exit financing.

Under the company's plan of reorganization, which was already confirmed by the court, total consolidated pre-petition funded debt of roughly $720 million is expected to be reduced to about $240 million upon emergence.

Hayes Lemmerz is a Northville, Mich.-based maker of automotive and commercial highway wheels.

Broad market stronger

Among other distressed credits, Idearc Inc.'s 8% notes due 2016 traded up to around 7, a trader said, on about $10 million traded.

CIT Group Inc.'s new securities were "really the active one," according to a trader. He saw the 7% notes due 2017 at 87 bid, 87.5 offered, calling that "a little better."

Sara Rosenberg contributed to this article.

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