Travelport softer as lender vote extended; Kodak remains under pressure on cash burn concerns

By Stephanie N. Rotondo

Portland, Ore., Sept. 28 - Distressed debt was trading "pretty sloppy," a trader said Wednesday.

"There was definitely some intraday weakness," he said.

"Everything is opening up and trading lower," said another trader. "Everything is heavy, everything is under pressure."

Still, action in purely distressed issues continued to be overshadowed by interest in recent new issues.

Travelport Ltd.'s debt closed softer as the company continued in its effort to refinance its PIK loans, despite bondholders claims that such a transaction would amount to a default. But after the bell, a trader said he noticed that bonds were trending higher in after-market dealings.

After announcing earlier in the week that it had drawn from its credit facility, Eastman Kodak Co.'s bonds have deteriorated significantly, losing 25 points on the day of the news and several points per day since. Wednesday was no exception, as a trader saw the debt falling at least a point.

Also on the weaker side were gaming credits like Caesars Entertainment Corp. and MGM Resorts International Inc.

Travelport bonds pressured

Travelport's parent company, Travelport Holdings, extended the deadline for its lenders to approve an extension on its PIK loans on Wednesday.

Bondholders have been fighting the effort, calling any agreement between the company and its lenders tantamount to default.

As such, the bonds were continuing to weaken.

One trader saw the 9 7/8% notes due 2014 at 63 bid, 65 offered.

At another shop, a trader echoed that market, calling it down "5 [points] and change" on the day. He also saw the 9% notes due 2016 closing around 59, which he said was down about 6 points.

However, he also noted that after the bell, trades were going through on the 9 7/8% notes that were higher, first at 6 ½ and then at 66.

"I don't know if those are late trades, or what," he said.

The new deadline for lenders to vote on the deal is Sept. 29. Travelport needs lenders to vote unanimously for the extension to be approved and if it is not, the company has already threatened a bankruptcy filing.

Kodak declines again

Concerns about cash burn continued to pressure Eastman Kodak's debt, following news out earlier in the week regarding a $160 million draw on the company's revolving credit facility.

A trader said there were "no real trades" in the name, though he saw the 7¼% notes due 2013 offered at 65 and the 9¾% notes due 2018 at 70½ bid, 71½ offered.

Another trader said the bonds were "weaker again," as the 7¼% notes "dipped into the high-50s" and the 9¾% notes lost another point to end at 70 bid, 71 offered.

A third market source deemed the 7¼% notes down as much as 5 points at 58 bid.

Kodak is based in Rochester, N.Y.

Casinos falling

A trader said "casino names just keep drifting lower," and Caesars' 10% notes due 2018 were no exception.

The trader saw the notes ending at 59 bid, "their first trip below 60," he said. He noted that the issue has lost 8 points in the last two or three trading sessions.

Another trader quoted the issue at 59½ bid, 60 offered, while a third source pegged the notes at 60 bid, down 4 points.

But Caesars wasn't the only gaming credit to get hit.

A source saw MGM Resorts' 6 5/8% notes due 2015 down 1½ points at 87 bid. Boyd Gaming Inc.'s 9 1/8% notes due 2018 were also down 1½ points, also at 87 bid.

Texas Industries slides

A trader saw Texas Industries, Inc.'s 9 1/8% notes due 2020 down 5 points on the day, at 80.

The slide occurred ahead of the Dallas-based cement and building materials maker's release after the market close of its second-quarter numbers, which actually showed improvement from a year ago - a net loss of $7.4 million, or $0.27 per share, versus year-earlier red ink of $23.7 million, or $0.85 per share. However, the loss was a little more than the quarter per share that Wall Street was looking for.

Springleak leaking

A trader said that Springleaf Financial Corp.'s bonds "have been drifting lower," seeing the Evansville, Ind.-based consumer lending company's 6.90% notes due 2017 down a half-point to a point, at 70 bid, 72 offered.

'"It's a big issue - but not much volume at all," a trader said.

He saw its 5.85% notes due 2013 "a little more active," off 1½ points at 88 bid, 88½ offered, on "more volume."

"When a company has numerous issues, people pound the shorter issues down," he said.

Another trader said that the company - the former American General Finance unit of troubled insurance giant American International Group, until its acquisition last year by Fortress Investments and its name change earlier this year - was lower in the wake of recent news involving the problems with its plans for establishing a real estate investment trust unit.

In the wake of that setback, he said the 6.90% bonds - which were trading 10 or 20 points higher "a month or two ago," had gradually come down into the 70s.

Broad market ends heavy

Elsewhere in the distressed marketplace, a trader said Clear Channel Communications Inc.'s 10¾% notes due 2017 fell to 58 bid, 59 offered from opening levels around 60.

NewPage Corp. was also dropping, according to the trader. He said the 11 3/8% first-lien notes due 2014 began the day around 82, but ended at 78 bid, 79 offered.

Paul Deckelman contributed to this article

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