Nortel, General Growth file plans, bonds improve; American Safety Razor prices DIP, exit loan

By Stephanie N. Rotondo

Portland, Ore., July 13 - The distressed debt market was "a little bit better," a trader said Tuesday, though he added that there was only "average volume."

But another trader said total trading volume was "probably double" that of Monday, adding that trading was "very broad-based."

Both sources estimated the market had gained at least half a point across the board.

"I don't think anything is going to get in the way of that at least for the next few days," the second trader remarked.

Still, there were very little sellers in the marketplace, making it a bit tougher to get things done.

"Guys want to pay two-days ago prices and sell at day-after-tomorrow prices," he quipped.

In the news, Nortel Networks Corp. filed its plan of reorganization late Monday, giving the company's bonds a boost come Tuesday. General Growth Properties Inc. also filed its plan. Traders said the shopping mall manager's debt closed out the day steady to up half a point, in line with the general market trend.

Meanwhile, American Safety Razor Co. newly planned $290 million credit facility was priced during Tuesday's session. The facility is expected to function as both a debtor-in-possession facility, as well as an exit financing facility.

Nortel heads higher

Nortel Networks' bonds traded up at least a point, a trader said, following the filing of the company's plan of reorganization.

The trader said the floating-rate notes due 2011 improved a point to 80½ bid, 81 offered, while the 10¾% notes due 2016 gained 1½ points, closing round 83.

At another desk, a source put the floaters at 80 bid, 81 offered, up from 79 bid, 80 offered.

The source also saw the 10¾% notes gaining ground at 83 bid, 83½ offered. That compared with previous levels around 811/2.

The Mississauga, Ont.-based company filed the plan late Monday. Nortel filed for bankruptcy protections in January 2009.

Under the terms of the reorganization plan, secured claims holders will be paid in full, while unsecured claims will get just a portion of the proceeds. Subordinated claims will get no recovery, unless all other classes have been paid in full.

Nortel Networks is a manufacturer of telecommunications networking devices.

GGP debt up on plan filing

General Growth Properties also filed its reorganization plan, as well as its related disclosure statement. As a result, traders saw the bonds ending the day unchanged to up half a point.

One trader called the 5 3/8% notes due 2013 unchanged at 107¾ bid, 108¾ offered, while the 7.20% notes due 2012 inched up to 113¾ bid, 114 offered from 113 bid, 113½ offered.

Another trader said the 7.20% notes were "up a little bit, probably half a point" at 114 bid, 114½ offered. He quoted the 5 3/8% notes at 108 bid, 108½ offered.

Earlier this month, the Chicago-based real estate investment trust had sought to extend its filing deadline to Oct. 18 from July 15. But as the plan was filed late Monday, it seemed that extension was not needed.

Under the terms of General Growth's plan, debtholders and other creditors will be paid in full and shareholders will also receive a "substantial recovery," according to a press release. Shareholders will receive stock in General Growth, as well as a new company to be spun off post-bankruptcy emergence.

Also, the plan calls for a recapitalization with $7 billion to $8.5 billion of new capital.

The plan is based on a series of financing agreements with affiliates of Brookfield Asset Management, Fairholme Capital Management and Pershing Square Capital Management. The investors have agreed to provide $8.55 billion in funding.

General Growth announced on Monday that it had secured a $500 million investment from Teacher Retirement System of Texas as well.

A hearing on the disclosure statement is scheduled for Aug. 19. The company expects to emerge from Chapter 11 protections in October.

Safety Razor loan priced

American Safety Razor's proposed $290 million credit facility launched with a bank meeting on Tuesday, at which time, price talk was announced, according to a market source.

Both the $20 million revolver and the $120 million first-lien term loan are being guided at Libor plus 750 basis points with a 2% Libor floor and an original issue discount of 98, the source said.

And, the $150 million second-lien term loan is being talked at 15% - split between 1% cash and 14% pay in kind.

The revolver and the first-lien term loan will be a debtor-in-possession facility for six months and then they will convert into a 41/2-year exit facility, and the second-lien term loan is convertible into equity upon the company's emergence from bankruptcy.

Goldman Sachs is the lead bank on the deal for the Cedar Knolls, N.J.-based producer of shaving, medical and industrial blades.

Sara Rosenberg contributed to this article

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