Clear Channel debt still zooms; Rite Aid moves up on numbers; Station unfazed by takeover bid

By Stephanie N. Rotondo

Portland, Ore., Dec. 17 - Clear Channel Communications Inc. once again made headlines Thursday, as the company said it was considering upsizing its planned new issue.

It very well came as no surprise, then, that the company's bonds were once again among the day's most active, continuing their upward ascent. Proceeds from the increased issue are expected to be used for the repayment of bank debt.

Meanwhile, Rite Aid Corp. posted a narrower loss for the third quarter. As a result, the company's bonds were seen trading up higher - though slightly so - in early trading.

Also, Station Casinos Inc.'s debt finished the day unchanged, even as the Las Vegas-based casino operator received another takeover offer from Boyd Gaming Corp.

Overall, things were seen quieting down in the distressed debt market, just one week before the Christmas holiday.

"The market seemed kind of quiet and softer in sympathy with the equity market," a trader said.

Clear Channel still zooming

Trading in Clear Channel Communications continued to be heavy and the bonds were pushed up further by word the company was looking to repay some bank debt.

A trader called the 10¾% notes due 2016 "very active" at 80 bid, 81 offered. The 11% notes due 2016 were the "second most active," opening around 70.5 and ending around the 75 mark.

The trader also saw the 5½% notes due 2014 at 66 bid, 67 offered.

Another trader said the notes were "busy, every day," also pegging the 11% notes in that 75 range.

"That's a little bit better again, probably by a couple of points," he said.

In a filing with the Securities and Exchange Commission Thursday, the San Antonio-based multimedia company said it was considering lifting its planned $750 million new issue of senior unsecured notes so that it could repay some term loans at par.

In fact, late in the day chatter was that the deal had indeed been upsized - to that $2.5 billion level that had originally been anticipated - with price talk around 8¼% to 8¾%.

The company has said previously that the new issue proceeds would go toward prepaying a portion of an intercompany note that matures in August.

Rite Aid moves up on numbers

In the retail world, Rite Aid's bonds moved up about a point on the day, following the release of the company's third-quarter results.

A trader said the bonds were "up a point early" in the session, seeing the 10 3/8% notes due 2016 around 106.

Another market source quoted the 9½% notes due 2017 at 94.5 bid, 95 offered, while yet another placed the 8 5/8% notes due 2015 at 85 bid.

For the quarter ending Nov. 28, the Camp Hill, Pa.-based drugstore chain reported a net loss of $83.9 million, or 10 cents per share, compared with a loss of $243.1 million, or 30 cents per share.

Revenues came to $6.4 billion. The company said that "liquidity remained strong," with $903.2 million available under its credit facility and from cash on hand.

"Our results demonstrate the significant progress we've made to strengthen our company since last year's third quarter," said Mary Sammons, chairman and chief executive officer, in the earnings release. "Liquidity at the end of the quarter more than doubled, and we've refinanced all of our 2010 debt maturities to give more time for our growth initiatives to work.

"Congratulations to our team for the great job they did once again growing prescriptions, reducing expenses and controlling inventory, which helped offset difficult front end sales in this tough retail economy and continued pressure on pharmacy margins," she concluded.

Kim Noland, an analyst with Gimme Credit LLC, noted that the overall numbers were "better than we expected," but still had some concerns going forward.

"While liquidity is strong at $900 million and refinancing has given Rite Aid some time to improve cash flow and delever, we are concerned that this might be had to accomplish without skimping on capex," Noland wrote in an afternoon comment.

Bon-Ton steady despite upgrade

Also in the retail space, Bon-Ton Stores Inc.'s notes were "pretty quiet," a trader said, as well as unchanged following an upgrade from Moody's Investors Service.

A trader said most of the trades in the name were odd lots, seeing the 10¼% notes due 2014 offered at 923/4. Another trader called the debt unchanged at 91½ bid, 92 offered.

Moody's upped its corporate family and probability of default rating on the York, Pa.-based retailer to Caa1 from Caa2. The notes were also upgraded to Caa2 from Caa3.

Station unreactive to Boyd bid

Station Casinos seemed little fazed by news that its competitor Boyd Gaming had renewed a proposal to buy the bankrupt casino operator.

"I think they are trying to buy them cheap," a trader said of Boyd's $2.45 billion cash and debt offer.

The trader saw the senior paper, such as the 6% notes due 2012 at 15.5 bid, 16.25 offered, noting that "a small piece" traded at 14. The junior notes were meanwhile trading under a dollar.

At another desk, a source called the 6% notes off more than 7 points at 14 bid.

In February, Station rejected a $950 million offer from Boyd and the company's spokesperson said the newest proposal is similar in nature.

But Boyd has continued to seek the acquisition, even going so far as to complain to a bankruptcy judge that Station has been uncooperative in the process.

"Boyd Gaming is in the best position to execute a smooth transition of ownership and operate the Station properties efficiently from day one," said Keith E. Smith, Boyd's CEO, in a letter submitted in a regulatory filing with the SEC. The letter was sent to Station's board of directors for consideration.

"The board has made no determination to pursue, nor has the company taken any steps toward pursuing, a sale of all or any portion of the company's assets," said Lori Nelson, Station's spokesperson, in a statement.

"We think the nonbinding nature of the bid as well as Station's retention of exclusivity to file its own reorganization plan until late march (or beyond) makes it unlikely that such a purchase would be agreed to near term," said Kim Noland, analyst with Gimme Credit, in an afternoon report. "However, the increase in the bid (albeit it does include more assets) should at least get a look from Station's creditors."

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