NOVA jumps on buyout news, Lyondell 'all over the place'; Station up on asset sale; Freescale lower

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Feb. 23 - NOVA Chemicals Corp.'s debt dominated trading during Monday's session, traders reported, after the company said it was being bought by an Abu Dhabi-based company.

NOVA's bonds gained at least 40 points on the news, except for the floating-rate notes due 2013, which were deemed unchanged. The buyout agreement will help to appease lending requirements imposed by lenders earlier this year.

Elsewhere in the sector, Lyondell Chemical Co.'s notes traded "all over the place," a trader said. The gyrations were likely a result of comments by company management that it was unsure if an upcoming coupon payment would be made.

In other buyout news, Station Casinos Inc.'s bonds gained about 10 points following word that Boyd Gaming Corp. had made an offer for some of its properties. However, Boyd's bonds fell 2 to 4 points post-news.

Freescale Semiconductor Inc.'s debt structure ended the day weaker after the company said that none of its lenders had agreed to participate in a debt exchange.

The distressed bond market "didn't really follow the equities," a trader said, citing a massive loss in the stock market. He called the market "flat to up a tad across the board," though he noted that volume was "lighter than normal."

Still, another trader said that weakness remained in the marketplace.

"The market seems to have a very negative tone," he said.

NOVA Chemicals debt jumps

Trading in NOVA Chemicals' debt "dominated" the session, a trader said, as news of a buyout deal sent the bonds up more than 40 points on the day.

The trader saw the 7.4% notes coming due in April at 97, a 40-point gain with more than 450 million trading.

The 6½% notes due 2012 were also better, this time by about 45 points, the trader said, at 82.5, with $12 million changing hands. The floating-rate notes due 2013 were unchanged at 76.5.

Another trader quoted the 7.4% notes at 87 bid, 98 offered, versus levels around 58 on Friday. Another source placed the 6½% notes up more than 46 points at 83.25 bid.

NOVA announced Monday that it agreed to be bought out by International Petroleum Investment Co. for a cash deal equaling $499 million, or $6 per share, pending shareholder approval.

The deal, valued at $2.3 billion including NOVA's debt, will allow NOVA to meet funding requirements set by lenders earlier this year. NOVA will operate as an independent company, funded by a $250 million credit backstop facility from IPIC.

"This acquisition will provide enhanced balance sheet strength for NOVA Chemicals and facilitate NOVA Chemicals' growth internationally," H.E. Khadem Al Qubaisi, managing director of Abu Dhabi government-owned IPIC, said in a statement. "We can provide stability and allow NOVA Chemicals to meet its operational and financial requirements while continuing to expand and invest in its business."

Furthermore, Calgary-based NOVA said Sunday it received $150 million in new financing from Export Development Canada and three Canadian banks.

Still, some market players had mixed reactions on the news.

"Miracles do happen," Gimme Credit analyst Carl Blake wrote in an afternoon comment. "The purchase price equates to a 5.2x LTM EBITDA and represents a significant premium to NOVA's stock price, but is still well below the replacement value of the company's plants. This possibly suggests management may not have been too confident about the company's ability to weather the current down cycle on its own."

Elsewhere in the sector, Lyondell Chemical's debt traded "all over the place," a trader said.

The trader said the 7.55% notes due 2026 inched up to 17, while the 9.8% notes due 2020 ended at 15 bid, 18 offered. He also saw the 10¼% notes due 2010 offered at 17.5.

Another trader deemed the 10¼% notes half a point lower at 16.5, with $15 million trading.

The movements in the bonds came on the back of news that the company was unsure whether it would make a mid-March coupon payment on its European bonds.

Alan Bigman, Lyondell's chief financial officer, told a bankruptcy court on Monday that the "company is in a position of conserving liquidity" and that in order to make the payments, the bankrupt company would need to gain permission from its banks.

"Banks have not been willing to provide such a waiver," he said.

Last week, Lyondell missed a February coupon payment, as well. Bigman told the court he was not sure if the company would make the payment within the 30-day grace period.

"I don't think they'll make it," a trader speculated.

Station up on asset sale news

Station Casinos' bonds gained a good 10 points following word that Boyd Gaming Corp. had made a $950 million offer for the company.

One market source saw Station's 6% notes due 2012 end at 35, up 10 points on the day. But another called the debt down more than a point at 26 bid.

The first source also saw Boyd's 6¾% notes due 2014 ending at 54.5 bid, 55.5 offered, down 2.5 points. The 7 1/8% notes due 2016 closed almost 4 points weaker at 52bid, 53 offered.

The offer is for Station's Green Valley Ranch Resort, Aliante Station, Texas Station, Wild Wild West and two Fiesta properties, according to a filing with the Securities and Exchange Commission. In its letter of intent, Boyd also said it would be willing to discuss acquiring additional properties.

In the last month, Station has missed two interest payments, totaling about $30 million. Station has thus asked its bondholders to agree to a pre-packaged bankruptcy.

Freescale debt structure weaker

Freescale Semiconductor's term loan was lower on Monday, with one trader pointing to general market heaviness as the reason behind the move.

The term loan was quoted at 44½ bid, 45½ offered, down from Friday's levels of 46 bid, 47 offered, the trader said.

In the bonds, the 8 7/8% notes due 2014 dipped a quarter point to 20.25, a trader said. Another quoted the paper at 19 bid, 21 offered, "down a point or so," while the 10 1/8% notes due 2016 ended around 16.

Late in the day Friday, the company announced that none of its existing credit facility lenders delivered cash commitments to participate in its proposed $1 billion incremental term loan that will be used to refinance bonds.

The incremental term loan due Dec. 15, 2014 will carry pricing of 12.5%, and will be guaranteed by the same guarantors under the company's senior secured credit facility.

As a result of bank lenders not participating in the proposed incremental term loan, Freescale is now offering the full $1 billion to noteholders through an exchange offer.

Eligible participants include holders of the company's senior floating-rate notes due 2014, 9 1/8%/9 7/8% senior pay-in-kind election notes due 2014, 8 7/8% senior fixed-rate notes due 2014 and 10 1/8% senior subordinated notes due 2016.

Up to $250 million of the senior PIK-election notes, which are priority one, and up to roughly $746 million of the senior subordinated notes, which are priority two, can be swapped for the new term loan debt.

The senior floating-rate notes are acceptance priority three, and the senior fixed-rate notes are acceptance priority four. Maximum amounts for swaps of these notes are not available.

According to the company, the purpose of the transaction is to improve its financial flexibility by reducing overall debt and related interest expense.

Each note invitation will terminate at midnight ET on March 10.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets.

Elsewhere in the telecommunications and technology sectors, Nortel Networks Corp.'s floating-rate notes due 2011 ended half a point higher at 15, a trader said.

Last week, Nortel announced that it was selling its application-delivery division to Radware for $17.65 million. Nortel reportedly wants to speed up the sale, as it is afraid it will lose money as time goes on.

Meanwhile, Sprint Nextel Corp.'s 7 5/8% notes due 2011 were fairly active, closing up some at 86 with about 413 million trading, the trader continued.

Another trader called the issue unchanged at 85.5 bid, 86 offered.

The first trader said Sprint's debt continued its climb that it began on Friday. That surge came on the back of what one trader deemed "less-worse-than-expected" fourth-quarter results.

Ford, GM loans gain

In more trading news, both Ford Motor Co. and General Motors Corp. saw their term loan levels climb a little higher during market hours, according to a trader.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 31¾ bid, 32¾ offered, up from 31 bid, 32 offered, the trader said.

And, General Motors, a Detroit-based automotive company, saw its term loan quoted at 36½ bid, 38½ offered, up from 36 bid, 38 offered, the trader added.

On Monday, Ron Gettelfinger, president of the United Auto Workers union, announced that an agreement was reached with Ford on modifications to the Voluntary Employee Beneficiary Association, the union's health care trust for Ford retirees.

Any changes to the contract are subject to approval of the union's membership at Ford.

In addition, the proposed health care trust changes will require court approval.

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