NewPage hires advisors, bonds remain weak; Rite Aid debt gains strength; Capmark moving upward

By Stephanie N. Rotondo

Portland, Ore., April 20 - Distressed debt remained firm through Wednesday's session, though the abbreviated holiday week continued to weigh on overall trading volume.

"The market was better generally," a trader said, seeing average gains of a quarter- to half-point. However, he said the market was "not particularly active."

NewPage Corp.'s debt was further weighed on by news the company had hired advisors to develop a restructuring plan. That news was in addition to news out last week about a management change.

Meanwhile, Rite Aid Corp. closed firmer on the day, though there was no news out to explain why.

Capmark Financial Group Inc. continued to be a topical credit, as investors reacted to the company's recent filing of its reorganization plan. The bonds have been slowly climbing up for most of the week.

NewPage remains weak

NewPage has reportedly hired advisors to help develop a restructuring plan, putting further pressure on the already depressed bonds.

A trader called the 10% notes due 2012 slightly weaker at 573/4, while the 11 3/8% notes were almost half a point lower at 99 3/8.

At another desk, a trader called the 10% notes half a point softer at 57 bid, 57 ½ offered. He also quoted the 11 3/8% notes at 99¼ bid, 99½ offered, also down.

He said the 12% notes due 2013 were trading around 25.

"[The 10% notes] must be down 15 points from the highs a few weeks ago," he said.

A third trader deemed the 10% notes a point weaker at 571/2.

According to news reports, NewPage has retained Lazard Ltd., FTI Consulting Inc. and law firm Dewey & LeBoeuf LLP to advise on a potential restructuring plan.

The news was in addition to Friday's announcement that David Prystash, chief financial officer, had resigned. Prystash's departure marks the fourth executive exit since June 2010.

Rite Aid gains

Rite Aid's debt was trending higher, traders reported, though there was no news out to cause the gains.

One trader said the 9½% notes due 2017 were a point better at 901/4. Another trader said the issue was "a touch higher" at 90.

At another shop, the 9½% notes were placed at 89½ and the 9 3/8% notes due 2015 at 90 3/8 bid, 90 7/8 offered.

A fourth source deemed the 8 5/8% notes due 2015 a bit higher at 91 bid.

Rite Aid recently released quarterly results that were better than expected, but Gimme Credit LLC analyst Kim Noland pointed out that the company is not yet out of the woods.

"Debt is now almost 7.5x adjusted EBITDA, imperiling equity value, and bondholders must remain vigilant in the face of lackluster operating performance that could sink bond value," she wrote in a report published Wednesday.

Capmark moving upward

Capmark Financial Group's debt continued to gain traction, as investors reacted to the company's plan of reorganization.

The plan was officially filed on Tuesday.

A trader said the 2010 paper was up over half a point around 53,while the 5 7/8% notes due 2012 gained nearly a point to end around 54 1/8.

Another trader also placed the 2010 issue around 53 and the 5 7/8% notes at 523/4.

Under the terms of the plan, the Horsham, Pa.-based firm will issue $1.25 billion of new debt to unsecured creditors. Those creditors will also receive stock and cash.

Those creditors holding debt with no guarantee will get about $3.89 billion, or about 56%, of what they are owed.

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