Ply Gem firms on new issue, refinancing plans; TXU mixed on deal news; GM gains on sales data

By Stephanie N. Rotondo

Portland, Ore., Jan. 6 - The distressed debt market continued to rally, traders reported Wednesday.

"Things are rocking, moving straight up," a trader said, attributing the positive tone to "so much cash" flowing in the marketplace.

"Everything is better," said another source.

"The market just continues to rip," added another.

News of a new deal and subsequent refinancing gave Ply Gem Industries Inc. an upward push. The company is planning to use proceeds to refinance its $360 million of outstanding 9% notes due 2012.

Energy Future Holdings Corp. - more commonly referred to by its former moniker TXU Corp. - also announced a new deal, which could be used in part to repay debt. But the news had mixed results regarding the company's capital structure, sending the bonds up, but the bank debt down.

Meanwhile, improved sales numbers for December helped General Motors Corp.'s bonds gain ground - or at least trade actively. A trader said that the autosphere in general was better, as both GM and rival Ford Motor Co. ended 2009 on a high note.

Ply Gem firms on new deal

Ply Gem Industries' announcement of a new deal gave the company's 11¾% notes due 2013 a boost, according to traders.

One market source saw the notes improve to 106 bid, 106.5 offered, up from previous levels around 104. The source also saw the 9% notes due 2012 a little better around 88, but on mostly smallish trades.

At another desk, a trader said there were "a lot of Ply Gem's trading," pegging the 11¾% notes at 105.75 bid, 106.5 offered, compared with 104 bid, 105 offered the day before. However, he said he "really didn't see" the 9% notes, estimating them with a low-90s bid.

Another trader called the 11¾% notes "pretty active" around the "106 ZIP code."

Early in the session, word came out that the Cary, N.C.-based building products company was planning a $110 million senior subordinated note issue, the proceeds of which would be used to redeem a portion of its existing $360 million 9% notes. Later, the deal was upsized to $150 million and was priced as a 13 1/8% 41/2-year note, coming in at 97.139.

Additionally, Ply Gem said it would refinance all of its 9% notes, a bulk of which is held by Caxton-Iseman (Ply Gem) III, LP and Caxton-Iseman (Ply Gem) IV, LP, which are affiliates of Ply Gem Holdings' indirect stockholders. Those notes will be tendered for no consideration and will be canceled prior to Feb. 16.

The news also helped the company gain an upgrade from Moody's Investors Service. Moody's upped its corporate family and probability-of-default rating to Caa1 from Caa2.

The Caa1 rating on the bonds was affirmed.

TXU debt mixed on deal

Energy Future Holdings - better known as the former TXU Corp. - also saw its bonds moving higher on the back of a new deal.

A trader said the TXU bonds were "all a point better," the 10 7/8% notes due 2017 at 85 bid, 86 offered, the 11¼% toggle notes due 2017 at 75 bid, 76 offered and the 10¼% notes due 2015 at 85.5 bid, 86 offered.

But another trader said the bonds were up 3 points on the day, the 10¼% notes "around 86," and the 11¼% notes and the 10½% notes due 2016 at 75.5 bid, 76 offered.

Meanwhile, TXU's term loan B debt weakened a little bit on Wednesday as investors decided to take some profits after watching the paper spend the past couple of sessions edging higher, according to traders.

The term loan B-1 was quoted by one trader at 84¼ bid, 84¾ offered, down from 84 7/8 bid, 85 3/8 offered, and by a second trader at 84 bid, 85 offered, down from 84¼ bid, 85¼ offered.

The term loan B-2 was quoted by the first trader at 84½ bid, 85 offered, down from 84 7/8 bid, 85 3/8 offered, and by the second trader at 84¼ bid, 85¼ offered, down from 84½ bid, 85½ offered.

And the term loan B-3 was quoted by the first trader at 83¾ bid, 84¼ offered, down from 84 3/8 bid, 84 7/8 offered, and by the second trader at 83½ bid, 84½ offered, down from 83¾ bid, 84¾ offered.

On Wednesday, the company said that it plans to commence a private offering of $300 million senior secured notes due 2020.

Proceeds from the notes will be used for general or other corporate purposes, which may include working capital needs, investment in business initiatives, capital expenditures and prepayment or repurchase of outstanding debt of the company and/or its subsidiaries.

However, according to the second trader, the bond offering did not affect the bank debt's performance.

"Just technicals. Nothing really related to the bond deal. Profit taking," the second trader remarked about the bank debt's slide in trading.

TXU is a Dallas-based energy company.

GM notes gain on sales

General Motors' debt was "grinding higher," a trader said, on the back of the company's December sales report.

The trader said "a lot" of the 8 3/8% notes due 2033 traded up at 29 bid, 30 offered.

But another trader called the notes unchanged around 29.5, though he conceded they were one of the day's most active credits.

"A lot of auto stuff was stronger," he added. Visteon Corp., for instance, saw its 7% notes due 2014 and its 8¼% notes due 2010 gain "another 4 points or so" to 35 bid, 36 offered.

On Tuesday, GM said it delivered 160,966 vehicles in December, a 7% increase year over year and a 50% increase from November.

"The fact that our retail market share has increased two full points from the third to fourth quarters demonstrates that we are strengthening our brands," said Susan Docherty, GM's vice president of sales, service and marketing, in the sales release.

"We are delivering a healthier sales mix and earning consumer confidence through our launch vehicles such as Chevy Equinox and Camaro, Buick LaCrosse, GMC Terrain and Cadillac SRX."

Still, total year levels continued to lag. The Detroit automaker sold approximately 2.08 million vehicles in 2009, down 30% from 2008.

"The year-over-year comparison reflects a 38% reduction in fleet, reduced overall incentive spending and the orderly wind-down of the Pontiac and Saturn brands," Docherty said. "Our sell-down of Pontiac and Saturn inventory is 10 months ahead of schedule and we only have about 1,700 vehicles left - 800 Pontiacs and 900 Saturns. This shows real progress in our action plans."

Broad market stronger

Elsewhere in the distressed debt marketplace, Harrah's Entertainment Inc.'s bonds gained ground as the company's revenues improved in December.

A trader said the 5 5/8% notes due 2015 "looked better" at 63 bid, 64 offered. Another trader placed the issue around 65, though he deemed that unchanged.

Another source saw the 10% notes due 2018 gaining more than 2 points to end at 83.5 bid.

Also, a trader said Lehman Brothers' 5 5/8% notes due 2013 were "active and better" around 23.

Sara Rosenberg contributed to this article.

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