CIT amends tender, helps floaters; Ford sales improve, debt gets boost; MGM loan heads higher

By Stephanie N. Rotondo

Portland, Ore., Aug. 3 - CIT Group Inc. regained its top spot in distressed land Monday, after the company announced it had revised its tender offer.

The news sent the short-dated paper up around 15 points on the day, according to several market sources. One trader speculated that short covering might have been a factor, but also noted that the amended terms were likely due to market pressure.

Meanwhile, Ford Motor Co. surprised the market by showing an increase in sales for the month of July, its first in 19 months. The sales report helped boost the carmaker's debt, bank and otherwise.

In the day's round of earnings releases, MGM Mirage showed a better-than-expected performance during the second quarter. As a result, the casino operator's bank debt headed higher.

Six Flags Inc. also reported. The results showed more of the same for the bankrupt company - and the bonds responded in kind.

Overall, the day was seen as largely firmer.

"There was definitely more activity than a typical Monday," one trader said.

"Everything is just off to the races still," said another.

But one trader noted that the same problem remains.

"There is more cash around than bonds being offered," he said, which makes it hard to get anything done.

CIT amends tender, helps floaters

CIT Group's floating-rate notes due 2009 once again piqued investor interest after the struggling bank sweetened the pot on its tender offer.

A trader said the bonds had opened around 77, also where they had closed Friday. Once the news hit the market, the floaters jumped to 93, going out 90 bid, 95 offered.

"There were slightly better bids in the rest of the paper, but not as much activity," he noted.

At another desk, a trader called the name "pretty notable" as the floaters "rallied huge." He said the debt gained 15 to 16 points on the day, ending around 93 bid, 95 offered.

"Everything else rallied with it," he added. "Depending on where you are at in the cap structure," bonds were up 2 to 10 points.

The New York-based financial institution said that it had amended the exchange offer for its notes maturing Aug. 17, with the consent of the bondholder group that had provided $3 billion in financing. Under the amended terms, bondholders will receive $875 per $1,000 principal amount of notes. That compares with the original price of $825 per $1,000 principal amount.

In addition, CIT changed the needed tenders to 58% from 90%. The early deadline was also extended to midnight ET on Aug. 5. As of July 31, 64.97% of holders had validly tendered their debt.

"We are pleased to announce a constructive resolution to the tender offer as we continue to make progress in the development and execution of a broad restructuring plan that positions CIT for the long-term," said Jeffrey M. Peek, chairman and chief executive of CIT, in a press release.

Ford sales improve, debt boosted

Ford Motor's debt saw some upward momentum after the automaker reported improved sales for the month of July.

A trader said about $75 million - "maybe more" - of the 7½% notes due 2012 traded higher at 92.5 bid, 93.5 offered. He also saw the 7.45% notes due 2031 firm a couple points to around 77.5, on $6 million to $7 million traded.

Another trader called the 7.45% notes "up some," also around the 77 mark.

The company's bank debt also showed some strength.

One trader had the term loan quoted at 86 bid, 87 offered, up from 85 bid, 86 offered, and a second trader had the term loan quoted at 85¾ bid, 86¾ offered, up from 84½ bid, 85½ offered.

For the month of July, Ford's total sales were 165,279, up 2.3% from 161,530 in the comparable period last year.

Car sales for the month were 62,176, up 8.7% from 57,177 last year.

And truck sales for July were 96,662, down 2.6% from 99,229 in 2008.

The Dearborn, Mich.-based automaker said that customer demand for its fuel-efficient vehicles coupled with the U.S. government's Car Allowance Rebate System enabled it to post the first sales increase of any major manufacturer in 2009.

"We had another strong month in progress before the 'Cash for Clunkers' program started," said Ken Czubay, Ford vice president, U.S. marketing, sales and service. "Our products, our dealers and our advance preparation enabled us to leverage the program and drive traffic and sales to another level. In addition, we achieved a sales increase even though we decreased incentive spending in an increasingly competitive environment.

"We have the freshest line of new products in the industry," Czubay added. "We're really encouraged by the growing number of consumers who are considering Ford for their next vehicle."

MGM Mirage loan better

MGM Mirage's term loan posted some gains on Monday following the release of second-quarter numbers that were viewed as being not too bad, according to traders.

One trader had the term loan quoted at 84 bid, 85 offered, up from 82¾ bid, 83¾ offered, and a second trader had the term loan quoted at 84 bid, 85½ offered, up from 82 bid, 83½ offered.

For the second quarter, the company reported a net loss of $212.6 million, or $0.60 per diluted share, compared with net income of $113.1 million, or $0.40 per diluted share, in the prior year second quarter.

Revenues for the quarter were $1.494 billion, down 17% from $1.896 billion in the previous year.

EBITDA for the quarter was $305.5 million, compared with $531 million last year and property EBITDA for the quarter was $357 million, a 34% decrease from the 2008 second quarter.

At June 30, MGM Mirage had approximately $4.1 billion of borrowings outstanding under its senior credit facility with available borrowings of $1.5 billion. Total long-term debt was $12.3 billion, down $1.1 billion from Dec. 31, 2008. And the company's cash balance was $411 million at June 30.

As was previously disclosed, during the second quarter the company secured financing for the completion of CityCenter, issued $1.15 billion of equity through an offering of common stock, issued $1.5 billion of senior secured notes and amended its senior credit facility to permanently waive prior non-compliance with financial covenants and provide for minimum EBITDA and maximum annual capital expenditure tests to replace the previous leverage and interest coverage tests.

"This has been a monumental quarter for us, as the significant capital market transactions and other corporate finance activities meaningfully improved our financial position," said Jim Murren, chairman and chief executive officer, in a news release.

"Perhaps as important, we saw a more stabilized - though still difficult - operating environment in the second quarter. Our operating teams are focused on continuing to sequentially increase cash flow and our CityCenter team is driving towards completion and opening of CityCenter. We believe CityCenter will invigorate the Las Vegas market and be a key component of the future growth of MGM Mirage," Murren added.

Six Flags weaker post-earnings

In other earnings news, Six Flags reported its second-quarter results for the period ending June 30, which showed continued weakness.

A trader said there were "not many trades" in the name but saw the 9 5/8% notes due 2014 at 10.75 bid, 11 offered. Another market source placed the issue at 11.5 bid, down nearly 2 points on the day.

Yet another source generically pegged the bankrupt amusement park operator's debt at 11 bid, 13 offered, down 1 to 2 points.

For the quarter, Six Flags saw total revenues of $302.1 million, a 13% decline year over year. Attendance dropped 8% to 8 million and guest spending per capita fell 4% to $36.70.

Results from continuing operations showed a loss of $97.7 million, compared with income of $127.6 million in the second quarter OF 2008.

"Our decline in performance is a reflection of all that surrounds Six Flags - a severe recession, a balance sheet restructuring process, the swine flu pandemic, adverse foreign currency impact at our international parks and miserable weather, particularly at our east coast parks," said Mark Shapiro, president and CEO, in the earnings release. "The trends of our July business have improved, but nowhere near enough to put us back on pace to match last year's full-season record setting performance."

Shapiro also commented on the status of the company's bankruptcy case.

"As promised, the restructuring of the company's finances has not affected our in-park product whatsoever," Shapiro said. "Our new rides and attractions are being very well received; we are diligently containing costs; and our guest satisfaction scores are at historic highs in the categories of 'overall satisfaction' and 'value for the money.'

"Our restructuring process and the nation's economic recession will pass and Six Flags will emerge healthy and more energized on the other end," he concluded.

Sara Rosenberg contributed to this article.

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