Realogy little fazed by new loan; FairPoint dips on restructuring buzz; Hawker notes unchanged

By Stephanie N. Rotondo

Portland, Ore., Sept. 28 - Monday was a mixed day for the distressed debt market, as traders dealt with empty desks and end-of-quarter wrap-ups.

"The market was a little noisy this morning, but it was quiet all afternoon," a trader said. He noted that some desks were empty due to Yom Kippur.

"The market was kind of sloppy in the afternoon," he added, though it started out firm.

Trading in Realogy Corp. died down some after last week's run, traders reported. The company priced its new term loan on Monday - and also said it expected the $500 million issue to be upsized again - but the news did little to affect price movement in the bonds.

Meanwhile, FairPoint Communications Inc. said it had secured a forbearance from its lenders and was in process of negotiating a restructuring that could involve a Chapter 11 filing. On the news, the company's bonds dipped about 4 points.

Hawker Beechcraft Acquisition Co. LLC's notes finished up about unchanged as the company said it would pay in kind on an April 2010 interest payment. The company is also using the PIK option on an upcoming coupon.

Realogy debt little fazed

Action in Realogy's debt quieted down, even as the company priced a new $500 million 13½% second-lien bank loan at par.

A trader called the bonds unchanged, the 10½% notes due 2014 at 72 bid, 74 offered. The trader noted that the notes traded with a 73 handle throughout the day.

The trader also saw the 12 3/8% notes due 2015 "offered in the high 50s, but I don't think there was a bid better than 51 or 52 around." However, he added that the issue traded between 56 and 58, according to Trace.

Another trader said there was not "much movement" after last week's gyrations. He also deemed the bonds unchanged, placing the 10½% notes around 73.

Parsippany, N.J.-based Realogy said it had already closed on $515 million of the incremental term loan, which was expected to be increased to $650 million. Proceeds from the financing will be used to reduce borrowings under its revolving credit facility, as well as to refinancing about $220 million of 11%/11¾% toggle notes due 2014 held by Icahn Partners LP.

Realogy also noted in a press release that its owner, Apollo Management, had informed the company that it has "substantially increased its investment in Realogy largely through open-market purchases of unsecured notes. Upon today's closing of incremental term loans, Apollo's ownership of Realogy's existing unsecured notes is approximately $970 million in aggregate principal amount."

"We are pleased with both our ability to raise new capital in today's credit market and Apollo's increased investment in our company through purchases of Realogy's bonds," said Richard A. Smith, Realogy's president and chief executive officer, in the statement.

"These are tremendous signs of investor confidence in Realogy, our business model and the value of our brands as well as the performance of our management team and our employees. Securing these incremental term loans goes a long way toward increasing our long-term liquidity and financial flexibility."

As the housing market turned sour, so did Realogy's bottom line. As such, the company has attempted to restructure itself and had entered into discussions with some bondholders regarding a potential debt exchange.

However, on Friday, the company said those talks unraveled. That followed Thursday's news that Carl Icahn had agreed to a debt swap.

The deal with Icahn was contingent upon Realogy securing the new term loan debt.

Realogy is a provider of real estate and relocation services.

FairPoint dips on restructuring chatter

FairPoint Communications said it had entered into negotiations with its lenders regarding a restructuring that could involve a bankruptcy filing.

As a result of the news, a trader said the 13 1/8% notes due 2018 fell to 11 bid, 12 offered from 15 bid, 16 offered.

FairPoint also said it had received a forbearance agreement from lenders holding more than 50% of its loans. Under the agreement, FairPoint does not have to pay principal and interest payments on its credit facility, as well as a $42 million payment due Sept. 30 related to its interest rate swap agreements.

However, FairPoint said it would likely breach its interest coverage ratio and leverage ratio covenants, though its lenders agreed not to take any action until Oct. 30.

"Today's action by our lenders demonstrates that our discussions are progressing in a positive manner and allows additional time for a permanent restructuring plan to be resolved," said David Hauser, chairman and CEO, in a press release

Like Realogy, FairPoint had begun speaking with noteholders about an out-of-court restructuring plan. Those talks also faltered.

FairPoint Communications is a Charlotte, N.C.-based provider of communications services.

Hawker unchanged on PIK news

Hawker Beechcraft Acquisition's debt was largely unaffected by news that company had elected to pay in kind on an April 2010 interest payment on its 8 7/8%/9 5/8% notes due 2015.

The company had previously said it would also pay in kind on its upcoming Oct. 1 coupon.

A market source quoted the 9¾% notes due 2017 at 61 bid, 62 offered, calling that unchanged.

Hawker Beechcraft is a Wichita, Kan., maker of business and general aviation, training and special mission aircraft.

Broad market holding steady

Elsewhere in the world of distressed, CIT Group Inc.'s bonds "drifted in a little bit on some of the 2011 maturities," a trader said. He said the notes fell to the high 60s and were "probably a point or 2 higher last week."

Station Casinos Inc.'s bonds were also seen unchanged, as the company fights with a minority group of lenders in court. A trader quoted the 6½% notes due 2014 at 4 bid, 5.25 offered, though he noted that "you don't really see much of Station these days."

He also saw a 28.5 bid for the senior paper, like the 6% notes due 2012.

"But I don't know if that's the right level because I am not seeing a right side," he added.

Another trader said that Six Flags Inc.'s bonds had "been active recently." He said the 9 5/8% notes due 2014 closed "stronger" with a 17 handle.

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