Bon-Ton, Sears fall, rebound on back of poor results; GenMar bonds steady on bankruptcy filing

By Stephanie N. Rotondo

Portland, Ore., Nov. 17 - Distressed bonds "followed stocks to some extent," a trader said Thursday.

That is to say, most issues were on the softer side. The trader noted that weak retail earnings - both Bon-Ton Stores Inc. and Sears Holdings Corp. reported disappointing results - and housing figures that were "just OK" helped to drag things lower.

On the back of their results, both Bon-Ton and Sears saw their bonds drifting down. However, the debt rallied a bit by the end of the day, but still ended down from the previous session.

General Maritime Corp. announced Thursday that it had filed for bankruptcy protections in order to implement a restructuring agreement with creditors. The news did little to move the oil shipper's bonds, however.

Meanwhile, MF Global Holdings Ltd.'s debt headed down after a judge approved moving $520 million of customer cash into new brokerages. While clients that had cash in their accounts should see the funds within a week, they are only getting a portion of their holdings.

Bon-Ton slips, rallies

York, Pa.-based retailer Bon-Ton reported weak earnings for the third quarter on Thursday and the bonds fell in response.

However, despite the "crappy numbers," a trader said the 10¼% notes due 2015 rebounded from the day's lows in the mid-50s, ending around 59.

Another trader said the paper opened trading around 55, but closed near "59-ish," still down from levels around 60 on Wednesday.

A third trader also saw the notes hitting low of 55 before coming back to finish at 59 bid, 60 offered.

For the quarter ending Oct. 29, Bon-Ton posted a $22 million, or $1.21 per share, net loss. That compared to a loss of $6.3 million, or 36 cents per share, the year before.

EBITDA was $25 million, versus $48.7 million for the third quarter of 2010.

And, same-store sales dropped 5.9%. Total sales were $656.1 million, a 6.3% decline.

For the year thus far, net loss was $90.3 million, or $5 per share. The year before, Bon-Ton posted a net loss of $63.5 million, or $3.60 per share.

EBITDA was $63.8 million, compared to $102.9 million previously. Same-store sales for the year were down 3%. Total sales dropped 3.5% to $1.9 billion.

"Our third quarter performance did not meet our expectations," said Bud Bergren, president and chief executive officer, in the earnings release.

Sears down on earnings

Sears Holdings also reported numbers Thursday, showing a wider loss for the third quarter.

A trader said the earnings were "lousy," but like Bon-Ton, the company's bonds fell back only to "bounce back" by the end of the day.

The trader said the 6 5/8% notes due 2018 dipped to a low of 75 before coming back to end around 78. Still, he said that was "down a couple points from the beginning of the week."

Another trader also saw the notes hitting a low around 75, but saw the paper close at 78 bid, 79 offered.

For the quarter, the Hoffman Estates, Ill.-based retailer posted a net loss of $421 million, or $3.95 per share. In the third quarter of 2010, Sears reported a net loss of $218 million, or $1.98 per share.

Revenues fell to $9.6 billion from $9.7 billion the year before. Same-store sales dropped 0.8% overall.

As of Oct. 29, Sears had cash and equivalents of $632 million between in U.S. and Canadian operations. That compared to $806 million as of Oct. 30, 2010.

GenMar files, bonds stable

New York-based General Maritime filed for Chapter 11 protections Thursday due to falling oil demand and a surplus of shipping vessels resulted in two consecutive years of losses.

The news, however, did little to move the bonds.

A trader called the 12% notes due 2017 unchanged at 9 bid, 9¾ offered.

"They really didn't do much of anything," another trader said of the debt, seeing the paper with a 9 handle.

A third trader said there was "really no change" in the notes, also pegging them around 9.

GenMar filed for bankruptcy in order to implement a restructuring agreement made with creditors. Oaktree Capital Management LP has agreed to make a $175 million equity investment, while a group led by Nordea Bank Finland Plc will provide up to $100 million for the company to use while reorganizing.

The Oaktree investment is in addition to the $200 million loan GenMar secured back on March to refinance debt.

MF Global drops off

Some of MF Global's clients will soon receive funds they held in their accounts at the bankrupt futures broker as a judge overseeing the case agreed to the distribution of $520 million in cash.

However, the distribution equals only about 60 cents on the dollar.

The New York-based firm's bonds were pressured on the news.

"They are subject to any little piece of news that comes out," a trader said, quoting the 6¼% notes due 2016 in a 37-39 context.

Another trader called the issue down 3 points at 37.

And, another trader saw the notes trading in a 37-38 context.

In related credits, a trader said that investors were "still worried that Jefferies Group Inc. will become another MF Global."

Broad market mostly soft

Among other distressed issues, a trader said Caesars Entertainment Corp.'s 10% notes due 2018 fell "almost 2 [points]" to 65.

At another desk, a trader saw NewPage Corp.'s 11 3/8% first-lien notes due 2014 slipping to 70½ from 72.

The trader also saw Dex One Corp.'s 12% notes due 2017 falling to 25 from 27 the day before. He cited a downgrade as the cause of the losses.

"They're still probably [rated] too high," he opined.

But while most of the market was down, some names were getting a boost.

A trader said Lehman Brothers Holdings Inc.'s debt had climbed up half a point to 251/2.

"There are buyers around," he said.

Eastman Kodak Co.'s 7 ¼% notes due 2013 were also "slowly dribbling up," he said. He placed the notes around 46.

Another market source called the issue up a deuce at 48½ bid.

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