Nortel gains on asset interest; Aventine files for Chapter 11, bonds slip; GM retreats, Ford gains

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., April 8 - Nortel Networks Corp.'s bonds got a boost Wednesday on news that someone had expressed interest in some of the company's assets.

That someone was Nokia Siemens Networks, among several others. Nokia is reportedly looking at several large pieces of the currently bankrupt company.

Meanwhile, Aventine Renewable Energy Holdings Inc. filed for Chapter 11 protections. The news sent the company's debt lower, though traders said activity was light. Aventine joins other ethanol producers in bankrupt land as ethanol demand has slumped.

General Motors Corp.'s bonds started to retreat some, though rival Ford Motor Co.'s debt remained positive. News reports indicated that a big GM bondholder sold off a majority of its holdings, which could have sparked the movement. However, GM's bank debt got a slight boost.

The bond market will close early on Thursday and will be closed entirely on Friday in honor of Good Friday.

Nortel gains on asset interest

Nortel Networks' debt jumped about 5 points during Wednesday's session after news came out that Nokia was interested in some for the company's assets.

A trader said the name was the day's most active, with about $50 million of the floating-rate notes due 2011 closing at 23.5. Another trader quoted the issue, along with the 10 1/8% notes due 2013, at 23 bid, 24 offered, calling that up 4 to 5 points.

Yet another source deemed the 10 1/8% notes 4 points better at 24 bid.

Nokia reportedly made an offer for several large pieces of Nortel, including its carrier networks unit and a research unit responsible for developing next-generation wireless technology.

Nokia's interest comes as Nortel tries to divulge itself of certain assets while under bankruptcy protection. Radware won an auction last week for another unit of Nortel, and Genband Inc. has expressed interest in a piece of the pie, as well.

Still, the bids are supposedly low, as no tangible figures have been released to the public.

Nortel is a Fairfax, Va.-based telecommunications company.

Aventine files for bankruptcy

Aventine Renewable Energy's bonds fell after the company filed for Chapter 11 protections on Wednesday.

Several market sources saw the 10% notes due 2017 trading at 14 bid, 15 offered, though each noted that activity was thin.

Aventine and six of its affiliates filed for bankruptcy after being stung by gyrating corn costs, declining fuel prices and an oversupply of ethanol. The Pekin, Ill.-based company joins Renew Energy LLC, Cascade Grain Products LLC and VeraSun Energy Corp. among the ranks of ethanol producers who have filed for bankruptcy in the last year.

The company had warned of the potential filing back in march after it released its quarterly results. As its liquidity position declined, Aventine noted that a filing could be imminent if it was unable to remedy that situation.

GM retreats, Ford continues climb

General Motors' bonds began to fall once again, though Ford Motor's paper remained on an upward track.

A trader saw GM's debt falling half a point to three-quarters of a point, the 8 1.4% notes due 2023 at 9.5 and the 8 3/8% notes due 2033 at 10 7/8. The trader also saw Ford's 7 3/8% notes due 2009 about half a point better at 95.25.

"People have been scrambling trying to find them," another trader said of Ford's bonds and the resulting hype of its recently completed tender offer. "Anybody that was short now can't find them."

The trader called the 7 3/8% notes unchanged and placed the 8 7/8% notes due 2022 at 34, up from the low-30s.

He also said GM's debt remained the 10 bid, 12 offered range, "all of them pretty much."

At another desk, Ford's 7% notes due 2013 were seen more than a point firmer at 69.5 bid, while another source called the benchmark 7.45% notes due 2031 unchanged at 37.5 bid, 39.5 offered. The second source also saw GM's 8 3/8% notes at 10 bid, 12 offered, calling that a point weaker.

GM's term loan was quoted at 45 bid at the end of the day, up from 42¾ bid, 43¾ offered on Tuesday, a source said, remarking that late Wednesday morning, the term loan had been at 43½ bid, 45½ offered.

Though investor interest in Ford has grown since the company announced that it reduced its debt by $9.9 billion earlier in the week, interest in GM continues to plummet.

In an article in the New York Times on Wednesday, it was reported that Southeastern Asset management had divested itself of the majority of its GM series B bonds. The company now holds about 9.6% of the debt, down from 33% in September 2008. Those bonds are convertible into about 13.2 million shares of common stock.

Automakers GM and Ford are based in Detroit and Dearborn, Mich., respectively.

In related news, Visteon Corp.'s term loan debt moved up with the rest of the cash market, but also spurring the name forward was news of the launch of auto supplier support programs, according to a market source.

Visteon, a Van Buren Township, Mich.-based automotive supplier focused on climate control systems, electronic/lighting products and interiors, saw its old term loan quoted at 17½ bid versus 16 bid on Tuesday, the source said.

On Wednesday, General Motors and Chrysler LLC launched support programs for auto suppliers, which are open to any receivable created with respect to goods shipped after March 19 made on qualifying commercial terms.

"These efforts, backed by U.S. Treasury resources, will help stabilize the auto supply base and restore credit flows in a critical sector that employs more than 500,000 American workers across the country," said Jenni Engebretsen, spokesperson for the U.S. Department of the Treasury, in a news release.

"During this difficult period of restructuring in the auto industry, the Supplier Support program will provide supply companies with access to liquidity and protect good-paying American jobs while giving GM and Chrysler reliable access to the parts they need," Engebretsen added.

Cash market helps 'bad' loans

The cash market in general was once again better on Wednesday, with some "bad stuff," like Las Vegas Sands Corp., Claire's Stores Inc. and Burlington Coat Factory Warehouse Corp. ticking higher, according to a market source.

Las Vegas Sands, a Las Vegas-based developer of multi-use integrated resorts, saw its strip of institutional bank debt quoted at 55 bid, 56 offered on Wednesday, up from 54¾ bid, 55¾ offered on Tuesday, the source said.

Claire's, a Pembroke Pines, Fla.-based specialty retailer offering value-priced jewelry and accessories, saw its term loan B quoted at 43 bid, 45 offered, versus 42 bid, 43½ offered during the previous session.

And Burlington Coat Factory, a Burlington, N.J.-based retailer of branded apparel, saw its term loan B quoted at 47 bid, 49 offered, compared with 46½ bid, 48½ offered on Tuesday.

"This rally really started two or three days after the equity market started going up. From mid-December to mid-March it was really BB and single-B's moving up. Suddenly when the market started to rally [in around mid-March], got some major moves on the crummier stuff," the source remarked.

"Don't know who the buyers are. Can't be the CLOs. They buy 80 and up. Got to be new money of some sort. Why they're buying those types of names I'm not sure. Could feel they're cheap in a world of rallying," the source added.

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