Caesars amends refinancing plan; J.C. Penney debt topical as company denies need for more cash

By Stephanie N. Rotondo

Phoenix, Sept. 26 - Distressed bonds were strong Thursday, though a trader noted that there continued to be a new issue focus in the market.

Caesars Entertainment Corp. continued to be active as the company said it had amended its refinancing plans, raising the amount of first-lien notes and lowering the amount of second-lien notes expected to be sold.

The company also said it was shrinking a planned bank loan.

And J.C. Penney Co. Inc. was in the news again as news outlets reported that the company's chief executive had said the company had no need to raise cash this year. However, after those reports - and after the market closed - it was learned that the retailer had commenced an 84 million-share stock sale.

As for other distressed credits, a trader said Energy Future Holdings Corp.'s 15% notes due 2021 had "a nice move," gaining 3 points to end at 211/2.

The coal sector was on the soft side, with one trader seeing Arch Coal Inc.'s 7¼% notes due 2021 falling a point to 761/4.

The trader also saw Alpha Natural Resources Inc.'s 6% notes due 2019 down a point at 841/2.

Another market source pegged Alpha Natural's 6¼% notes due 2021 off almost a point at 831/2.

Caesars amends terms

Caesars Entertainment continued to weaken in Thursday trading, just one day after the company held an investor lunch to discuss its $1.85 billion bond offering and other refinancing efforts.

One trader called the 10% notes due 2018 down over a point, trading around 533/4. Another trader, however, said the debt was unchanged, pegging the notes in a 54 to 55 context.

A third market source called the issue up 1½ points at 55¼ bid.

As previously reported, Caesars is looking to refinance about $4.4 billion of CMBS debt and the $450 million senior secured credit facility entered into by Octavius Linq Holding Co. LLC, an indirect subsidiary. As such, the company is looking to sell $1.85 billion of senior secured notes.

The deal was said to include a $500 million tranche of seven-year first-lien notes (B2/B) and a $1.35 billion tranche of eight-year second-lien notes (Caa2/CCC+). Both tranches come with three years of call protection.

However, on Wednesday the Las Vegas-based casino operator said it was upping the amount of first-lien notes to between $1 billion and $1.5 billion and trimming the second-lien notes sale to $1.25 billion.

The company also said it was reducing a planned bank loan to between $2 billion and $2.5 billion from $3 billion.

Caesars also announced on Wednesday that it was selling 10 million shares of common stock. Credit Suisse Securities (USA) Inc. is leading the stock sale.

J.C. Penney rebounds

J.C. Penney was "topical again," a trader said, as it was reported that Myron Ullman, chief executive officer, had said that the struggling retailer was not looking to raise cash this year.

Ullman's reported comments came on the heels of a Goldman Sachs analyst report that stated the company would likely need more liquidity in the near term.

Despite Ullman's efforts to assure investors, it might have been all for naught: After the bell, the company announced that it was selling 84 million common shares in a secondary offering.

But ahead of the stock sale news, J.C. Penney's debt was experiencing a bit of a rebound, according to traders.

One trader said the 5.65% notes due 2020 rose "almost a point" to 74 5/8. Another trader said the issue was "pretty active," moving up to around 75, versus 73½ previously.

The second trader also saw the 6 3/8% notes due 2036 at 68½ bid, 69 offered, compared to levels around 67 on Wednesday.

A third source placed the 5.65% notes at 75½ bid, up a deuce on the day.

Proceeds from the stock sale will be used for general corporate purposes, the company said.

J.C. Penney is based in Plano, Texas.

Alcatel continues to buzz

Alcatel-Lucent paper continued to rise as rumors of a possible tie-up with Nokia Corp. continued to swirl around.

A trader said the 6.45% notes due 2029 were a point better at 853/4. Another source also placed the bonds at that level.

Renewed chatter of a possible buyout from Nokia began to circulate on Wednesday. The companies have gone back and forth several times in recent years and the latest buzz - that Nokia is interested in buying Alcatel's wireless unit - comes on the back of Nokia's sale of its handset unit to Microsoft Corp.

Alcatel is a Paris-based telecommunications company.

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