Edison International earnings disappoint, bonds climb; Hawker files for bankruptcy, debt gains

By Stephanie N. Rotondo

Portland, Ore., May 3 - A distressed bond trader said that "for the most part, the market was better again" during Thursday trading.

"It was generally an up day," he added.

But another trader said that in the distressed realm, "nothing was up today," noting that the main focus was on new high-yield issues.

Looking at the day's notables, both traders were right.

For instance, Edison International Inc.'s bonds were about 3 points higher across the board, despite a disappointing earnings release late Wednesday.

Hawker Beechcraft Acquisition Co. Inc. was also moving up, even as the company announced that it had officially filed a prepackaged bankruptcy.

However, Bon-Ton Stores Inc.'s debt dropped in active dealings. The losses came after the company reported dismal sales for the month of April.

Edison up despite earnings

Edison International reported first-quarter earnings on Thursday, which showed a 47% decline.

The narrower profit of $114 million was due in part to a wider loss at the Rosemead, Calif.-based power producer's Edison Mission Energy subsidiary.

Still, bonds linked to Edison Mission were up about 3 points across the board, according to a trader.

He pegged the 7.20% notes at 66, the 7% notes due 2017 at 66½ and the 7¾% notes due 2016 at 68 3/8.

For the parent company, revenues gained 2.7% to $2.86 billion. Operating costs increased 9.4%.

Edison Mission's loss, however, widened to $83 million from $18 million the year before.

Hawker files, bonds rise

A trader saw Hawker Beechcraft Acquisitions Co.'s 8 5/8% and 8½% notes due 2015 "up a point or 2," trading around the 16 mark.

The strength in the debt came as the Wichita, Kan.-based aircraft manufacturer and reseller announced that it had officially filed for bankruptcy.

The filing was based on a deal with senior secured lenders and senior bondholders, in which the company will be able to eliminate $2.5 billion in debt and about $125 million in annual interest expense.

Under the agreement certain lenders have also agreed to provide $400 million in debtor-in-possession financing.

Bon-Ton slides on sales

Bon-Ton Stores' 10¼% notes due 2014 took a hit Thursday after the company reported a 5% decline in April same-store sales.

One trader called the bonds down 3 points to 78. Another deemed the debt down 4 points at 77.

For the four weeks ended April 28, the York, Pa.-based retailer said total sales dropped 5.3% to $187.2 million. For the first quarter, same-store sales dipped 1.3%, with total sales falling 1.4% to $640.8 million.

The company said the sales results "did not meet our expectations," according to a press release.

Full first-quarter results will be reported later this month.

Broad market higher

Elsewhere in the distressed market, Rotech Healthcare Inc.'s 10½% notes due 2018 were up 1½ points to 671/4, according to a trader.

The trader also saw Verso Paper Corp.'s 11 3/8% notes due 2016 gaining a point to finish around 69.

Travelport LLC's debt was also firming, the 9 7/8% notes due 2014 at 68 and the 9% notes due 2016 at 94.

Both were a point higher, the trader said.

At another desk, a trader said NewPage Corp.'s 11 3/8% first-lien notes due 2014 were "kind of the same" around 72.

And, Circus and Eldorado Joint Venture's 10 1/8% notes that were to have matured March 1 traded "a couple times" at 811/4.

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