Bon-Ton debt makes comeback; Clearwire debates coupon payment and bonds slip; GenMar ticks up

By Stephanie N. Rotondo

Portland, Ore., Nov. 18 - A trader said distressed bonds were "kind of sideways" during Friday trading.

"It was pretty quiet," he said.

Bon-Ton Stores Inc.'s debt continued to rally as the week wore out, despite posting disappointing earnings on Thursday. In the previous session, the notes had initially dropped, but managed to rebound by the end of business. A trader speculated that the post-earnings gains, as well as those incurred Friday, were due to an "upbeat" conference call.

Meanwhile, Clearwire Corp.'s bonds were seen falling anywhere from 4 to 10 points. The declines came as the company said it was debating whether or not to make an upcoming interest payment.

Though subordinated noteholders were attempting to challenge a $75 million loan, General Maritime Corp. paper was on the rise. The oil tanker company filed for bankruptcy protections Thursday.

Bon-Ton rallies again

Bon-Ton Stores' 10¼% notes due 2015 "bounced back a little," a trader said.

He saw the notes trading around 66, up 6 points from the previous session's close and up 10 from Thursday's lows.

"I think the call went well [Thursday]," he said, referring to the company's earnings call. Before the call, investors went sell-crazy on the numbers, but pushed the debt back up post-call.

Another trader said the debt "rebounded a little bit," quoting the notes at 63 bid, 64 offered, versus 59 bid, 60 offered previously.

For the quarter ending Oct. 29, Bon-Ton posted a $22 million, or $1.21 per share, net loss. That compared with 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 with $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.

Come Friday, Fitch Ratings lowered its ratings on the York, Pa.-based retailer to B- from B.

"Bon-Ton appears to have hit a stumbling block," wrote Gimme Credit LLC analyst Evan Mann in an afternoon report. Though the company has attempted to make efforts to improve sales, "at this point management's credibility is suspect and only time will tell if recent results represent a temporary speed bump or signs of deeper troubles."

Clearwire paper declines

Clearwire paper took a hit during end of week trading after news outlets reported that the company might not make an upcoming interest payment.

A trader said the 12% first-lien notes due 2015 fell to 76 bid, 78 offered from previous levels in the low-80s. The 12% second-lien notes due 2017 meantime dipped into the low- to mid-40s from the low-50s.

"So they were down more," he said of the subordinated issue.

Another trader said he heard the bonds were down 8 or 9 points, though he did not have any markets.

The struggling Kirkland, Wash.-based wholesale wireless carrier has a $237 million payment coming due Dec. 1. The Wall Street Journal, citing the company's top executive, reported that the company was debating making the payment as it would be a "significant drain" on its books.

The company also said it needs about $1 billion to fund operations and to upgrade its network. As of Sept. 30, Clearwire had just under $700 million in cash and equivalents.

GenMar drives higher

A group of noteholders was attempting to block a $75 million loan General Maritime was seeking to fund operations while in bankruptcy.

However, the judge overseeing the case gave his OK for a $30 million draw.

GenMar filed for bankruptcy Thursday 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.

On Friday, traders reported that the New York-based oil shipping company's 12% notes due 2017 had gained some ground.

One trader said the debt was "maybe up a point," trading around 10 3/4. That compared with 9 bid, 10 offered the day before.

Another trader saw the notes trading around 11.

Broad market mixed

Among other distressed issues, a trader said ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 fell a deuce to 653/4. Another trader called the notes down by a couple points at 64½ bid, 65 offered.

A trader deemed Caesars Entertainment Corp.'s 10% notes due 2018 "kind of active," but weaker. He pegged the issue around 64.

Another trader said the notes were "about unchanged" at 64 bid, 65 offered.

Lehman Brothers Holdings Inc.'s debt was called "fairly active" and modestly firmer at 25¾ bid, 26 offered.

MF Global Holdings Ltd.'s 6¼% notes due 2016 were also better at 37½ bid, 38½ offered.

© 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.