Tronox bonds get boost; Anadarko 'cruising forward'; General Growth steady after DIP loan news

By Stephanie N. Rotondo

Portland, Ore., July 9 - Distressed debt closed out the final trading session of the week about unchanged, traders reported Friday.

Still, with heat in the Northeast hitting record highs, sources noted that a fair few desks were empty, resulting in a "pretty dead day," as one trader put it.

But buyers were not scarce, at least when it came to Tronox Worldwide LLC. The bonds had declined significantly in the previous session and began trending lower come Friday's open. By the end of the day, however, the notes had risen back to the levels they were seen at on Thursday.

Anadarko Petroleum Corp. was also among the day's gainers, moving up "1½ to 2 points across the board," a trader said. The bonds have been "cruising forward," he added.

Meanwhile, General Growth Properties Inc. saw its bonds holding steady to possibly gaining a bit. The company is seeking to replace its current bankruptcy loan in favor of another loan with better terms.

Buyers boost Tronox

Tronox Worldwide debt traded down in initial Friday trading, a trader said, but buyers soon pushed the notes back up to about unchanged.

The trader saw the 9½% notes due 2012 at 78 bid, 79 offered.

"They were hammered yesterday," he said, referring to the 10- to 15-point drop the bonds experienced following the filing of the company's reorganization plan. "They dipped some more, but it seemed like they found a floor and buyers came in."

But another trader said the notes fell from their intra-day highs, ending around 773/4.

Under the terms of the plan filed late Wednesday, unsecured creditors holding over $470 million in claims will receive 80% to 100% recovery. Secured creditors holding just $1 million in claims will be repaid in full.

Also, the Oklahoma City-based company will set up trusts to deal with certain environmental claims, estimated to be as high as $5.2 billion. The trusts will be funded with up to $145 million in cash and other assets. And, the trusts will have the right to receive 88% of recoveries related to litigation involving Anadarko Petroleum.

Anadarko purchased Kerr-McGee - Tronox's former parent - for $18 billion just a few months after the 2006 spinoff. After Tronox filed for bankruptcy protections in January 2009, the company then filed suit against both Kerr-McGee and its new owners in May 2009, claiming its parent had overloaded the spinoff with so much environmental liabilities that it had no choice but to file for Chapter 11.

Anadarko 'cruising forward'

In other Anadarko news, market sources saw the Houston-based oil company's bonds gaining about 2 points across the board as the company told BP plc it would not be contributing to clean up costs related to the Deepwater Horizon rig explosion in the Gulf of Mexico.

A trader pegged the benchmark 5.95% notes due 2016 at 94, versus 92 bid, 92½ offered on Thursday.

Another trader said the debt was "cruising forward," seeing the 5.95% notes also around 94 and the 7½% notes due 2031 at 921/2.

Anadarko told BP - its joint operating partner at the rig that exploded and then sank on April 20 - it would not pay the $272 million BP requested in June. Anadarko said it was not liable for the cleanup costs, as the disaster was, in its view, due to BP's negligence.

Also in that sector, a trader said that ATP Oil & Gas Corp.'s 11 7/8% second-lien senior secured notes due 2015 had moved up to around a 71½ bid, from prior levels in a 70-72½ context. That continued a firming trend in the Houston-based energy exploration and production company's bonds, which recently had gotten as low as around 68-69.

Investors had worried that the tough federal restrictions on deepwater oil drilling in the Gulf of Mexico in the wake of the Deepwater Horizon disaster might hurt the company, because a large portion of its oil and gas reserves are in the deepwater sectors of the Gulf.

General Growth steady

General Growth Properties' paper was "probably unchanged" as the company sought to replace its current debtor-in-possession facility with a new $400 million facility.

The trader said there was "some trading" in the name, though "nothing price action wise."

"If anything, it's creeping up a little bit," he said, seeing the 7.2% notes due 2012 around 1131/2.

At another desk, the 7.2% notes and the 8% notes that were to have matured in April of 2009 at 113½ bid, 113¾ offered. He deemed that up "maybe a quarter to a half."

The Chicago-based real estate investment trust wants to replace its current DIP loan as the new one bears interest at a rate that is 8% lower than the original facility at 5.5%. That would save the company over $2 million a month in interest payments.

Broad market unchanged

Also going on in distressed debt land, Harrah's Entertainment Inc.'s 10% notes due 2018 were "pretty much unchanged," a trader said, closing around 84.

The trader also saw Nuveen Investments Inc.'s 10½% notes due 2015 at 88½ bid, 90 offered, "kind of unchanged."

Paul Deckelman contributed to this article

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