Exide Technologies' bonds head down again; J.C. Penney rises, CEO reportedly out; Rotech files

By Stephanie N. Rotondo

Phoenix, April 8 - Exide Technologies Inc. remained topical in the distressed debt market on Monday.

Mid-last week, the company's debt had fallen on news regarding the hiring of restructuring advisors. Following the news, the company officially announced the hire and also provided figures as to its available liquidity and cash flow. That helped the debt regain some ground.

But the bonds were down again on Monday, without any fresh news to act as catalyst.

J.C. Penney Co. Inc. was meantime better across the board, even as the company returned to court with Macy's regarding its planned Martha Stewart boutiques. The stock was also fairly up, as it was being reported that private equity firms were considering an injection into the troubled retailer.

After the market closed, news outlets began reporting that Ron Johnson, chief executive officer, was being ousted from his role.

In the world of bankruptcy filings, Rotech Healthcare Inc. announced it had filed for Chapter 11 protections in order to implement a debt restructuring. The filing was expected, so there was little resulting action in the company's bonds.

Exide drops back down

A trader called Exide Technologies' 8 5/8% notes due 2018 down 3½ points on Monday, pegging the paper at 751/2.

Another trader said the debt fell 4 to 5 points to 741/2, wiping out gains incurred on Friday.

And a third trader said the notes were "definitely lower" at 75 bid, 76 offered.

Early Thursday, it was reported that the Milton, Ga.-based battery maker had hired restructuring advisors Lazard Ltd. and law firm Akin Gump Strauss Hauer & Feld LLP. Exide followed that up with a press release that confirmed the hiring of Lazard, but not the law firm.

Also in the press release were cash flow and liquidity figures.

"The company expects that fiscal 2013 fourth quarter free cash flow will be approximately $50 million, exceeding prior guidance of $30 million, with total liquidity at March 31 of greater than $230 million," Exide said in the release.

On the back of that, the bonds rallied in Friday trading.

One trader opined that the recent volatility might be due to short covering. But he also noted that there is a looming maturity and wondered why the company included the cash flow and liquidity figures in the release. He speculated that the numbers could be a way to throw people off and that Exide might be struggling to figure out what to do with the Sept. 18 maturity.

"The banks probably wouldn't let them draw down to pay it off," he said.

J.C. Penney firms

J.C. Penney securities were rising Monday, even as the company headed back to court to battle over Martha Stewart with Macy's.

A trader called the 7.95% notes due 2017 up nearly a point at 95 7/8, while the 5.65% notes due 2020 were "relatively unchanged" at 81. He also saw the 7 1/8% notes due 2023 "up a couple points" at 97, the 6 3/8% notes due 2036 better by almost a point at 76 and the 7.4% notes due 2037 higher by over a point at 80 1/2.

Another trader said the debt was "generically better by 1 to 2 points," seeing the 5.65% notes going out at "+/- 83" and the 7.4% notes at 80 bid, 81 offered.

However, another market source deemed the 5.65% notes off almost a point at 81 bid.

The Plano, Texas-based retailer's equity (NYSE: JCP) was up 42 cents, or 2.72%, to $15.87.

Around midday, speculation was that for the stock's part, it was up because certain private equity firms - such as Apollo Global Management LLC and Leonard Green & Partners LP - were considering a buyout of the company.

However, after the bell, news came out that Ron Johnson, CEO, had been ousted and replaced with Michael Ullman III, whom Johnson had originally taken over for.

Johnson was hired in 2011 and was tasked with turning the company around. Most of his ideas - especially getting rid of sales and coupons - were met with disdain by consumers and the turnaround effort failed to succeed. In late February, J.C. Penney reported a fourth-quarter net loss of $552 million, or $2.51 per share and a full year net loss of $985 million, or $4.49 per share.

Same-store sales for all of 2012 declined by over 25%.

Rotech files for bankruptcy

Orlando-based medical supply provider Rotech Healthcare officially filed for bankruptcy on Monday, a move that was widely expected.

The company will use the court proceedings to implement a debt restructuring.

Because the filing was expected, the bonds were little changed post-news.

One trader called the 10¾% notes due 2015 off a couple points, seeing the issue trading around 99. But another trader said that 99 mark was about in line with previous trades in a 99 to par context.

Under the prepackaged plan, bank lenders and holders of the 10¾% notes will have their holding converted into an amended term loan. The 10½% second-lien notes holders will receive all of the new equity in the reorganized company.

Lender Silver Point Finance LLC has agreed to provide up to $30 billion of bankruptcy financing.

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