TXU mixed on numbers; Clear Channel still rising; Bon-Ton active, better; Big West loan breaks

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Feb. 19 - The distressed debt market continued to feel firm - even on a slow news day - as the week came to an end.

Energy Future Holdings Corp., however, saw its debt finish Friday's session mixed after the company released its fourth-quarter and full-year results. The bonds were "a little softer," a trader said, while other sources saw the bank debt improving.

Traders also saw credits like Clear Channel Communications Inc. and Bon-Ton Stores Inc. trading better, but with no news to explain why. Clear Channel received some good news the week before in the form of a rating upgrade, but Bon-Ton has not released any fresh news since the beginning of the month.

In the bank debt world, Big West Oil LLC's new term loan broke for trading Friday. By the end of the day, the debt had firmed above its original issue discount price.

TXU debt mixed on numbers

Energy Future Holdings, the company formerly known as TXU Corp., saw its debt structure end the day mixed following the company's earnings release.

In the bonds, a trader called the 10 7/8% notes due 2017 "a little softer" around 78. He added that about $10 million of the issue changed hands.

Another trader said the 10¼% notes due 2015 were "slightly active" around the 77¼ level, while the 10 7/8% notes were around 781/2.

Meanwhile, the term loan debt linked to TXU gained some ground, according to a trader.

The term loan B-1 and term loan B-2 were quoted at 80 5/8 bid, 81 offered, up from 79 bid, 79¾ offered, and the term loan B-3 was quoted at 80 1/8 bid, 80 5/8 offered, up from 78¾ bid, 79½ offered, the trader said.

For the fourth quarter, the company reported consolidated net income of $137 million, compared with a reported net loss of $8.855 billion for the fourth quarter 2008.

Adjusted net loss for the quarter was $351 million compared with a net loss of $367 million in the prior year.

And, operating revenues for the quarter were $2.18 billion, versus $2.364 billion in the comparable 2008 period.

"We had solid operational and record safety performance in 2009 and completed the construction of our new Sandow 5 and Oak Grove 1 coal units on time and on budget," said John Young, chief executive officer, in the earnings release. "While the economic environment remains challenging, I believe Texas is positioned for future growth."

Also, Energy Future said that it will once again use the pay-in-kind option on the May interest payments on its toggle notes.

Energy Future Holdings is a Dallas-based energy company.

Clear Channel still moving up

Clear Channel Communications' bonds continued to move up in trading, though a trader noted that there were "no huge trades."

The trader saw about $10 million of the 10¾% notes due 2016 traded at "79-ish," which he called "definitely up a couple of points." He also saw a "scrap" of the 5½% notes due 2016 ending around 50, also up "a few points, but again no real big size."

The 11% notes due 2016 were placed around 683/4, up "about a point."

At another desk, a trader pegged the 11% notes at 69 and the 10¾% notes at 78.

Last week, Moody's Investors Service upgraded the San Antonio-based multimedia company to Caa2 from Caa3. The agency cited the recent refinancing of some of its bank debt.

"In turn, recovery levels will likely improve moderately over time as compared to the low 2009 levels as cyclical pressures subside and valuation multiples and EBITDA increase, which is the primary driver for the upgrade," said Neil Begley, senior vice president, in a statement released Feb. 12.

Bon-Ton active, better

Bon-Ton Stores' debt was reasonably active during the final trading session of the week, though there was no news to explain why.

A trader said about $15 million and change" of the 10¼% notes due 2014 traded "up and down" 90 bid, 91 offered. He deemed that level unchanged to "maybe a teeny bit better."

Another trader called the paper up "a point and change" around 91, compared to 89 bid, 90 offered on Thursday.

Bon-Ton is a York, Pa.-based retailer.

Big West loan breaks

Big West Oil's $360 million five-year term loan hit the secondary market on Friday, with levels quoted well above the tranche's original issue discount price, according to a trader.

The term loan was seen at 99¾ bid, par ¾ offered on the break and then it moved up to par ½ bid, 101½ offered, the trader said.

Pricing on the term loan is Libor plus 950 basis points with a 2.5% Libor floor, and it was sold at an original issue discount of 97. The loan also includes 101 soft call protection for one year.

During syndication, the Libor floor was reduced from 3%, the discount tightened from initial talk of 96 and the call protection was added.

Proceeds from Big West Oil's term loan will be used to finance the company's emergence from Chapter 11.

Other exit financing will come from a $75 million three-year ABL revolver.

Bank of America is the lead bank on the deal.

Big West Oil, a wholly owned subsidiary of Flying J Inc., is a Salt Lake City-based complex high conversion refinery.

Broad market ends week strong

Also in distressed debt territory, MGM Mirage's 8 3/8% notes due 2011 firmed to 97 bid, 98 offered, according to a trader. He added that about "$20-odd million" turned over.

The trader also saw NewPage Corp.'s 11 3/8% notes due 2014 ending "a little bit better than where it traded the day before" around 95.

Another trader called American International Group Inc.'s 8.175% notes due 2058 a point better at 67 bid, 68 offered.

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