TXU rises as interest payment looms; J.C. Penney rally goes on; New Enterprise climbing higher

By Stephanie N. Rotondo

Phoenix, Oct. 24 - Recently topical names continued to be in focus in the distressed debt market on Thursday.

As Energy Future Holdings Corp. gets closer to a Nov. 1 interest payment, the company's bonds have started to gain in activity. The company is currently engaged in talks with creditors and investors are waiting to see if the parent company will put one or more of its subsidiaries into bankruptcy.

A trader said the 10% notes due 2020 saw "heavy volume," with "over 20 trades." He said the issue fell slightly to 1063/4.

J.C. Penney Co. Inc. paper was also busy again and better, continuing a rebound that began in the previous session.

A trader saw the 7.95% notes due 2017 gaining over a point to end at 763/4, while the 7.4% notes due 2037 increased a point to 641/4.

Another market source called the 5.65% notes due 2020 rising nearly 4 points to 68¾ bid.

Even RadioShack Corp.'s 6¾% notes due 2019 were rallying after declining for the last two sessions on the back of dismal quarterly earnings.

A trader said the bonds increased over 2 points, closing at 681/4.

New Enterprise bonds rallying

New Enterprise Stone & Lime Co. Inc.'s 11% notes due 2018 jumped in Thursday trading.

The company held a conference call early in the day to discuss its fiscal 2014 second quarter results, which were released on Oct. 15.

A trader saw the debt popping 4½ points to end at 55. He said the notes had been trading at that level about two weeks prior, but had fallen to around 47. Come Wednesday trading, he said the paper had moved up to 50 and the gains continued into Thursday's session.

On Monday, the New Enterprise, Pa.-based provider of limestone, dolomite and gravel filed an 8-K announcing Thursday's conference call. But the filing also noted that the company had announced that it had begun to implement a "cost savings and operational efficiency plan" in the fiscal second quarter.

According to a subsequent press release, the plan was put into place "as a result of the prolonged economic tightening in its markets." The company is hoping the plan - which will reduce head-count, merge certain units to streamline operations and cut administrative costs - will generate savings of at least $20 million by fiscal 2015.

New Enterprise also said that it was considering selling non-core assets to improve liquidity.

For the quarter, the company reported revenues of $242.36 million, down from $260.54 million the year before. Net income held steady year over year at $8.52 million.

Cash and equivalents was $4.4 million, which compared to $7.98 million for the same period of fiscal 2013.

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