NewPage perks up just days before coupon comes due; Rite Aid debt gains; Nortel 'well bid for'

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., June 28 - Distressed bonds "rallied a little today," a trader reported Tuesday.

Even NewPage Corp.'s debt - which had been on a steady decline - moved up during the session. The market was still wondering if an upcoming coupon would be made and there has been no word from the company.

Rite Aid Corp.'s notes were also higher, though there was no fresh news out on the Camp Hill, Pa.-based drugstore chain.

There was also no word yet on the outcome of Nortel Networks Corp.'s patent auction. Still, a trader said the company's bonds were "well bid for."

NewPage attempts to rally

A trader saw NewPage's 11 3/8% notes due 2014 gain a point, closing around 913/4.

However, he deemed the 10% notes due 2012 unchanged at 261/4.

At another desk, a market source called the 11 3/8% notes up half a point to a full point at 91 bid, 92 offered. The 10% notes were also seen better, at 26 bid, 27 offered.

That compared with 25½ bid, 26 ½ offered previously.

Another trader saw "a little bit of activity" in the 11 3/8% notes, quoting them up a point, at 91¾ bid, while the company's 10% second-lien senior secured were up one-quarter point at 26¾ bid, "so they're both up slightly."

A second trader called the bonds "quiet today," compared with the busy activity levels seen over the past two weeks and even on Monday, when its bonds, particularly the 11 3/8% notes, were among the busiest junk issues. He saw those bonds at 91½ bid, 92½ offered and its 10% notes at 26 bid, 27 offered, with "no real change - it's where they opened this morning."

The Miamisburg, Ohio-based papermaker is facing an interest payment of about $100 million on the 11 3/8% notes Thursday and with the bonds heading lower and lower, it would seem the consensus is that the coupon will not get paid.

As previously reported, NewPage has not returned calls to Prospect News seeking comment.

The company is also looking to repay or refinance the 10% notes before the end of 2011. If the company fails to do so, it will accelerate other outstanding debt.

Lazard Ltd., FTI Consulting Inc. and law firm Dewey & LeBoeuf LLP are working with NewPage to develop a restructuring plan.

Rite Aid heads up

Rite Aid's debt was trending upward, though without any news to act as a catalyst.

A trader saw the 7.70% notes due 2027 moving up 1½ points to end around 651/4, while the 9½% notes due 2017 gained a point to close around 883/4.

Another source pegged the 7.70% notes at 64½ bid, 65½ offered and the 9½% notes at 87 bid, 88 offered.

Last week, the company reported a narrower loss for its fiscal first-quarter. Rite Aid posted a loss of $63.1 million for the period ending May 28.

No winner yet for Nortel

Nortel Networks had yet to disclose the winner of its patent portfolio auction as of press time.

The auction began Monday. Potential bidders included Google Inc., Apple Inc., Research in Motion Ltd., Ericsson SA and RPX Corp.

Intel Corp. and Microsoft Corp. was also whispered to be taking part in the sale.

A trader said that Nortel's bonds were "quiet but well bid for."

He pegged the 10 1/8% notes due 2013 and the 10¾% notes due 2016 at 951/4, up a quarter.

The Toronto-based telecommunications products company filed for Chapter 11 protections in January 2009. Since then, the company has sold off assets to pare down and pay off creditors.

Nebraska Book gyrates

A trader said that Nebraska Book Co. Inc.'s bonds were moving around in the wake of the company's Chapter 11 filing on Monday with the federal bankruptcy court in Wilmington, Del.

"It looks like they're going to pay off their 10% bonds [which would mature on Dec.1] which are senior secured, in cash." He said that the bonds were trading Tuesday around par, since the holders are virtually assured of making a full recovery, given their ranking high up in the company's capital structure.

But he saw the 8 5/8% notes due 2012 - which had fallen from levels around 84 bid last week to lows of about 67 - rebounding to 75½ bid, 77½ offered, though trading flat, or without their accrued interest. "It looks like there's a quick restructuring going on, so they're up about 3 or 4 points today."

He said that he "didn't know whether a lot of guys were short" on the issue and were buying to cover the shorts, "but they were up sharply."

Another trader, though said he "didn't see much change at all" in the Lincoln, Neb.-based textbook distributor's 8 5/8s, quoting them at 73 bid, 75 offered, "maybe up a point on the day, on some trading."

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