Clear Channel remains active; Aurora gains again; SunPower converts fall on new-deal plan

By Paul Deckelman

New York, May 22 - Clear Channel Communications Inc.'s bonds were in the spotlight for a second consecutive day on Wednesday, with fairly active trading in the wake of the diversified media company's Tuesday announcement of plans to exchange some of its existing notes for new bonds.

Another name which had been topical on Tuesday continued its ride on Wednesday, as Aurora Diagnostics Inc.'s bonds were again on the upside. That issue had risen on Tuesday in a comeback effort after having softened in last week in response to an earnings release.

MBIA Inc.'s bonds were seen having settled in at the higher levels they had reached recently on news of a settlement of the bond insurance company's long-running legal dispute with Bank of America.

In the convertibles market, SunPower Corp.'s plans to bring a new five-year convertibles deal caused the solar power equipment manufacturer's existing bonds to lose ground.

Clear Channel climb continues

A trader in distressed bonds said that "you keep seeing activity" in Clear Channel Communications' paper, particularly its 7¼% notes due 2027. He noted also that its equity remained busy.

He pegged the bonds at 80 bid, 80½ offered, calling that up about 1½ points on the session, with $12 to $14 million of those bonds changing hands, "so that one saw some action today."

But at another desk, a trader quoted the company's 6 7/8% notes due 2018 down nearly 2 points on the session at 88 bid.

It was the second straight session in the spotlight for the San Antonio, Texas-based radio broadcasting and outdoor advertising company which on Tuesday unveiled plans to give the holders of some of its existing bonds new paper in exchange for their notes. That announcement caused most of its paper to rise.

The company offered to give new 14% senior notes due 2021 to the holders of its outstanding $796.25 million 10¾% senior cash pay notes due 2016 and its $1.28 billion of outstanding 11%/11¾% senior toggle notes, also due 2016.

It set an early-tender deadline of June 4, and an expiration date of June 18 for the exchange offer.

Aurora improves again

A trader saw Aurora Diagnostics' 10¾% notes due 2018 trading up between 1 and 1½ points, going home at 69½ bid, 70¼ offered.

But he said there was "not a lot of volume," estimating about $3 million of turnover.

He noted that the Palm Beach Gardens, Fla.-based healthcare company's bonds had risen to about 68 to 68½ on Tuesday, a gain of about 3 points.

The bonds were seen as trying to bounce back after having traded at softer levels last week following the filing of the company's quarterly earnings report.

In the first quarter ended March 31, revenues fell to $60.9 million from $70.4 million a year earlier, and Aurora's net loss widened to $7.6 million from $2 million in the year-earlier quarter.

MBIA settles in

A trader said that MBIA's 14% surplus notes due 2014 were at 94 bid, 96 offered.

The Armonk, N.Y.-based bond insurer's paper had shot into the 90s recently from prior levels as low as the mid-20s, while its other, secured issues pushed above par from their prior levels in the mid-80s.

"They sort of stopped there" and settled in at the higher levels, holding onto the previous gains, he said.

The bonds had firmed solidly earlier in the month on the news that MBIA and long-time nemesis Bank of America had settled a lengthy legal battle that dated back to the financial crunch of 2007-2008, when many of the mortgage-backed securities MBIA had insured went sour as the underlying mortgage loans they were securitizing defaulted.

Exide hangs in

Elsewhere, a trader said that there was "just not a whole lot to talk about."

However, he saw Exide Technology Inc.'s 8 5/8% notes due 2018 in a 73 to 74 bid context, saying that "they've been in that range" over the past few sessions.

He called the Milton, Ga.-based automotive and industrial storage battery systems manufacturer's bonds up perhaps ½ point, with some $5 million having changed hands.

Busy session for Caesars

Caesars Entertainment Corp.'s 10% notes due 2018 which is usually found among the day's more active issues in the junk bond market, whether or not there is news out on the Las Vegas-based gaming giant, was in its usual spot on the Most Actives list.

A trader saw that paper trading between 64 and 65 bid "all day long," with the last trade at 641/2, which he called almost unchanged.

Between $9 million and $10 million was seen to have traded.

Sun plans converts deal

In the convertibles market, SunPower was heard by market sources to have launched an offering of $300 million of five-year senior convertible debentures early Wednesday, but hedged investor interest was curbed because a Total SA subsidiary agreed to purchase $200 million of the deal, leaving only $100 million to be offered to the public.

SunPower's existing notes were lower outright, but expanded modestly on a dollar neutral, or hedged, basis, a New York-based trader said.

SunPower planned to price its $300 million deal of senior convertible debentures after the market close Wednesday. The debentures were talked to yield 0.75% to 1.25%, with an initial conversion premium of 27.5% to 32.5%, according to a syndicate source.

There will be "no hedgies," a new York-based trader said.

A second trader said he expected the new deal to be pretty quiet.

Total Gas &Power USA SAS, a subsidiary of Total SA that owns about 65% of SunPower's common stock and is an institutional accredited investor, has agreed to purchase - and the initial purchasers have agreed to sell - $200 million principal amount of the debentures, assuming that the full $300 million aggregate principal amount is sold.

SunPower shares opened lower, but selling accelerated into the close, with the shares ending down $1.81, or 8.6%, in heavy volume at $19.19.

The Rule 144A deal was being sold via Deutsche Bank Securities Inc. and RBS Securities Inc., with possible participation from Citigroup Global Markets Inc., a syndicate source said.

Proceeds will be used for general corporate purposes, which may include redeeming or repurchasing some of SunPower's outstanding debentures and working capital.

The debentures are non-callable for life, with no puts and will be settled in stock.

The company is a San Jose, Calif.-based provider of high-efficiency solar cells, solar panels and solar systems.

Existing SunPower firm on hedge

SunPower's existing 4.75% convertibles due 2014 traded at 108.5, which was down 0.6 point and was also seen at 110.375 versus an underlying share price of $21.05, which was a stock level close to the previous close.

It was better by maybe 0.375 point, a trader said.

SunPower's existing 4.5% convertibles due 2015 traded at 118.3, which was down 2.4 points, according to Trace data. But the paper was also seen at 120.5 bid, 121.5 offered versus an underlying share price of $21.05 at the close.

"It was a little better," a trader said.

Rebecca Melvin contributed to this review.

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