Michaels jumps on numbers; NXP stirs on tender offer news; Visteon notes unfazed by Ford news

By Stephanie N. Rotondo

Portland, Ore., June 4 - Michaels Stores Inc. dominated trading on Thursday, traders reported, after the company posted its first-quarter results.

"I think they weren't bad," a trader said of the improved figures. The numbers resulted in a 5- to 13-point gain in the bonds.

Meanwhile, NXP BV's paper traded actively on news of a second tender offer. The company said it plans to spend up to $300 million for five series of notes. The bonds ended the session unchanged to better, depending on whom you asked.

Visteon Corp. announced that its former parent company, Ford Motor Co., had agreed to provide $125 million of debtor-in-possession financing. But the news did little for Visteon's debt, though Ford's continued to drive higher - mostly.

Michaels jumps on numbers

Michaels Stores' debt got a 5- to 13-point boost after the company posted improved quarterly results.

Several market players pegged the 11 3/8% notes due 2016 with a 72 handle, calling that up 13 to 13.5 points on the day. About "$30 million plus" changed hands, a trader said.

The trader also saw the 10% notes due 2014 trading more than 5 points higher at 84.75, with $5 million trading.

Late Wednesday, the arts and crafts retailer reported a first-quarter profit of $4 million, compared with a loss of $20 million the year before. The better results were partially attributed to a $15 million decline in interest expense.

Revenues increased 0.6% to $852 million, though same store sales fell 2%. Gross margins slipped to 37% from 38.5%.

"Our operating units performed relatively well, which were offset by the continued negative impact of a weakened Canadian dollar," stated John Menzer, chief executive officer, in a press release. "We were very encouraged with the sales in a number of key categories, including Beads and Jewelry Making, Impulse items and Wall Frames. Our new marketing and merchandising programs are connecting with the Michaels customers and have helped drive an increase in customer transactions, even in today's difficult retail environment.

"I have challenged the Michaels team to renew their commitment to be the destination of choice for 'Where Creativity Happens,' and continue to provide strong customer service in our stores," he added. "This is the clearest path to increase sales and where our energy and efforts must remain focused."

Elsewhere in the retail arena, Neiman Marcus Inc.'s term loan B gained some ground in the secondary market as May revenues were announced, despite a nearly $70 million drop when compared with last year, according to a trader.

The Dallas-based high-end specialty retailer's term loan B was quoted at 74½ bid, 75½ offered, up from 74 bid, 75 offered in the previous session, the trader said.

However, on Wednesday, some other traders had the term loan B quoted in the 73 bid, 74 offered context, which would make Thursday's improvement even more significant.

For the month of May, Neiman Marcus reported total revenues of $246 million, down 21.5% from $313 million in May 2008, according to a news release.

Comparable revenues for the month were $240 million, down 23.3% from $313 million last year.

In the four-week May period, comparable revenues in the specialty retail stores segment, which includes Neiman Marcus Stores and Bergdorf Goodman, decreased 27%.

The company said that it experienced weakness across all geographies and merchandise categories in the specialty retail stores segment.

In unrelated Neiman news, there is a rumor going around that the company may be getting ready to launch an extension of its credit facility via Bank of America.

Specifics and confirmation of this chatter were unavailable prior to press time.

NXP stirs on tender news

Trading in NXP's bonds was "quite busy," a trader said, after the company announced a $300 million tender offer for five series of notes.

The trader saw the 7 7/8% notes due 2014 "around 40," versus levels at 35 bid, 36 offered "earlier in the week."

He also saw the 9½% notes due 2015 at 32 bid, 33 offered, "up from probably the mid-20s," and the floating-rate notes due 2013 around 30, from 28 previously.

But another trader deemed the debt unchanged, the 7 7/8% notes at 39.75 and the 9½% notes at 34. The trader saw $21 million and $2 million, respectively, trading.

The Eindhoven-based chipmaker announced Thursday a second tender offer designed to decrease its debt. Under the terms of the offer, NXP will buy back approximately $1 billion of its 9½% notes, €458 million of its 8 5/8% senior notes due 2015, approximately $1.38 billion of its floating-rate senior secured notes due 2013, €936 million of floating-rate senior secured notes due 2013 and approximately $1 billion of its 7 7/8% notes.

The company will hold a modified Dutch auction for the first priority notes. For second priority issues, the company will pay $400 or €400 for each $1,000 or €1,000 principal amount of notes. Third priority noteholders will receive $450 for each $1,000 tendered.

The early tender deadline is midnight ET on June 17. The offer expires at midnight ET on July 1.

NXP said it would use available cash on hand to pay for the offer. That may include a draw under its senior secured revolving credit facility.

Visteon unfazed by Ford news

Visteon's bonds were "very quiet" on news that its former parent, Ford Motor, had agreed to provide $125 million for the now-bankrupt automotive parts supplier.

A trader quoted the 12¼% notes due 2016 at 5.5 bid, 8.5 offered, the 7% notes due 2014 at 6 bid, 8 offered and the 8¼% notes due 2010 at 4 bid, 6 offered.

"But they have been pretty quiet the last couple of days," he noted.

Activity in the name dropped off considerably after the company announced it filed for Chapter 11 protections on May 28. Right after that news, the bonds were among the more active issues.

On Thursday, Visteon said it had secured debtor-in-possession financing of $125 million from Ford, which had previously said it would provide financial support as necessary.

Still, Visteon has to secure funds from its other customers as well. Ford's agreement expires June 30.

Ford's bonds were meanwhile mostly higher, traders reported.

"They have been very steady," one trader said. "They have been very non-moving."

He said the longer issues, such as the 7.45% notes due 2031, were "up a couple," while the short paper - like the 7 3/8% notes due 2009 - were better by "maybe a half [point]." He placed the former at 66 bid, 67 offered, up from 63 bid, 65 offered and the latter at 97 bid, 98 offered.

Another trader saw $25 million of the 7 3/8% notes trading around 98, a tad higher on the day.

One other source called the 7% notes due 2013 down nearly 5 points at 76.75 bid.

Hawaiian Telcom holding steady

Hawaiian Telecom Communications Inc. filed its reorganization plan Thursday, but that did little to inspire movement in the name.

"People are trying to buy them, but they just haven't been trading," a trader said, generically placing the company's bonds at 1 bid, down from the last trading levels around 3.

According to the company's reorganization plan and disclosure statement filed with the bankruptcy court overseeing its case, Hawaiian Telcom's lenders will receive the majority of new equity in the reorganized company. Senior noteholders will receive warrants for 12.75% of the new equity, along with subscription rights for up to another $50 million in equity.

However, holders of the 12½% notes - along with stockholders - will receive nothing.

"The plan provides for a significantly deleveraged capital structure, and the terms of the new debt give us greater financial flexibility to execute our business plan and invest in new products, better positioning the company for future success," president and chief executive officer Eric K. Yeaman said in a company news release.

Hawaiian Telcom filed for bankruptcy on Dec. 1, 2008.

Broad market mixed

A trader said that Clear Channel Communications Inc.'s bonds were "popping today," seeing its 6¼% notes due 2011 push up to 46.5 bid from 40.5, on $17 million traded, while its 10¾% notes due 2016 rose to 33 bid from 29 .5, with $12 million traded. Its 5½% notes due 2014 gained a point on $12 million traded to end at 22.

"Obviously, there's something out there, something going on in Clear Channel," he said.

Smurfit-Stone Container Corp. - whose bonds had been gaining solidly the previous few sessions - "hung around" the same 37 to 38 context, unchanged and "holding at those levels," a trader said. He saw "some decent-sized trading" in the name.

Sara Rosenberg and Paul Deckelman contributed to this article.

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