GM bonds remain busy, better; Visteon notes improve; YRC Worldwide active as approvals secured

By Stephanie N. Rotondo

Portland, Ore., Dec. 22 - the distressed debt market had a generally firmer tone to it Tuesday, as the day's biggest traders moved up.

General Motors Corp., for example, continued to see heavy trading in its bonds. The bonds were also seen ending about a point better, presumably still on the news regarding the addition to the management team.

However, there was no news to explain why Visteon Corp.'s notes traded actively and also better.

YRC Worldwide LLC's bonds ended either worse or unchanged on the day, depending on whom you asked. The paper did see decent volume, however, as the company announced it had received the approvals necessary to go forward with its debt-for-equity exchange.

GM remains busy, better

General Motors' bonds continued to move up in active trading, market sources reported.

A trader said the benchmark 8 3/8% notes due 2033 were "active again" at 26 bid, 27 offered, up from 25 bid, 26 offered.

Another trader said both the 2033 paper and the 7.20% notes due 2011 ended "better," around 27.

The Detroit automaker's debt started to gain steam during Monday trading, as the company announced that former Microsoft Corp. chief financial officer Chris Liddell was joining the formerly bankrupt company.

On Tuesday, news reports speculated that Liddell's "to-do" list - which includes repaying $6.9 billion in government aid and leading an initial public offering - might also lead him to the chief executive spot vacated by Fritz Henderson.

In other GM news, Isuzu is reportedly considering dropping GM as its joint venture partner. That follows news that GM is considering shuttering its Saab unit as takeover talks with Opel failed.

Visteon notes improve

Elsewhere in the autosphere, Visteon's bonds were also among the day's most active, a trader said.

The trader pegged the 7% notes due 2014 at 22 bid, 23 offered, up from 20 bid, 21 offered previously.

Another trader also called the 7% notes "a little bit better," around the 22 mark.

There was no fresh news out on the Van Buren Township, Mich.-based automotive parts supplier to explain the surge. However, last week the company filed its reorganization plan, which will give 96% control of the company to secured lenders.

YRC active as approvals secured

Traders gave mixed reports on the performance of YRC Worldwide's bonds, as it was learned that the company had secured the needed consents to complete a debt exchange.

A trader deemed the debt "busy," quoting the 8½% notes due 2010 at 59 bid, 60 offered. He called that down 1 to 1.5 points.

But another source saw the paper "kind of where it was" in the high-50s.

YRC has "satisfied certain requirements related to its previously announced debt-for-equity exchange offers," according to a press release Monday. The requirements included approval by the Securities and Exchange Commission, as well as approval from lenders and some pension funds.

"This completes major steps with certain critical stakeholders to allow the transaction to proceed without further extensions related to these steps," the company said.

Last week, YRC extended the deadline for its tender offer after failing to receive the minimum threshold requirements.

YRC Worldwide is an Overland Park, Kan.-based trucking company.

Citadel loan ends tighter

Citadel Broadcasting Corp. saw levels on its term loan B tighten as investors had some time to process the company's Chapter 11 filing and financial restructuring plan, according to a trader.

The term loan B was quoted at 74 bid, 75 offered, compared with Monday's closing levels of 73¾ bid, 75¼ offered, the trader said.

Under the company's proposed restructuring, its $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.

In addition, the plan 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.

Upon announcing its restructuring plan, Citadel revealed that the proposal was already agreed upon by over 60% of its senior secured lenders.

To fund the restructuring, the company will have access to more than $36 million of cash on hand, as well as all cash flow from operations.

And, as a result of the restructuring, approximately $1.4 billion of the company's debt would be extinguished.

Citadel is a Las Vegas-based radio broadcasting company.

Tronox heads up

A trader said that Tronox Worldwide LLC's 9½% notes due 2012 traded in "a high 77-79 range," and ended up around 78 bid, which he called up 2 points on the day on "a little trading, not much trading.

"Up a couple of points, on not much volume," even as a New York bankruptcy judge OK'd the company's emergency request to access debtor-in-possession and exit financing provided by Goldman Sachs & Co., after Tronox demonstrated that a failure to approve the financing plan might lead the bank to withdraw its offer by a Dec. 24th deadline, which would endanger the overall restructuring effort.

Huntsman Corp. meantime on Tuesday withdrew its court motion demanding that Tronox proceed with a scheduled auction of its assts, at which Huntsman, which has offered $415 million, was to have been the lead bidder. Tronox said it had another plan for restructuring when it canceled the auction and indicated that it will pay the required breakup fee to Huntsman.

Broad market mixed

Among other distressed issues, General Growth Properties Inc.'s bonds were quiet amid a new analyst report claiming that the company's equity was undervalued.

A trader said there were only a few trades in the name, placing the 7.20% notes due 2012 around 103 and the 5 3/8% notes due 2013 at 97.

Another trader said that American International Group Inc.'s International Lease Finance Corp.'s 5.35% notes due 2012 were "active again," a "slightly lower" around 85.

Sara Rosenberg and Paul Deckelman contributed to this article.

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