American Apparel hires restructuring advisors, bonds hold; Exide Technologies paper inches up

By Stephanie N. Rotondo

Phoenix, Feb. 20 - Distressed debt continued to climb higher Thursday, according to traders.

American Apparel was in the news as the company hired Skadden, Arps, Slate, Meagher & Flom LLP to look into its restructuring options.

However, a trader said the bonds were virtually unfazed by the news, though the stock "tanked."

Meanwhile, Exide Technologies Inc.'s debt was holding its own. A trader said a monthly operating report out Wednesday "looked OK."

Late in the day, news came out that the company and its creditors were seeking approval to probe whether warehouse owners and the London metal Exchange conspired to fix metal prices.

American Apparel hires advisors

American Apparel's debt managed to shake off news that the Los Angeles-based clothing company had hired a law firm to look into its restructuring options.

"It didn't seem like the bonds really moved," a trader said, seeing the 13% notes due 2020 at 83.

The stock (NYSE: APP), however, fell 31.09 cents, or 32.02%, to 66 cents.

American Apparel hired Skadden, Arps, Slate, Meagher & Flom LLP as restructuring advisors, the Wall Street Journal reported Thursday. According to "people familiar with the matter," bondholders have already started to organize and reach out to the advisors.

The company has about $240 million in debt. Sales have been declining of late, with the company reporting a 6% decline in December and a 1% dip in January.

Fourth quarter earnings are expected to come out in early March.

Exide on the rise

Exide Technologies' 8 5/8% notes due 2018 were firming around 78, a trader said.

The trader noted that the company's monthly operating report came out on Wednesday and that the figures "looked OK."

For the month of January, the Milton, Ga.-based battery maker reported operating income of $1.64 million on net sales of $10.01 million. By comparison, operating income in December was $674,000 on net sales of $83.4 million.

Net loss for January was $18.45 million versus December's loss of $5.84 million.

After the market closed on Thursday, an article came out claiming that Exide and its creditors were looking to probe into a possible price fixing scheme between warehouse owners and the London Metal Exchange.

The company said it has been tracking the issue for months.

Edison stays strong

Edison Mission Energy paper "hung in there" after putting on 5 points in the previous session, according to a trader.

The trader pegged the debt - which tends to trade on top of itself - at 85½ bid, 86 offered.

On Wednesday, the bankrupt power producer said it had reached an agreement with its parent company, Edison International Inc., and a majority of its senior unsecured noteholders under which all of Edison International claims would be extinguished.

According to the agreement, Edison Mission will emerge from Chapter 11 protections debt-free, but still a subsidiary of its parent.

Lehman edges up

Lehman Brothers Holdings Inc.'s "benchmark issues" were inching up Thursday, following word on Wednesday that the defunct brokerage had gotten approval on a settlement agreement with Freddie Mac.

A trader placed the notes at 231/2.

A bankruptcy judge gave the OK on the $767 million settlement in regard to two loans the mortgage giant gave to Lehman before its 2008 collapse.

Lehman also said that another distribution is slated for April, though it is unclear how much creditors will receive. Lehman has already paid out $60 billion out of over $70 billion owed.

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