Hexion bonds dip, loans up; Ahern debt gains ground; Cooper-Standard slips; broad market mixed

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Jan. 15 - As Friday trading came to a close, a distressed debt trader said it was "starting to feel like a three-day weekend."

"It was a strange day," he added, as equities were weaker and even new issues were not enticing investors to participate much.

"The market was either hung over or didn't bother coming in at all," he quipped.

Another trader noted that there were "not really a lot of bonds to chase," also contributing to the sluggish day.

Hexion Specialty Chemicals Inc.'s new issue was out for trading, however. The new bonds came down a tad from their original issue price and the old bonds followed suit. But the company's bank debt was seen slightly improved on the day.

Elsewhere, Ahern Rentals Inc. saw some action as investors pushed the bonds upward. There was no news out Friday to explain the surge, but the company did announce it had amended its credit facility on Monday.

In the automotive space, Cooper-Standard Automotive Inc.'s bonds dipped a little, as several names in the autosphere have pared some of their recent gains.

The financial markets will be closed Monday in observance of Martin Luther King Jr. Day.

Hexion bonds dip, loans up

Hexion Specialty Chemicals' "old" debt drifted lower as the company increased its new issue of senior secured notes to $1 billion from $700 million.

A trader said there were a "bunch of assorted trades" in Hexion's existing 9¾% notes due 2014 "all right around par." He deemed that "maybe a points softer."

Another trader also saw the 9¾% notes at par bid, par ½ offered. The trader added that the new notes, the 8 7/8% notes due 2018, opened around par, but "proceeded to trade lower," ending up at 99¼ bid, 99 5/8 offered.

Meanwhile, Hexion's strip of C-1 and C-2 bank debt moved higher after the company increased the notes offering, according to a trader.

The strip was quoted at 96 bid, 97 offered, up from 94 bid, 95 offered prior to the upsizing, the trader said, adding that the strengthening actually took place on Thursday night shortly after the news came out.

Proceeds from, the $1 billion of 8 7/8% senior secured notes, which priced at 99.296, will be used to repay $800 million of term loans and for general corporate purposes.

By comparison, when the bond deal was expected to be sized at $700 million, lenders were told that $500 million of the company's term loans would be repaid.

Proceeds from the notes will be placed into escrow until the company obtains approval of its credit facility amendment, which, among other things, allows for the notes.

As was previously reported, Hexion is currently out to lenders with an amendment that, in addition to allowing the note sale, would extend term loan debt to May 5, 2015, in return for higher pricing, and extend revolver maturities to May 5, 2013.

As of Jan. 12, the company had about $200 million in orders towards the extended revolver, up from $175 million prior to the launch of the amendment.

Pricing on the extended revolver is Libor plus 450 basis points and committing revolver lenders are being offered a 200 bps upfront fee as well as a 200 bps ticking fee.

The extended revolver would take effect upon the May 31, 2011 expiration of the existing revolver.

The amendment would also revise some covenants contained in the credit agreement, reset the accordion feature to $200 million, permit the issuance additional senior notes or loans as long as an agreed amount of proceeds are used to prepay term loans and/or revolver loans at par, and allow the sale of additional debt, including junior or unsecured debt, in an amount not to exceed the accordion feature.

Hexion is a Columbus, Ohio-based thermoset resins company.

Ahern debt gains ground

Ahern Rentals' notes were "really busier," a trader said, during Friday's session.

The trader said about $25 million of the Las Vegas-based rental equipment company's debt traded, "up 1 to 2 points." He said the 9¼% notes due 2013 opened "sub-60" and ended around 62.

Another trader saw "some trading around 601/2," noting that the issue got up to 613/4. He added that the bonds had closed at 60 the previous day.

Earlier in the week, Ahern announced that it had amended its credit facility to allow for a new $95 million term loan facility. Proceeds of $47 million were used to repay outstanding loans under its revolving credit facility.

Also, the company said that it had successfully amended the terms of the 9¼% notes.

"These transactions have provided the company with additional liquidity to continue to execute [its] business strategy," the company said in a press release.

"We are very appreciative of the support of our bank group, Liberty Harbor and our existing bondholders in helping us achieve this important financing," said Don Ahern, chief executive officer, in the release. "We will continue to execute on our business strategy so that Ahern Rentals can successfully navigate the severe industry downturn we are currently encountering and emerge on the other side with a stronger company and an improved geographic footprint that will allow us to resume our history of growth."

Cooper-Standard slips

There was a "little bit of action" in Cooper-Standard Automotive's notes, according to a market source.

The source pegged the 7% notes due 2012 around 115.

He added that recent action in the credit was likely investors "working on how this deal will come out in value."

Another source quoted the 8 3/8% notes due 2014 at 37½ bid, 38 offered, down from levels around 381/4.

Cooper-Standard is a Novi, Mich.-based automotive parts supplier.

Broad market mixed

Also in the distressed realm, a trader said that American International Group Inc.'s 5 5/8% notes due 2013 closed at 84½ bid, 85 offered, on $50 million traded.

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