Greek austerity plan helps lift distressed debt; NewPage gains, quiet before coupon; Nortel up

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., June 29 - The distressed debt market "had a good feel to it," a trader said Wednesday.

"We had a bit of a relief rally," the trader noted, as Greece approved an austerity plan that would help it avoid a sovereign default, thereby allaying investor fears.

Still, the positive tone could also be due to "window dressing for quarter-end," the trader said.

NewPage Corp.'s bonds were a bit higher, following the market trend. However, volume in the debt had decreased dramatically, just one day ahead of a coupon payment that no one is sure will get paid.

Meanwhile, the market continued to wait for word on the outcome of Nortel Networks Corp.'s recent patent portfolio auction. But the bonds remained strong, giving credence to the belief that the longer the company is quiet, the higher the potential bid price could be.

Lehman Brothers Holdings Inc. said Wednesday that it had not only come up with a new reorganization plan, but had also secured wider support for the deal. The news gave the defunct investment bank's debt a boost, as the plan could bring the nearly three-year case to a close.

Also, OPTI Canada Inc. headed upward, though on no credit specific news. A trader opined that the gains were due to an increase in oil prices.

NewPage debt gains

A trader said he didn't see NewPage "all over the tape" during midweek trading. That was in contrast to recent sessions where the papermaker's bonds were seen dominating trading.

Still, he called the 11 3/8% notes due 2014 firmer around 92, versus 91 bid, 91½ offered previously. The 10% notes due 2012 were also better, trading between 27 and 28.

Another trader said the 11 3/8% notes were "still" around the 92 mark, while the 10% notes moved up to 27 bid, 28 offered from 26 bid, 27 offered.

"Everything seemed to be up slightly today," a third trader said, quoting the 11 3/8% first-lien senior secured bonds up three-eighths of a point at around the 92 1/8 bid level, while seeing its 10% second-lien senior secured notes up by a full point, at 27¾ bid.

"So they're slowly creeping up," he said, although he added that in the overall market "in general, everybody seems to have put their buying hat on today."

The Miamisburg, Ohio-based company has a $100 million coupon on its 11 3/8% notes coming due Thursday and the market has wondered if the payment will get made.

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.

Nortel remains strong

Nortel Networks' bonds - the 10 1/8% notes due 2013 and the 10¾% notes due 2016 - "traded up" to around 96, a trader said, on "medium volume."

The Toronto-based bankrupt telecommunications company has yet to announce the winner of an auction of its patent portfolio. The auction began Monday and bidders included Google Inc., Apple Inc., Research In Motion Ltd. and RPX Corp. Rumor has it that Intel Corp. and Microsoft Corp. might also be on the list.

The portfolio, which includes some 6,000 patents, is expected to generate as much as $1 billion. Google made the "stalking horse" bid earlier this year at $900 million. In order to win, a bidder would have to offer at least $29 million more.

Lehman up on new plan

Lehman Brothers Holdings' debt gained about half a point as the company said it had secured more creditor support for a new plan of reorganization that could result in a quicker exit and faster payouts to creditors.

A trader pegged the notes - all of which tend to trade on top of one another - around 26 in heavy trading.

Lehman filed for Chapter 11 protections on Sept 15, 2008 and was the largest corporate failure in U.S. history. The now-defunct investment bank is expected to pay out $60 billion to creditors.

OPTI rises with oil

OPTI Canada's subordinated issues gained ground, possibly due to higher oil prices, a trader said.

He said the 7 7/8% and 8¼% notes due 2014 were trading around 42.

Oil meantime gained $2.16 to end at $95.06 per barrel.

Another market source saw the 7 7/8% senior secured notes up by 1 5/8 points on the session Wednesday to end at 41 1/8 bid.

There was no fresh news out about the Calgary, Alta.-based oil-sands energy company, which earlier this month announced that it had not made a scheduled $71 million total interest payment due on June 15 on the $750 million of 7 7/8% notes and on the company's $1 billion of 8¼% senior secured notes due 2014.

OPTI Canada said at that time that it was invoking the standard 30-day grace period stipulated in the bonds' indenture, and would work with advisors Lazard Freres & Co. LLC, Scotia Waterous Inc. and TD Securities Inc., "to review strategic alternatives available for the Company to address its overall leverage position," options which might include a capital structure adjustment, which the company said may include debt-for-equity exchanges or conversions, possibly combined with raising additional capital. Other options that may be under consideration, it said, could include capital market opportunities, asset divestitures and/or a corporate sale, merger or other business combination.

GenMar swims upstream

Elsewhere, a market source saw General Maritime Corp.'s 12% notes due 2017 up by 2½ points on the day, ending at 81 bid.

The New York-based international petroleum tanker firm's bonds had traded around the lower 80s last week, but had fallen by about 3 or points on Monday, though there was no firm news out on either Monday or Wednesday to explain the issue's recent gyrations. The company's New York Stock Exchange-traded shares hit a new 52-week low of $1.35 in intra-day trading, and closed down 2 cents, or 1.43%, at $1.38, a new 52-week low close.

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