Tronox bonds pop as term sheet, plan revised; Citadel gains on filing; GM firm on Liddell news

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Dec. 21 - The shortened holiday week started out a mixed bag for the distressed debt market, traders reported Monday.

Some names were stronger, while others faded a bit, sources said.

Of the day's winners, Tronox Worldwide LLC's bonds gained as much as 5 points on the day. The increase in the debt came as the company finalized its term sheet regarding its plan of reorganization.

Meanwhile, Citadel Broadcasting Inc. announced it had filed for Chapter 11 protections as it seeks to implement a pre-negotiated restructuring. The news resulted in some firmness in the company's bank debt.

Also, news of the incoming chief financial officer was given credit for slight gains in General Motors Corp.'s bonds.

But as was expected, Monday's session was rather subdued.

"I don't really notice anything with any real action," a trader said. "It's going to be one of those weeks I think."

Tronox pops as term sheet revised

Tronox Worldwide's bonds gained "about 5 points," a trader said, as the company settled the terms of its reorganization plan.

The trader quoted the 9½% notes due 2012 at 74 bid, 75 offered, a market echoed at another desk as well.

The new plan is centered around new debt and equity financing, as well as the creation of certain trusts related to the company's environmental liabilities.

According to the distribution terms of the plan, general unsecured claim holders will receive 70% of the equity in the new company, with unsecured claim holders receiving the remaining 30%. All of Tronox's bonds will be eliminated.

The company also said it would cancel an auction to sell substantially all of its assets.

Tronox is an Oklahoma City-based producer of titanium oxide pigment.

Citadel loan gains on filing

Citadel Broadcasting's term loan B was stronger as the company announced that it filed for bankruptcy in order to implement a pre-negotiated financial restructuring, according to traders.

The restructuring was agreed upon by over 60% of the company's senior secured lenders and would result in the extinguishment of approximately $1.4 billion of debt.

On the back of the news, the company's term loan B was quoted by one trader at 73½ bid, 74½ offered, up from 71¼ bid, 72¼ offered on Friday, and by a second trader at 73 bid, 75 offered, up from 71¼ bid, 72¼ offered.

To fund its restructuring, Citadel has reached an agreement with its secured lenders to access more than $36 million of cash on hand, as well as all cash flow from operations.

"We are pleased with the support from the majority of our senior lenders, and we look forward to working with the remaining senior lenders and other stakeholders to ensure a complete and expeditious restructuring," said Farid Suleman, chief executive officer, in a news release.

Under the proposed restructuring, Citadel's $2.1 billion secured credit facility will be converted into a new $762.5 million term loan.

Holders of senior secured claims will receive a pro rata share of the new term loan and 90% of the new common stock in the reorganized company.

The plan also proposes that holders of unsecured claims, including the secured lenders' deficiency claim of approximately $900 million, unsecured notes and general unsecured claims will have the option to receive either a pro rata share of cash in an amount equal to 5% of the unsecured claim capped at $2 million or 10% of the new common stock.

Citadel is a Las Vegas-based radio broadcasting company.

GM notes firm on CFO news

General Motors' benchmark 8 3/8% notes due 2033 saw some action during Monday trading, as the Detroit automaker announced it had hired Chris Liddell as its new chief financial officer.

One trader deemed the issue unchanged around 26. But another saw the paper up modestly at 26 bid, 27 offered.

Liddell will start his post in the new year, according to a press release, vacating the position of CFO at Microsoft Corp.

"Chris brings a depth and experience to this job that were unmatched in our search for a new financial leader," said Ed Whitacre, chairman and interim chief executive officer.

"Chris will lead our financial and accounting operations on a global basis and will report directly to me. We're also looking to his experience and insights in corporate strategy as a member of the senior leadership team in helping our restructuring efforts."

GM is still searching for someone to fill the CEO position recently vacated by Fritz Henderson.

ILFC bonds dip

In the financial sector, a trader said that American International Group Inc.'s International Lease Finance Corp. unit saw its bonds down "a good bit," placing the 5.35% notes due 2012 in the mid-80s.

The trader said the 3- to 5-point loss was due to a downgrade by Moody's Investors Service on Friday. The agency lowered the unit to B1 from Baa3.

Another trader said "a lot of the trading" that there was in the market Monday "was in AIG paper." He said that the bonds of the big New York-based insurance company and such subsidiaries as International Lease Finance - such as the latter's 4 7/8% notes due 2010 - "were trading all over the place, it looks like."

He suggested, "It looks like maybe a year-end blowout," but otherwise was unaware on any specific factor that was a catalyst for the action, although another source pointed to Friday's downgrade of those bonds to junk status by Moody's Investors Service.

A market source saw those bonds - which on Friday had finished around 98 bid in size trading, with a few smaller trades late in the day, pushing them near the par level - gradually pushed down during the day before going home at 95, on busy volume of more than $30 million, mostly in several big round-lot trades.

Another market source quoted IFLC's 5.65% notes due 2014 down as much as 6 points on the day in brisk trading, finishing at 77 bid.

Meanwhile, First Data Corp.'s 9 7/8% notes due 2015 ended around 91, a trader said.

Paul Deckelman contributed to this article.

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