Edison Mission Energy up after CDS settlement; Geokinetics gains amid restructuring plan

By Stephanie N. Rotondo

Phoenix, Jan. 17 - Distressed bonds were taking a back seat to new issues on Thursday, according to market sources.

"The new issue market has been the hot potato," one trader said.

Edison Mission Energy's debt "bounced off their lows," a trader reported. The bounce came one day after the bankrupt power producer's credit default swaps settled.

Meanwhile, Geokinetics Holdings USA Inc.'s bonds have been pushing higher ever since the company announced a restructuring agreement on Tuesday. Under the agreement, the company will file for bankruptcy.

Edison rises post-CDS

Edison Mission Energy paper "bounced off of their lows a little bit," a trader said Thursday.

The bounce came after the company's CDS was settled at 48½ on Wednesday.

The trader said the debt - which trades in line with one another - hit a high of 493/4.

The Santa Ana, Calif.-based power producer and unit of Edison International Inc. filed for bankruptcy in December after failing to make a November coupon payment. The company also missed a mid-December coupon.

Under the terms of the bankruptcy plan, Edison Mission will break from its parent company upon the completion of the case.

Geokinetics gets a boost

On Tuesday, Geokinetics announced that it had reached a deal with more than 70% of its bondholders and all of its preferred holders relating to a restructuring plan.

Since the announcement, the company's 9¾% notes due 2014 have risen 10 points, according to a trader.

He pegged the issue around 58 as of Thursday's close.

The terms of the restructuring plan will be facilitated by a pre-packaged bankruptcy. According to the terms of the deal, all $300 million of the senior secured notes will be converted into equity, making bondholders the majority owner. The holders have also agreed to provide $25 million for debtor-in-possession financing.

The DIP loan will also be converted into equity once the Houston-based company completes its bankruptcy proceedings, which it hopes to do by the end of the first quarter.

Geokinetics is a provider of seismic data acquisition, seismic data processing services and multi-client seismic data to the oil and gas industry.

Broad market holds

Among other distressed issues, a trader said Ambac Financial Group Inc.'s notes were "up a point or so," trading around 40.

The trader also remarked that Kellwood Co.'s debt "has been moving up for the last week."

He saw the 7 5/8% notes due 2017 around 60, which was up a couple points. The 12 7/8% notes due 2014 were also a couple points better at 88.

Another source called Exide Technologies Inc.'s 8 5/8% notes due 2018 unchanged at 88 bid, 88¼ offered.

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