New issues, conferences distract distressed investors; Dynegy mixed; Blockbuster CFO resigns

By Stephanie N. Rotondo

Portland, Ore., Sept. 14 - New issues were "still the focus," a trader reported Tuesday. As a result, trading in distressed issues remained lean and the market was generally unchanged on the day.

The trader added that there were "a few conferences going on," providing market players with another "distraction."

Dynegy Holdings Inc.'s bonds closed the day up or down, depending whom you asked. The company recently said it had secured federal approval for its acquisition by the Blackstone Group, a deal valued at over $4 billion.

Meanwhile, Blockbuster Inc.'s debt was mostly steady in the wake of its chief financial officer's sudden exit. Traders saw the senior paper moving up a bit, though the subordinated issue was largely unchanged.

NewPage Corp. was active yet again during Tuesday trading. The papermaker's debt closed the session unchanged to slightly firmer.

Dynegy debt mixed

Traders gave mixed reports on Dynegy's debt, with some saying the bonds were up and others seeing the notes slipping.

One trader called the bonds down half a point to three-quarters, depending on the issue. The 7¾% notes due 2019 were pegged at 68¾ and the 8 3/8% notes due 2016 at 781/2.

At another desk, the 7¾% notes were deemed up almost a point at 69¼ bid.

Last week, the Houston-based energy company received federal regulator approval for its acquisition by Blackstone. Dynegy had announced the buy last month.

A Blackstone affiliate will buy Dynegy for $4.7 billion, all in cash. The deal includes the assumption of debt. The price per share works out to $4.50, a 62% premium over the Aug. 12 closing share price, according to an Aug. 13 press release.

Additionally, Blackstone will sell certain assets to NRG Energy Inc. for $1.36 billion.

The transaction is expected to close by the end of the year, but Dynegy still has a few days to search for a better offer.

Blockbuster steady on CFO exit

Blockbuster bonds were little changed following news out late Monday regarding an executive's departure.

A trader quoted the 11¾% notes due 2014 at 53 bid, 54 offered and the 9% notes due 2012 at 6 bid, 9 offered.

Another trader echoed the market on the 11¾% notes, calling that a "touch better." He added that the 9% notes wee "still" trading around 7.

Thomas M. Casey, the Dallas-based company's chief financial officer, resigned his post on Sept. 7, according to a regulatory filing. His exit became effective on Monday.

Dennis McGill will replace Casey.

The filing stated that Casey left of his own accord.

The management change comes as the company struggles to stay afloat. A forbearance agreement - acquired when the company missed the coupon payment on its 11¾% notes in July - is set to expire on Sept. 30. An interest payment on the 9% notes came and went unpaid on Sept. 1.

However, the forbearance agreement prohibited the payment on the subordinated notes.

Blockbuster has been in talks with creditors for the better part of the year in an effort to restructure its balance sheet, which includes over $900 million in debt. It has previously been reported that a bankruptcy filing might soon come, ahead of the forbearance expiration.

NewPage notes firm

As per the recent usual, NewPage's 11 3/8% notes due 2014 continued to be active, a trader said.

The bonds also inched up a tad during Tuesday's session, closing around 901/2.

Another trader, however, called the bonds unchanged, also around 901/2.

There was no fresh news out on the Miamisburg, Ohio-based coated papermaker.

Broad market mostly unchanged

Elsewhere in the distressed arena, Tribune Co.'s bonds were "quiet," a trader said, and "still" trading in the mid-40s.

General Motors Corp.'s benchmark 8 3/8% notes due 2033 were meantime "a touch softer on light volume" around 31.

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