Trump Entertainment Resorts notes improve; AIG paper mixed; Idearc gyrates, loan ends firmer

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., Aug. 27 - The distressed market started slow and soft Thursday, but things got better as a new round of bid-wanted lists started to circulate, traders reported.

"The market seemed like it was going to be softer in the morning," a trader said. After the lists came out, "it got a little better."

Still, even with the lists going around, there was little in the way of price movement.

"Right now, there is nothing out there pushing things around," the trader said.

Of the things that did see some movement pricewise, Trump Entertainment Resorts Inc.'s debt moved higher. The gains came as a bankruptcy judge sided with bondholders regarding a sale proposal from Donald Trump. The judge declared that the plan must compete with an offer from bondholders.

Meanwhile, American International Group Inc.'s debt gyrated throughout the session. By the end of business, however, traders had mixed reviews on the debt.

Idearc Inc.'s term loan moved all around during trading, finally ending up off of its lows. Its bonds were also better on the day.

Trump debt improves

Trump Entertainment Resorts' bonds got a decent boost, relative to their current price, as the bankruptcy judge overseeing its case sided with bondholders regarding a proposal submitted by Donald Trump.

A trader placed the 8½% notes due 2015 at 9.75 bid, 10 offered.

"That's a pretty good move for that dollar price," he said, noting that the debt moved up during the day to levels near 10 from levels near 9.

Another source quoted the issue at 9.25 bid, 10.25 offered, up 1.5 points on the day.

On Thursday, U.S. Bankruptcy Judge Judith Wizmur told Trump that his proposal to repurchase the company for $100 million must compete with a proposal from bondholders for $175 million.

Earlier this month, Trump partnered with Beal Bank in a quest to take over the debt-beleaguered casino bearing his name. Along with the $100 million investment, the proposal also calls for the restructuring of about $485 million in debt.

But bondholders fought the plan, calling it an inside job and alleging that company management was attempting to keep bondholders in the dark.

Trump Entertainment Resorts is an Atlantic City, N.J.-based casino operator. The company filed for bankruptcy protection in February 2009.

Among other gaming and hotel operators, a trader saw Mashantucket Pequot Tribe's 8½% notes due 2015 "drop 20 points," into the lower 20s, from around the 40s previously, on the news that the operator of the Foxwoods casino resort complex in Connecticut is in refinancing talks with its bankers and has also hired the turnaround firm of Miller Buckfire & Co., LLC as its financial and restructuring adviser in connection with this process.

"They were in the 40s," he said, "and then there was the news, and the stuff dropped 20 points." He said it was difficult to gauge how much trading was happening because the $500 million issue, which priced at par in November 2007, was a Rule 144A deal, so "it's private, you don't see it."

He saw levels drop as low as an 18 to 21 context by the end of the day, with "more paper for sale in the low 20s."

There are, he warned "a lot of questions" about Mashantucket, "and when in doubt - people sell them."

While the tribe said in a statement Wednesday that it is currently in compliance with all debt agreements, is also current with all its debt payments, and has sufficient resources to continue to operate its businesses as normal, other accounts would seem to indicate there may be more to the story - and that the situation may be more grim than the tribe is letting on.

For instance, an article in Wednesday's edition of New London (Conn.) Day newspaper, titled "Mashantuckets near default on Foxwoods' debt," characterized the tribe as being "on the brink of default" and quoted an unidentified "senior advisor to the tribe" as saying that the tribe's $2.3 billion of debt, which it is looking to restructure, "is $1 billion more than the tribe's Foxwoods Resort Casino - North America's largest casino and once the world's most profitable - can sustain."

AIG bonds end softer

In the financial realm, American International Group's bonds gyrated throughout the session, only to end a bit lower on the day, according to a market source.

The source called the longer-dated paper down 1 to 2 points, the 5.45% notes due 2017 at 65 bid, 66 offered and the 5.85% notes due 2018 at 66.5 bid, 68.5 offered.

But another source deemed the debt better, placing the 6% notes due 2037 at 43, versus around 40 earlier in week. The 8 1/8% notes due 2058 closed at 49 to 51, up from recent low-mid 40s

The movement came as it was learned that former chief executive Maurice "Hank" Greenberg had agreed to help the new CEO turn around the company.

"I want to get the benefit of his criticisms or his support," said Robert Benmosche said in a Reuters report. "The world may choose to vilify him. I think of him as having had some problems, but he can help us with the solutions."

That news helped the company's equity reach the highest point since November.

But earlier in the session, there was news regarding an asset sale that might have accounted for the declines in the debt.

A Bloomberg report cited "three people with knowledge of the matter" that claimed that bidders of AIG's Taiwanese life insurance unit might offer less than the $2 billion target. The article said that a Primus Financial Holding-led group might bid up to $1.4 billion, while Fubon Financial Holding is planning a $1 billion offer. Cathay Financial Holding could bid as high as $1.5 billion.

At least one bidder has already resigned from the process.

Meanwhile, Radian Group Inc.'s bonds have experienced a significant run up, though one trader was baffled by the move.

"You couldn't give these things away when they were in the 70s," he said, noting that the 7¾% notes due 2011 were currently trading around 80.

"Last week, they were trading around 73 and, before that, bids were into the 60s," he said. "So I don't know what is going on there."

Idearc debt gyrates

Idearc's term loan B was all over the place on Thursday, falling off by a couple of points on news of a private lender call and then moving back up off its lows, but still closing out weaker on a day-over-day basis, according to traders.

The term loan B was quoted by one trader at 45¾ bid, 46¾ offered at the end of the day, down from around 49¼ bid, 50 offered on Wednesday night. This trader saw the debt move as low as 44½ bid, 46½ offered earlier in the Thursday session.

A second trader was quoting the term loan B at 46 bid, 47 offered, down from 49 7/8 bid, 50¼ offered on Wednesday night. This trader said that the loan had moved as low as 43½ bid, 45½ offered on Thursday before rebounding slightly.

Details on what was discussed during the private lender call were unavailable.

The bonds meanwhile remained active. Sources placed the 8% notes due 2016 at 9 bid, 10 offered, up about a point on the day.

One trader noted that the debt had also gyrated along with the bank debt. But all its movement was upward, he added.

Another trader saw "a lot of activity" in bankrupt telephone directory company, which had actually been the most actively traded issue on Tuesday, when it had moved up a point to 8 bid. Idearc did not lead the most actives on Wednesday, but there was still "a lot of volume," he said, with the bonds trading as high as 9 3/8 during the day, before settling in to trade around 8 ½ to 9 and end around 9, up another point.

Idearc is a Dallas-based provider of yellow and white page directories and related advertising products.

Sara Rosenberg contributed to this article.

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