Catalyst Paper up on amend and extend; OPTI steady, action dies down; Nebraska Book unchanged

By Stephanie N. Rotondo

Portland, Ore., June 1 - Distressed debt traders saw an overall softer day Wednesday, given the performance of the equity markets.

"It was more of a stock-centric day," a trader said, as the Dow Jones industrial Average fell about 280 points and oil futures lost nearly $3.

"It was definitely a weaker day," another trader said. "Not as much as you'd think, but definitely weaker."

Catalyst Paper Corp., however, beat the broad market trend, as its bonds gained almost 5 points on the day. The gains came after the company announced it had secured an amend and extend with its asset-based loan lenders.

In other market mainstays, OPTI Canada Inc. was unchanged to slightly weaker, though traders noted that volume was down considerably from the day before.

Action in Nebraska Book Co. Inc. was also not as heavy as it was on Tuesday. The company's debt finished up about unchanged from previous levels.

Catalyst Paper heads up

A trader said Catalyst Paper was an actively traded credit Wednesday, as the market pushed the 7 3/8% notes due 2014 up "almost 5 points."

He pegged the notes around the 59 level.

Another trader saw the 7 3/8% notes having gained 5 points on the session, to finish at 58 bid, 59 offered.

He also saw the company's 11% senior secured notes due 2016 up about 2 points on the session at 91 bid, 92 offered.

Catalyst was one of the most actively traded junk bonds on the day, with a trader seeing over $28 million of the notes having changed hands, easily putting it among the top five most active issues. He quoted the bonds as having risen more than 6 points on the day to 59 1/8 bid.

On Tuesday, the Richmond, B.C.-based papermaker said it had secured an amend and extend on its $330 million asset-based loan facility due August 2013. The amendment altered the facility, making it a C$175 million ABL facility coming due May 31, 2016.

The reduced borrowing capacity "reflects reduced working capital levels due to the permanent closure of the company's Elk Falls mill in 2010," Catalyst said in a press release.

The financial covenants in the facility were also replaced by a covenant to maintain a minimum fixed charge coverage ratio of 1.1/1.0. The covenant is triggered only if excess availability under the amended facility falls below $22 million.

Additionally, the fixed assets of the Snowflake mill are not part of the borrowing base and become first-lien security under the company's senior secured note facilities. This will allow for the issuance of an additional $60 million of senior secured notes under those facilities.

Elsewhere in the paper realm, a trader said there was "lots of onesies" in NewPage Corp. bonds.

He said the 11 3/8% notes due 2014 were "probably off a little bit" at 963/4, while the 10% notes due 2012 were "a little bit softer, but not huge," ending around 421/4.

OPTI action quiets down

Trading in OPTI Canada subordinated paper was "very quiet compared to yesterday," according to a trader.

He called the 8¼% notes due 2014 unchanged at 49 bid, 50 offered.

Another trader, however, said the subs fell nearly a point to close around 49.

On Thursday, Nexen Inc.'s chief financial officer made some positive comments about the Long Lake project in which OPTI owns a 35% stake.

"We should expect to see positive cash flow here any day," said Kevin Reinhart 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.

OPTI is a Calgary, Alta.-based oilsands producer.

No joy for Nebraska Book

There was little follow through in Nebraska Book Co.'s debt Wednesday, "after all that price action yesterday," a trader said.

He placed the 10% notes due 2011 at par ½ bid, 101½ offered, the 8 5/8% notes due 2012 at 83 bid, 84 offered and the "super subs" at 9 bid, 10 offered.

"But nothing traded," he said.

As for the previous day's price movements, he said that it was "most likely somebody that found a retailer they could sell into the story and took them for a lot of points."

Nebraska Book is a Lincoln, Neb.-based textbook distributor.

Caesars debt dips

Caesars Entertainment Corp.'s 10% notes due 2018 were seen falling a point to end around 92 at one desk.

At another, a trader said the notes were "a little bit softer, but not on very much trading."

He pegged the issue at 92 bid, 93 offered.

Caesars is a Las Vegas-based casino operator.

Paul Deckelman contributed to this article

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