ATP Oil & Gas bonds drift closer to zero as more DIP funds sought; Verso mixed after exchange

By Stephanie N. Rotondo

Phoenix, Feb. 4 - The "bond du jour" in the distressed debt market, according to one trader, was ATP Oil & Gas Corp.

The bankrupt company's bonds saw "heavy trading" as the debt slipped deeper into the single-digits. The declines came after a late Friday court filing that showed the company was seeking additional debtor-in-possession funds.

Verso Paper Corp. was meantime mixed as the papermaker announced it had wrapped up an exchange of bank loans for new bonds.

Overall, the distressed arena was softer during Monday trading, following a hefty decline in the equity markets.

ATP closer to zero

ATP Oil & Gas' 11 7/8% notes due 2015 "took it on the chin," a trader said, seeing the bonds fall from a 5 handle to a 4 handle.

"That one continues to be a bust," another trader said, also pegging the debt around 4.

The losses were due to a court fling filed late Friday, in which the Houston-based oil and gas exploration company sought an additional $142 million of DIP financing.

ATP failed to meet production targets required under its original DIP facility, which triggered the elimination of a $50 million tranche. The company said it needs the additional funds for working capital and general corporate purposes.

Verso mixed post-swap

Verso Paper's bonds finished the session mixed after the company announced it had completed a debt exchange.

A trader called the 8¾% second-lien notes due 2019 unchanged around 39. The 11¾% notes due 2019, however, fell over 2 points to end around 703/4.

Another trader placed the second-liens at 38 bid, 40 offered, "about where it was trading."

The Memphis-based company swapped $85.8 million of loans at the holding company level for $72.9 million of new 11¾% senior secured notes due 2019.

The new notes were issued via Verso Paper Holdings LLC and Verso Paper Inc., both wholly owned subsidiaries.

Broad market drifting down

Also in the distressed space, Caesars Entertainment Corp.'s 10% notes due 2018 came in slightly after the company said it was issuing a $1.5 billion add-on to its 9% notes due 2020.

A trader said the bonds were "quite active," trading around 683/4.

Another trader said that Cengage Learning Acquisitions Inc.'s bonds "continue to drift" ahead of earnings.

He placed the 11½% notes due 2020 at 77 bid, 78 offered and saw the 10½% notes due 2015 "offered in the mid-20s."

The second trader also saw Alcatel-Lucent USA Inc.'s 6.45% notes due 2029 "coming off their highs," slipping to levels around 78.

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