Compton gets boost on asset sales; U.S. Concrete dips despite statement OK; Smurfit debt slips

By Stephanie N. Rotondo

Portland, Ore., June 7 - Distressed debt got off to a slow start on Monday, as traders deemed the day one of the thinnest in regard to trading volume.

"It was one of the quietest starts I have ever seen," said one trader.

Generally, the market ended the session "about the same, maybe a quarter weaker," the trader said. "There was almost no change" from Friday's closing levels.

Another trader said the market was down as much as half a point across the board, calling it a "big sideways drift."

Some credits, however, managed to buck the trend. Compton Petroleum Corp., for instance, saw its bonds improving 3 to 4 points in Monday trading. The gains came as the company announced over C$150 million of asset sales, the proceeds from which will be used to pay down debt.

U.S. Concrete Inc. got the bankruptcy court's OK on its disclosure statement on June 3, the company said in a press release published Monday. Still, the news had little effect on the bonds, which dipped about a point in trading.

Smurfit-Stone Container Corp.'s notes were also weaker, according to traders. But with no news out, the losses were likely due to general market pressure.

Compton bonds get boost

Compton Petroleum was the day's "big winner," a trader said, following news of C$150.2 million in asset sales.

The trader said the Calgary-based company's 7 5/8% notes due 2013 gained 4 points on the day, ending around 80.

He added that about $20 million to $25 million of the bonds turned over.

Another trader placed the debt up 3 points at 793/4.

Compton is selling a portion of its natural gas assets located in the Niton and Gilby areas of Central Alberta, according to a press release. The proceeds from the sales will be used to reduce outstanding debt and to provide additional capital for Compton's 2010 development program.

"These property sales represent another step in Compton's continuing initiatives to reduce debt, streamline operations and better position itself for growth opportunities," the company said in the release.

"These transactions highlight the value of our assets, which is not currently being reflected in our share price," said Tim Granger, president and chief executive officer, in the release. "The overall deal metrics are excellent, resulting in high per flowing barrel and reserve values as compared to other recent natural gas transactions. They are also consistent with our objective to improve financial flexibility while preserving significant upside potential for shareholders.

"We continue to believe that Compton's asset base can generate solid returns and production growth in a conservative natural gas price environment," he added. "Though not complete, the improvements to our capital structure and ensuing accretion in our netbacks will result in a stable position from which to grow."

Elsewhere in the oil and gas sector, ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were "pretty much unchanged," a trader said, at 72 bid, 73 offered. Another trader echoed that market, but added that there "wasn't huge trading" in the name.

U.S. Concrete dips despite statement OK

Houston-based U.S. Concrete received approval on disclosure statement last week, the company announced Monday. But that did little to help the company's debt.

A trader saw the 8 3/8% notes due 2014 slipping a point to 54. Another trader also pegged the bonds at that level, calling it "a little softer, but not significantly."

A July 23 confirmation hearing is currently scheduled.

"The court's approval of the disclosure statement marks the next important step toward completing the company's restructuring plan in an orderly and timely manner," said Michael W. Harlan, president and CEO, in a statement. "We are confident our plan of reorganization will be confirmed at the hearing in July and expect to emerge from this process shortly thereafter, well positioned to continue as a leading competitor in our markets."

Under the terms of the plan, U.S. Concrete will exchange approximately $272 million of the 8 3/8% senior notes for new equity in the reorganized company.

Smurfit slips with market

Smurfit-Stone Container's notes fell in Monday trading, a trend set by the broader market.

One market source saw the bonds losing half a point, the 8% notes due 2017 around 81 and the 7½% notes due 2013 around 883/4.

Another source, however, deemed the 8¼% notes due 2012 down as much as 2 points on the day, closing around 82½ bid.

There was no news out on the Chicago-based paperboard and paper packaging manufacturer.

Canwest alters loan pricing

Canwest LP came out with changes to its $400 million term loan, increasing pricing and the original issue discount, according to a market source.

The term loan is now priced at Libor plus 700 basis points, up from Libor plus 600 bps, and the original issue discount is now 97, up from 98, the source said.

Left unchanged was the 2% Libor floor and 101 call protection for one year.

JPMorgan and Morgan Stanley are the lead banks on the deal.

Proceeds from Canwest's term loan will be used to help fund the acquisition of the company and some of its subsidiaries by holders of its 9¼% senior subordinated notes.

The noteholder group has agreed to buy substantially all of the LP entities' financial and operating assets from Canwest Global Communications Corp., including all of its daily newspapers, digital and online media operations as well as the shares of National Post Inc., for $1.1 billion, including $950 million in cash funding.

The sale proceeds will allow a full repayment of the $925 million debt owed by the LP entities to their senior secured lenders.

Canwest Global is a Winnipeg, Man.-based media company that filed for Chapter 15 bankruptcy on Oct. 6, 2009.

Broad market weakens

Among other distressed credits, one trader dubbed First Data Corp.'s 10.55% notes due 2015 the "loser of the day." The trader said the bonds fell more than 3 points to close at 731/2.

Ahern Rentals Inc.'s 9¼% notes due 2013 meantime dipped to around 43, the trader added.

"That one has quietly come off 10 to 12 points in the last couple of weeks," he remarked.

And, the ever-active Harrah's Entertainment Inc. was slightly softer on the day. The 10% notes due 2018 finished around 81, while the 5 5/8% notes due 2015 closed around 66.

Sara Rosenberg contributed to this article

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.