Alpha Natural selling Alpha Shale stake, bonds improve; NII announces job cuts, debt declines

By Stephanie N. Rotondo

Phoenix, Dec. 9 - Distressed debt was on the firm side as the week began, but the strength was not extended to every credit.

Alpha Natural Resources Inc. was following the day's trend, helped by the company's announcement that it was selling its 50% stake in Alpha Shale Resources to Rice Energy.

But NII Holdings Inc. - a name that has continued to be active and volatile since mid-October - did not follow Alpha Natural's course, as the bonds dropped anywhere from just a couple points to nearly 5 points. The decline came as the company announced an operational restructuring plan.

Alpha Natural raising liquidity

A trader said Alpha Natural Resources' debt was ending about 1½ points higher on the day after the company disclosed a sale of its 50% stake in Alpha Shale Resources.

The trader pegged the 6% notes due 2019 at 88¼ and the 6¼% notes due 2021 at 87.

Another market source placed the 6¼% notes at 88¾ bid, up a point from Friday.

The good times didn't stop there, as the entire coal sector was moving mostly higher during the day's session.

At another desk, a trader said Arch Coal Inc.'s 7% notes due 2019 were a point better at 771/4.

Under the terms of the sale, Rice Energy will pay to Alpha Natural $100 million in cash. Alpha will also receive $200 million in Rice's common stock. The latter part of the consideration could prove to be profitable for the Bristol, Va.-based company: Rice filed a registration statement for a planned initial public offering early Monday as well.

Alpha Natural and Rice Energy formed the joint venture in 2010 to develop a portion of Alpha's Marcellus natural gas holdings in Greene County, Penn.

Closing of the transaction will close when Rice's IPO does.

NII to cut jobs

NII Holdings' recent rally came to a halt on Monday as the company released details of an operational restructuring plan that will cut 1,400 jobs.

"I guess [the plan] was why these suckers were coming back" last week," a trader opined. Before last week, the bonds had been on a downward spiral since shortly before reporting earnings at the end of October.

In Monday trading, the 10% notes due 2016 opened at 57, but closed around 53, the trader said. The 7 5/8% notes due 2021 were off "almost 5 points" at 41½ and the 8 7/8% notes due 2019 dropped 4 points to 431/2.

Another trader said the debt was "active on that news," seeing the 7 5/8% notes fall "a couple points" to 42.

The Reston, Va.-based provider of Nextel mobile phone service in Latin America said Monday that it planned to restructure its headquarters and market organizations.

About half of the staff at HQ will lose their jobs. Over 1,400 marketing positions are also expected to be axed.

The company is hoping to save $50 million to $55 million in annual costs.

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