NewPage reportedly shopping for DIP, bonds benefit; Clearwire softens on restructuring chatter

By Stephanie N. Rotondo

Portland, Ore., Aug. 25 - Distressed bonds were on a "rollercoaster" on Thursday, according to a trader.

Things were lifted in the morning, he said, but by the afternoon, most things were giving back at least a portion of the earlier gains.

"We were originally in the positive in the morning," said another distressed debt trader. "Then it was pretty much down most of the day."

NewPage Corp. got a late day boost on news the company was looking for a debtor-in-possession loan. Conversely, Clearwire Corp.'s debt began to be quoted lower on buzz the company was considering a restructuring.

Meanwhile, Caesars Entertainment Corp.'s bonds continued to be actively traded. Traders said the bonds gyrated with the broader market, managing to close barely better than the previous session.

NewPage up on DIP news

News that Miamisburg, Ohio-based papermaker was shopping for a debtor-in-possession loan pushed the company's first-lien notes higher, according to traders.

One trader placed the 11 3/8% notes due 2014 around 84. Another said the debt "seemed a little better" trading in an 83-84 context.

According to a Wall Street Journal report, NewPage is in talks with JPMorgan Chase & Co. and Wells Fargo & Co. for a DIP loan of about $600 million.

Citing people familiar with the matter, NewPage is said to have already developed a preliminary prepackaged bankruptcy filing, though nothing is set in stone, the sources said.

NewPage warned of a potential Chapter 11 filing earlier this month as it failed to refinance its second-lien notes in July. Because of that failure, certain debts were accelerated. If the company fails to refinance or repurchase the debt by the end of the year, more debt could mature earlier than planned.

NewPage hired investment bank Lazard Ltd. and law firm Dewey & LeBoeuf earlier this year to advise on a potential restructuring plan.

Clearwire debt dips

A trader said there was chatter that Clearwire - a partner of Sprint Nextel Corp. - was considering a "possible restructuring," which sent the Kirkland, Wash.-based company's bonds down.

"I'm not sure if anything is trading," he said, as the buzz came late in the day. He noted that the bonds were, however, quoted 5 to 10 points lower, depending on the issue.

The 12% notes due 2017, for example, were seen in the mid-70s.

Late last week, news outlets reported that Sprint was in talks with cable companies, looking for an investment in its Clearwire partner. Sprint reportedly wanted the investment in order to acquire the shares of Clearwire that it doesn't already own.

Sprint holds a 54% stake in the company.

Caesars gyrates with market

As the market bounced around in Thursday trading, so did Caesars Entertainment's 10% notes due 2018, traders reported.

Traders saw the debt move as high as 76 before coming back to end around 74.

"That's still up a point," one trader remarked.

There was no fresh news out on the Las Vegas-based casino operator.

Broad market gains

The rest of the distressed market was mostly higher on the day, in line with the generally positive tone.

A trader said Clear Channel Communications Inc.'s 11% notes due 2016 "continued to drift." He said the paper "probably rebounded a couple points from the lows, but then it traded back down." He placed the notes around 62, down from an intraday high around 63 bid, 64 offered, but up from Wednesday closing levels of 61 bid, 62 offered.

Another trader said Hovnanian Enterprises Inc.'s 10 5/8% notes due 2016 closed a point better around 871/4.

At another shop, a trader said Capmark Financial Group Inc.'s bonds - which tend to trade on top of one another - finished the session around 541/2, while Nebraska Book Co. Inc.'s 8 5/8% notes due 2012 traded around 62, up from round-lot levels around 58 last week.

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