OGX bonds tumble to new lows; RadioShack recovers on liquidity assurance; Kodak loan talk out

By Stephanie N. Rotondo

Phoenix, July 12 - It was a lackluster Friday for the distressed debt market as the equity markets ended in mixed fashion.

"There was very little activity," one trader said.

Another called the day "mighty slow."

Still, that didn't stop OGX Petroleo & Gas Participacoes SA and RadioShack Corp. from holding investors' attention.

OGX bonds fell to new lows on Friday, as the troubled Brazilian oil company continues to face obstacles. In the last week, it was reported that a shareholder was looking to block a sale of assets, that two more board members had left and that creditors were meeting with lawyers to discuss Brazilian insolvency law.

Cleary Gottlieb Steen & Hamilton LLP held a conference call on the topic on Friday and Bingham McCutchen LLP is planning a presentation on Monday.

Meanwhile, RadioShack's debt recouped some lost ground after the company said it had ample liquidity to deal with its upcoming maturity. The bonds had dropped in the previous session on reports it was looking to hire a financial advisor.

OGX hits new lows

A trader said OGX bonds "keep making new lows," as the 8½% notes due 2018 dropped over 2 points to 163/4.

Another trader saw the debt in a 16 to 17 range, versus levels around 19 previously.

On Thursday, it was reported that some OGX creditors were looking into their options as the flagship company of billionaire Eike Batista has seen its value dwindle. Also on Thursday, news outlets reported that a shareholder was looking to block a sale of assets.

Law firm Cleary Gottlieb held a conference call with creditors on Friday, discussing the current situation and what options might be available to them. Bingham McCutchen has scheduled a presentation for Monday.

On Friday, Brazil's oil regulator said it was going to look into the economic viability of OGX's Tubarao Azul offshore oil field. If the field is viable, the regulator will ask OGX to submit a development plan.

But just last month, the company said it was considering shuttering production at the field in 2014. The regulator said that if OGX can't make further investments in the field, it could re-auction the asset.

RadioShack regains ground

RadioShack's 6¾% notes due 2019 "recovered" to around 75, according to a trader.

He said the 2.5% convertible notes that mature Aug. 1 "rebounded a fair amount," trading into the high-90s. But the notes "gave back some of the gains they showed earlier in the day," ending in the mid-90s.

Another trader said the straight bonds were "stronger after the company said liquidity was pretty good." He pegged the debt at 73 bid, 74 offered.

He also saw the converts in a 94-95 context.

A third trader called the 6¾% notes up a deuce at 75.

On Thursday, it was reported that the Fort Worth, Texas-based electronics retailer was looking to hire a financial advisor, causing concerns about the company's looming maturity, of which there is about $287 million outstanding.

But in a statement on Friday, RadioShack said it had liquidity of $820 million as of the end of the first quarter and that the meetings with advisors were simply an effort to look at ways to strengthen its balance sheet.

Talk on Kodak loan released

Timing came out on Eastman Kodak Co.'s $695 million of first- and second-lien term loans as a bank meeting was scheduled for 1 p.m. ET in New York on Monday, according to a market source.

Also, talk on the $420 million six-year first-lien term loan emerged at Libor plus 475 basis points to 500 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, the source said.

And, guidance on the $275 million seven-year second-lien term loan was announced at Libor plus 825 bps to 850 bps with a 1.25% Libor floor, a discount of 98½ and call protection of 103 in year one, 102 in year two and 101 in year three, the source continued.

With the term loans, the company is planning on getting an up to $200 million senior secured asset-based revolver.

Proceeds from Kodak's credit facility will be used to fund distributions to creditors in accordance with the company's plan of reorganization. The new debt will enable the company to repay its secured creditors under current senior and junior debtor-in-possession facilities, finance its exit from Chapter 11 and meet its post-emergence working capital and liquidity needs.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch and Barclays are the lead banks on the deal.

Kodak is a Rochester, N.Y.-based imaging technology products and services provider to the photographic and graphic communications markets.

Sara Rosenberg contributed to this article

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