SuperValu jumps on earnings, Cerberus deal; Nokia sales increase, bonds rise; ATP lower

By Stephanie N. Rotondo

Phoenix, Jan. 10 - The distressed name of the day was SuperValu Inc., as the company not only released improved earnings but also announced an official deal with an investor group led by Cerberus Capital Management LP.

Under the deal, Cerberus and its cohorts will buy five of SuperValu's supermarket chains for $3.3 billion. Additionally, Cerberus will lead a tender offer for up to 30% of SuperValu stock at $4 per share.

On the news, SuperValu's bonds were dominating trading, rising 2 to 5 points on the day.

Meanwhile, Nokia Corp. gave an update of its fourth-quarter performance, which has "exceeded expectations," the company said in a press release.

Those bonds were also ending higher, by at least 2 points.

Though the day was a strong one overall, ATP Oil & Gas Corp. was on the losing side. Earlier in the week, the company said that it was putting over half of its shelf drilling leases in the Gulf of Mexico up for auction. The news has prompted the bonds to slide further into the single digits.

Good news for SuperValu

It was "all SuperValu, all day," a trader said, as the company posted a quarterly profit and announced a deal with an investor group led by Cerberus Capital.

The trader said SuperValu's 8% notes due 2016 were the day's "top trader," with at least $50 million changing hands. The issue was traded up to 991/2, down from the intraday high, according to the trader.

In addition to the 8% notes, the trader saw the 8% notes due 2031 moving up "5 and change" points to 67 1/8, while the 7½% notes due 2014 rose nearly 2 points to close around par 1/4.

And, the 8.7% notes due 2030 gained over 5 points, closing at 691/2, and the 7.9% notes due 2017 improved 3½ points to 993/4.

Another market source pegged the 8% notes of 2016 at 99¾ bid, up 2¼ points.

The source noted that the issue was up as much as 3 points earlier in the session.

A third trader said the 2016 maturity closed at 991/2, down from the day's high around 101. He also pegged the 7½% notes at par ¼ - "they're going to be called," he said - and the 2031 notes at 67 bid, 68 offered, down from highs around 70.

The stock (NYSE: SVU) meantime put on 43 cents, or 14.14%, to end at $3.47.

For the Eden Prairie, Minn.-based grocery store operator's fiscal third quarter, net profit was $16 million, or 8 cents per share, compared to net loss of $750 million, or $3.54 per share, the year before.

However, revenue fell to $7.91 billion from $8.33 billion.

As for the Cerberus deal, SuperValu will sell five chains - Albertsons, Acme, Jewel-Osco, Shaw's and Star Market - to the investor group for $3.3 billion.

Cerberus will also lead a tender offer for up to 30% of SuperValu's stock at $4.00 per share.

Upon completion of both transactions, Sam Duncan - the former chairman and chief executive of OfficeMax - will replace Wayne Sales as CEO.

Nokia rises with sales

Nokia gave an update on its fourth-quarter performance on Thursday, which showed better-than-expected device sales, spurred by its new Lumia line.

The bonds "started to drift higher," a trader said, though he added that the debt "gave some back" by the end of the day.

He placed the 5 3/8% notes due 2019 at 98 offered, up over 2 points. The 6 5/8% notes due 2039 were also up over a deuce at 931/2, he said.

Another trader said the paper was "pretty active," pegging the 2019 maturity at "98-ish" and the 2039s at "close to 94."

Nokia sold 86.3 million devices in the fourth quarter. Of those, 4.4 million were Lumia smartphones.

The results were likely positively impacted by the holiday season and, as such, the Finnish company also remarked that it expected "seasonality" to have a "negative impact" in the first quarter of 2013.

ATP losing its grip

ATP Oil & Gas' debt was on the weak side despite an overall firm day in the marketplace.

One trader quoted the 11 7/8% notes due 2015 at 8 bid, 9 offered, down from 8¾ bid, 9¾ offered previously.

Another trader also placed the bonds in the 8 to 9 context, though he added that the levels were up from the day's low of 7½ bid, 8½ offered.

Earlier in the week, The Houston-based bankrupt oil and gas producer sought court approval to put up 18 of its 38 shelf drilling leases in the Gulf for auction. The company is being forced to do so by its debtor-in-possession lenders, which are led by Credit Suisse AG.

The company has until March 15 to complete the sale. However, ATP has been marketing the leases since last year and has yet to come up with a stalking horse bid.

Strong day for market

Elsewhere in the distressed space, Travelport LLC's 9 7/8% notes due 2014 inched up to 943/4, on $25 million traded, according to trader.

The trader also saw Springleaf Finance Corp.'s 6.9% notes due 2017 increasing "a couple points" to 943/4.

And, Navistar International Inc.'s 8¼% notes due 2021 slipped over half a point - "kind of big for as strong a day as it was," the trader said - to end around 98.

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