Clear Channel bonds active; Vertis unmoved by exchange news; Rite Aid debt loses weight

By Stephanie N. Rotondo

Portland, Ore., April 16 - Though total volume in the distressed debt arena remained good on Friday, traders noted that the action died down mid-day following news that Goldman Sachs had been charged with fraud.

"The Goldman thing kind of subdued things a bit," a trader said.

"It was all eyes on Goldman," said another.

But the second trader added that the "market is still strong."

"We got a little bit of cash in last week and stuff is still at high levels," he said.

Clear Channel Communications Inc. was one of the day's more active issues. Sources deemed the debt unchanged to slightly lower, though there was no news out to act as a catalyst.

Meanwhile, Vertis Inc. paper seemed unmoved by word of an exchange and tender offer. There was some trading in credit, though overall it was light, a trader said. The bonds ended a couple points better than the last round-lot trades.

Rite Aid Corp. saw its notes slipping in trading. But as was the case with Clear Channel, there was no news to explain the dip or the surge in trading volume.

Clear Channel bonds active

Clear Channel Communications' debt remained active during the final trading session of the week, despite a lack of fresh news out.

One trader said the San Antonio-based media company "definitely had a bunch of different stuff trading," with the 10¾% and 11% notes due 2016 making up the bulk of the volume in that credit.

He said that about $40 million to $50 million of those issues changed hands, pegging the 11% notes at 73 bid, 74 offered and the 10¾% notes at 80½ bid, 81½ offered.

Vertis unmoved by exchange news

Baltimore-based Vertis announced a comprehensive refinancing plan that includes an exchange offer for its 13½% notes due 2014 and its 18½% notes due 2012.

On the news, a trader saw just over $6 million of the 18½% notes trading at 961/4. However, he said he saw "nothing in the 13s, not even an odd lot." He wondered if the lack of action in that issue was due to investors believing "there is going to be something better."

Another trader said a "small amount" of the 18½% notes moved, quoting them at 96 bid, 96¼ offered.

Vertis is looking to reduce its overall debt by more than $250 million, as well as to extend maturities and reduce interest expenses.

"Upon completion of the planned transactions, Vertis will have significantly reduced its outstanding indebtedness and related interest expense and extended its debt maturity profile," the company said in a press release

Refinancing plans

Vertis is also looking to refinance its existing $225 million revolving credit facility, using up to $200 million in proceeds from a new senior secured asset-based revolving credit facility and $600 million in new first-lien debt.

In the bond exchange, Vertis will give holders of the 13½% senior notes 784.377 common shares per each $1,000 of bonds validly tendered.

Noteholders can also choose to straight tender their holdings, for which Vertis will give $400 for each $1,000 in debt. That price drops to $350 if holders do not tender by the consent time.

Holders of the 18½% notes will meantime receive new 13% senior secured notes due 2016 should they choose to participate in the exchange. For each $1,000 of 18½% notes tendered, holders will receive $393.73 in the new notes and $591.27 in cash.

Vertis is also seeking to amend the senior and second-lien notes via a consent solicitation. The goal is to remove all restrictive covenants and some events of default.

The exchange and tender offers expire at 5 p.m. ET on May 18.

Rite Aid loses weight

A trader called activity in Rite Aid debt "reasonably active," though, like Clear Channel, there was no news out to explain the volume.

The trader said the 9½% notes due 2017 closed "down a little bit, but I'd say basically flat" around 861/4. The 8 5/8% notes due 2015, however, were down more than a point around 871/2.

He noted that about "$25-odd million" of each issue changed hands during the trading day.

Another market source pegged the 8 5/8% notes at 87½ bid, down 1½ points on the day.

Rite Aid is a Camp Hill, Pa.-based pharmacy chain.

Broad market mixed

Also moving around in the distressed debt arena was Smurfit-Stone Container Corp.'s 8¼% notes due 2012, according to a trader.

The trader quoted the notes at 91½ bid, 92 offered, "maybe, worst case, a buck cheaper."

Another trader that Spheris Inc.'s 11% notes due 2012 - which had gained a good 20 points on Thursday following news of an approved asset sale - were still hanging around the 32 level seen at Thursday's close.

General Growth Properties Inc.'s 8% notes that were to have matured last year finished around the 112 mark, a trader said.

"Most people are expressing [General Growth] through the stock," the trader said, explaining that while bond activity was thin, the stock has been trading a lot.

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