Six Flags spikes on Stark proposal; U.S. Concrete debt is active, unchanged; MBIA remains firm

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., March 19 - The distressed debt market "opened like it wanted to be weaker, but I'd say it was about unchanged," a trader said Friday.

However, the overall secondary market saw pretty light volume. Shortly before the market closed, a market source noted that total volumes had not yet reached $1 billion.

"That's the first time in awhile that it has been that low," he said.

There were some bright spots, though. Six Flags Inc., for example, saw its bonds opening 6 to 7 points higher than Thursday closing levels, following news that the company had come to terms with a bondholder group regarding a new reorganization plan. Still, the bonds came in some from their intraday highs, but still ended higher on the day.

U.S. Concrete Inc. meantime saw a surge in activity in its notes. Traders called the bonds essentially unchanged, as they were still trading within the range they have been for some time.

Elsewhere, the financial arena continued to be firm. A trader noted that MBIA Inc.'s remained on the upward track, gaining as much as 3 points on the day.

Six Flags debt spikes

Six Flags' debt jumped in "euphoria" trading - per the words of one market source - as the company announced it had reached a settlement with bondholders regarding the company's bankruptcy case.

One trader noted that trading in the name was thin, however. He placed the 8 7/8% notes that were to have matured Feb. 1, 2010 around 36, compared to levels around 29 on Thursday. The 9 5/8% notes due 2014 meantime settled in at 33. The trader said that the issue had opened at 37 bid, 38 offered.

"It's been volatile," he said. "But it's still up [from Thursday]."

Another trader called Six Flags bonds "much better."

"They had been mid- to high-20s, then they traded up to mid-30s," he said, pegging the bonds generically at "36-ish."

At another desk, a market source said the debt had "traded up 6 to 7 points right off the get-go" following the settlement news, then "drifted back down a little bit." He quoted the notes generically at 34 bid, 36 offered.

As for the 8 7/8% notes, he said the bonds hit a high of 36, versus the 29 level seen in Thursday's session. "Now they are probably wrapped around 36," he said.

Stark Investments proposal

On Friday, the New York-based amusement park operator said it had agreed to a proposal in which a Stark Investments-led group of bondholders would get control of the company post-bankruptcy.

According to the terms of the deal, the Stark group will invest $725 million in new equity. Bondholders also plan to borrow $1.1 billion to pay off creditors and provide working capital.

Current management will receive warrants and options for up to 15% of the new equity in the reorganized company. The Stark group will get the remaining 85%.

The Stark plan will negate a previous plan filed with the court. That plan - led by Avenue Capital Group - would have given control over to ACG in exchange for about $420 million in debt.

The new plan still allows for ACG to be paid in full.

A hearing on the new plan is scheduled for April 16.

U.S. Concrete active, steady

U.S. Concrete's bonds were more active during the last trading session of the week, though there was nothing new to cause the activity.

A trader said the 8 3/8% notes due 2014 traded in "reasonable size for a bond of that size that doesn't trade that much," with about $10 million to $12 million changing hands. He said the bonds were trading "towards the lower end" of their recent 56-62 trading range, at 57½ bid, 58 offered.

Another trader echoed that market, calling the notes unchanged.

Earlier this month, the concrete and cement producer released its fourth-quarter results, which showed a narrower loss due to lower writedowns. However, the company also noted that its weakened liquidity, combined with a decline in sales, had resulted in some doubts about the company's ability to operate.

"Absent a successful restructuring, there is substantial doubt about our ability to continue to operate as a going concern," said Robert D. Hardy, chief financial officer, during the company's quarterly conference call.

MBIA remains firm

A trader said that MBIA's bonds "keep moving up," pegging the Armonk, N.Y.-based bond insurer's 14% surplus notes due 2033 at 67 bid, which he said was up around 2 or 3 points on the session, on "good volume."

The bonds traded on Friday in a 66-68 range.

The company's bonds have been steadily rising since the beginning of March, when it reported a considerably smaller fourth-quarter loss than a year ago, and posted a profit for the full 2009 year, versus a big loss the year before. The 14% notes in particular, had appreciated nearly 20 points in that time, rising from the upper 40s pre-numbers to current levels.

He said that "they're still paying [interest], and it is tough to find yield," in trying to explain the continued strength in the bonds, even nearly two weeks after the company reported.

He also opined that "people are thinking that even if the lawsuit [the company is embroiled in] doesn't work out like they think, it's still worth taking a shot, I guess."

MBIA - which lost heavily during the 2008 to 2009 meltdown in the financial markets - is working on a previously announced strategy to split off its still-valuable municipal bond insurance business into a new unit in order to rebuild that business. But banks that bought insurance from MBIA for mortgage securities are suing the insurer for trying to ring-fence the muni-usiness, claiming it could leave the company with fewer resources to pay its obligations on structured securities.

Radian bonds higher

Also among the financials, he saw Radian Group Inc.'s bonds continuing to improve, quoting the Philadelphia-based mortgage and municipal bond insurer's 5 3/8% notes due 2015 up 4 points to around the 70 bid, 72 offered level on "decent sized trading," while seeing its 5 5/8% notes due 2013 and its 7¾% notes due 2011 "quoted unchanged-to-higher, but with no real activity." He saw the 2013 bonds around 81 bid, 83 offered and the 2011 bonds at 96 bid, 97 offered, both unchanged.

"The long ones were trading and were up 4 points," he said.

He noted that the stock was little changed on the day, ending at $11.56, and "people are comfortable with the stock being in the $11s, and the yield that's attached to them. I guess."

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