Visteon bonds fall; Clear Channel welcomes new issue; Ply Gem exchange fails; Momentive softer

By Stephanie N. Rotondo

Portland, Ore., Dec. 18 - Though the market had been somewhat active over the course of the week - with a looming holiday, no less - the distressed debt arena finished Friday "kind of dull."

"There is still cash being put to work," a trader said. "But nobody wants to sell. I think there are still better buyers out there."

It was not, however, a dull day for Visteon Corp. The company filed its reorganization plan, which included a proposal for the transfer of three pensions. But the news did little to appease investors, sending the bonds down as much as 8 points.

Meanwhile, Clear Channel Communications Inc.'s existing notes stepped back a bit, after being among the top active names for several straight sessions. The bonds were still somewhat active, but the majority of the activity was in the media company's just-launched new issue.

Also, Ply Gem Industries Inc.'s deadline for a previously reported on exchange offer came and went Thursday. Come Friday, the company said the minimum threshold requirements were not met. Still, the bonds seemed little fazed.

Visteon bonds fall

Visteon's bonds lost ground during the final trading day of the week, as the company filed its reorganization plan.

A trader saw a 19 bid for the 7% notes due 2014, adding that the issue "traded a few times around 20."

He also saw the 12¼% notes due 2016 at about 36 bid, 37 offered.

Another market source said the bonds dropped 7 to 8 points, pegging the 8¼% notes due 2010, as well as the 7% notes, at 20 bid, 21 offered.

As part of Visteon's plan to exit bankruptcy protections, the Van Buren Township, Mich.-based automotive parts supplier is asking Pension Benefit Guaranty Corp. to take over three of its pension plans. In return, Visteon will give PBGC a 3.8% equity interest in the new reorganized company.

Visteon is claiming that covering the pensions themselves would not be prudent for the company's survival. If Visteon kept the pensions, the company would have to contribute $260 million to fund the plans through 2015. And, in that same scenario, PBGC would then have a $460 million claim against Visteon, of which it would only receive about 12%, the company said.

Also according to the proposed reorganization plan, Visteon's lenders - which are owed about $1.6 billion - will receive the remaining 96.7% of equity. Unsecured creditors holding about $1.2 billion in claims will receive nothing.

Clear Channel welcomes new issue

Clear Channel Communications' bonds were still somewhat active during Friday trading, though not nearly as much as they had been in the last few days, if not weeks, according to market sources.

The decline in activity was likely due to the emergence of the company's new $2.5 billion issue, as investors looked to scoop the new paper up.

A trader said the 5½% notes due 2014 were the most active issue under the credit's umbrella, around the 66 mark. He also aw the 5½% notes due 2016 at 57 bid, 57.5 offered.

Also, the trader said the new issue was in two parts, a series A and B note, both of which came at par. He saw the series A issue trading up to 102.25 bid, 103.25 offered, while the series B ended at 103.25 bid, 103.75 offered.

Meanwhile, Clear Channel's term loan B and delayed-draw term loan held steady after running up during the previous session on the back of news that the company's bond offering was significantly upsized, according to a trader.

The term loan B was quoted by the trader at 83 bid, 84 offered, and the delayed-draw term loan was quoted at 79½ bid, 81½ offered, unchanged on the day.

On Thursday, the term loan B was rose from 81½ bid, 82½ offered and the delayed-draw term loan rose from 79 bid, 81 offered as the company said in a 8-K filing that it was considering upsizing its senior notes offering and using some of the additional proceeds to repay term loans at par.

By evening, sources said that the bond deal was indeed increased - moving to $2.5 billion from $750 million.

In addition to repaying term loans, proceeds from the notes will be loaned to Clear Channel Outdoor Holdings Inc. to repay intercompany debt owed to Clear Channel Communications.

Though the market has reacted rather positively to the new deal, some are not so optimistic.

"Even with a massive pay down, we have little hope that Clear Channel Communications can grow into its capital structure and doubt the value of the bonds," wrote Gimme Credit analyst Shelly Lombard in a note to clients. That being said, "we also expect the market to continue to ignore valuation concerns and concentrate on the benefits of a potential $2.5 billion debt pay down."

Following suit, Moody's Investors Service dropped its rating on the new issue to B2.

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

Ply Gem exchange fails

Ply Gem Industries' debt finished the day unchanged to weaker - though in mostly odd-lot trades - following word that the company's exchange offer had failed to meet the minimum requirements.

A trader saw an 81.25 bid, "but just for a small piece" in the 9% notes due 2012. He also quoted the 11¾% notes due 2013 at 98 bid, 99 offered.

Another source placed the 9% notes around 80, noting that the trades were mostly small in size. However, that compared with odd lots around 83 on Thursday.

The source deemed the 11¾% notes unchanged around 98.5.

The Cary, N.C.-based building products company was looking to exchange up to $78.7 million of the 9% notes. For the swap to be successful, the company needed at least $30 million of the notes to be validly tendered by Dec. 17.

Any notes that were validly tendered will be returned to their holders.

Momentive loan under pressure

Momentive Performance Materials Inc.'s term loan B took a turn for the worse during the trading session following word that the company terminated its credit facility amendment proposal, according to a trader.

The term loan B was quoted by one trader at 88½ bid, 90½ offered, down from 90½ bid, 92½ offered, and by a second trader at 89 bid, 90 offered.

On Friday morning, Momentive Performance said in an 8-K filed with the Securities and Exchange Commission that it "has chosen not to seek to amend its senior secured credit facility."

Under the pulled amendment proposal, the company was going to extend some term loan commitments to 2015 and some revolver commitments to 2014.

In addition, the amendment was going to reduce the size of the revolver.

Momentive Performance also revealed in its 8-K filing that it no longer plans to sell $500 million of first-lien senior secured notes.

Proceeds from the notes were going to be used to repay some term loan borrowings and for general corporate purposes.

Completion of the amendment and the notes offering were conditioned on each other, as the amendment was going to give the company permission to issue the notes.

Momentive is an Albany, N.Y.-based specialty materials company, providing high-technology materials products to the silicones, quartz and ceramics markets.

Sara Rosenberg contributed to this article.

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