OPTI Canada firms on Nexen-Long lake comments; Dex debt dips; Ahern yet to form plan

By Stephanie N. Rotondo

Portland, Ore., May 26 - The distressed debt market was mixed to firmer Thursday as the market prepared for the upcoming holiday weekend.

However, some players were more prepared than others, vacating their desks ahead of the bell - or simply not coming in at all.

"Everybody has left for the weekend," a trader said.

OPTI Canada Inc. gained strength, a trader said, on positive comments made by Nexen Inc., with whom OPTI has a joint venture project. But another trader deemed the debt steady on the day.

Meanwhile, Dex One Corp. saw its notes dip a tad in trading. The decline came as the company announced a management departure.

The market is also waiting to hear what Ahern Rentals Inc. plans to do with its balance sheet. The company has been attempting to restructure ever since missing a coupon payment earlier this year.

OPTI heads up

A trader said OPTI Canada's subordinated debt was better as oil prices firmed and its Long Lake joint venture partner Nexen said the project should be cash-flow positive soon.

He pegged the 7 7/8% and the 8¼% notes due 2014 at 481/2.

But another trader said the issue was "pretty much unchanged," also around that 48½ mark.

"We should expect to see positive cash flow here any day," said Kevin Reinhart, Nexen's chief financial officer, during a presentation at the UBS Global Oil and Gas Conference in Austin, Texas. "So we don't have to wait for a year or two before we start getting some cash back from that."

Earlier this year, OPTI said it was unlikely that the Long Lake project would hit its 2011 production target, as operational issues have continued to pose problems.

The project has capacity of 72,000 barrels per day. On May 19, OPTI said average daily production was as 28,000 barrels.

Oil prices declined 13 cents, or 0.13%, to $100.10.

OPTI is a Calgary, Alta.-based oil-sands producer. It owns a 35% stake in the Long Lake project.

Dex dips, CFO quits

Dex One's 12% notes due 2015 were "a bit lower," a trader said, following word that the company's chief financial officer had resigned.

The trader quoted the issue at 46½ bid, 47 offered, noting that there was "not a whole lot of activity."

Another trader saw the issue gaining a quarter-point, closing at 471/4.

"It wasn't that active," he added.

The Cary, N.C.-based phonebook publisher said Thursday that CFO Steven Blondy would be leaving the company by July 31.

The company said the departure was "mutually agreed upon by the company and Blondy."

A search is underway for a replacement.

Investors await Ahern plan

Ahern Rentals' 9¼% notes due 2013 were quoted higher at 46½ bid, 47½ offered, a trader said. That compared to 40 bid, 45 offered previously.

However, he noted that the bonds were "not really trading."

"It's one of those names that still hasn't filed but is past their 30 days," the trader said, referring to Ahern's missed coupon payment on Feb. 15.

Since then, the Las Vegas-based construction equipment rental company has secured waiver after waiver as it attempts to come up with a restructuring plan.

"There is talk of a rights offering," the trader said.

"There has to be [a rights offering]," another market source said. "There's no cash flow. They gotta get some skin in the game."

"The better days aren't quite here yet," he said.

Broad market mostly better

Among other distressed issues, Lehman Brothers Holdings Inc.'s 6 7/8% notes due 2018 and its 4.8% notes due 2014 were deemed "stronger" at 261/4, up "a quarter or so," according to a trader.

Also in the financial realm, Capmark Financial Group Inc.'s 7 7/8% notes due 2012 were better at 591/4.

Another trader called Caesars Entertainment Corp.'s 10% notes due 2018 half a point higher at 93.

The trader also saw Energy Future Holdings Corp.'s 10¼% notes due 2015 "unchanged, but kind of busy" at 631/2.

A third trader said DirectBuy Holdings Inc.'s 12% notes due 2017 moved up to 43½ bid, 44½ offered, while General Maritime Corp.'s 12% notes due 2017 were "a few points lower" at 87.

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