Ply Gem boosted by numbers; First Data mixed following earnings; Primus results help bonds

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Aug. 14 - Earnings news dominated activity in the distressed debt marketplace, traders reported Friday.

Ply Gem Industries Inc. reported its second-quarter earnings, which seemed to beat market expectations. As a result, the company's bonds gained as much as 10 points during the session.

Meanwhile, First Data Corp.'s debt ended the day mixed following its earnings release. Despite posting a wider net loss, the company's bank debt headed upward. Its bonds, however, were seen largely unchanged.

Primus Telecommunications Group Inc. also posted numbers. The better-than-expected results helped the company's notes jump as much as 6 points on the day, according to traders.

Overall, Friday trading was on the quiet side, a conclusion to a rather subdued week.

"We're not even at a billion in turnover today," one trader said, just before the market closed. Of the things that were trading, he deemed them to be "non-traditional" names.

Ply Gem boosted by numbers

Ply Gem Industries' bonds were deemed one of the day's "few movers" price-wise, a trader said, on improved quarterly numbers.

The trader said the 11¾% notes due 2013 were "up a good bit" into the mid-80s. Another trader called that issue up 10 points to around 86, while the 9% notes due 2012 closed around 36.

"Everybody is looking for them," the second trader said. "You can't find them. I think some people are short."

Another market source pegged the 9% notes at 36 bid, 37 offered.

For the second quarter, Ply Gem posted net sales of $260.6 million, a decline of 23.6% from the same period of 2008. For the first half of 2009, sales came to $443.3 million, a 25.8% decline year over year.

Adjusted EBITDA improved to $41.5 million from $41.2 million. Net loss was meanwhile better at $8 million, versus a net loss of $19.5 million in 2008.

"Ply Gem's second quarter and first half of 2009 sales and adjusted EBITDA results continue to reflect the challenging conditions that exist in the housing market today," remarked Gary E. Robinette, president and chief executive officer, in the earnings release. "However, despite the fact that single family housing starts were down 51.6% and 36.2% in the first and second quarters of 2009, respectively, Ply Gem demonstrated an improvement in our second-quarter adjusted EBITDA compared to last year.

"We will continue to realign our cost structure as necessary for current and future market demand. At the same time, we are focused on maximizing cash flow and outperforming the market place in all business units, allowing us to emerge stronger when the housing market recovers."

During the conference call to discuss the results, management also noted that liquidity was $72.2 million, including $19.5 million cash on hand.

Ply Gem is a Cary, N.C.-based manufacturer of materials for residential construction.

First Data mixed following 10-Q

First Data's debt structure ended the day mixed after the company reported a wider net loss for the second quarter.

One trader said $15 million of the 9 7/8% notes due 2015 traded at 84 bid, 85 offered. He said that level "looks right about where it was."

Another trader, however, called the notes better at 84 bid, 84¾ offered, up from around 83½ previously.

"That's always one of the most active ones," the trader said. "But it was even a slow day for them."

Meanwhile, First Data's term loan B debt gained some ground in trading, according to traders.

One trader had the term loan B-2 quoted at 84¾ bid, 85¼ offered, compared to 83¾ bid, 84¾ offered on Thursday.

Meanwhile, a second trader had the term loan B-2 quoted at 84¼ bid, 85¼ offered, up from 83½ bid, 84¼ offered, and the term loan B-3 quoted at 84 bid, 85 offered, up about a point on the day.

For the second quarter, First Data reported a net loss of $195.9 million, compared to a net loss of $160.6 million in the second quarter of 2008.

Consolidated revenues for the quarter were $2.209 billion, basically flat from $2.204 billion in the comparable period last year.

And, adjusted EBITDA for the quarter was $607.2 million, down 5% from $641 million in the prior year.

During the second quarter, First Data repaid $32.2 million of its senior secured term loan as required under the amortization schedule, according to a 10-Q filed with the Securities and Exchange Commission Friday.

For the six months ended June 30, the company made a total of $64.4 million in amortization payments.

As for the company's revolver, there was $95 million outstanding under the facility at June 30, compared to $18 million outstanding at Dec. 31, 2008.

The revolver had $1.6 billion in availability as of June 30 after considering the amount outstanding, letters-of-credit issued under the facility, and the $230.6 million commitment from Lehman Brothers that is no longer being funded.

First Data is an Atlanta-based provider of electronic commerce and payment services.

Primus results better than expected

Primus Telecommunications Group's notes got as much as a 6-point boost following what one trader called "better-than-expected" quarterly results.

The trader said the 14¼% notes due 2013 earned about 1½ points to close at 82 bid, 83 offered. Another market source echoed that market.

At another desk, the bonds were seen trading between 82 and 85. That trader said the debt had jumped 5 to 6 points on the day.

For the quarter ended June 30, Primus reported net income of $25.36 million, or 15 cents per share. That compared to net income of $46.52 million, or 25 cents per share, in the second quarter of 2008.

Revenue fell to $196.74 million from $235.89 million the year before.

"Second-quarter 2009 results were stable despite the challenging economy and our conservative approach to sales and marketing spend during the preceding two quarters," stated K. Paul Singh, chairman and CEO of the company, in a press release.

"Our operating units around the world executed within our expectations, and this execution, combined with aggressive cost management and favorable currency translation, delivered sequential growth in adjusted EBITDA and generated $14.2 million in free cash flow."

Reader's Digest loan dims

The Reader's Digest Association Inc.'s term loan B fell by a couple of points on Friday, according to traders.

The term loan B was quoted by one trader at 37 bid, 38 offered, by a second trader at 36 bid, 38 offered, down from 40½ bid, 42½ offered, and by a third trader at 39 bid, 41 offered, down from 42½ bid, 44½ offered.

Reader's Digest is a Pleasantville, N.Y.-based publishing company.

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