Energy Future files for bankruptcy, debt unchanged to higher; Fannie, Freddie up, vote delayed

By Stephanie N. Rotondo

Phoenix, April 29 - The distressed debt market was firming up as the month neared its end.

"In general, everything was a little bit better," one trader said.

The big news of the day was Energy Future Holdings Corp.'s bankruptcy filing. The filing had been expected for months, as the company has been struggling under a mountain of debt due to its 2007 leveraged buyout.

The imminence of the filing grew when the company missed a coupon payment on its Texas Competitive Electric Holdings Co. LLC 15% notes due 2021 in April. The Dallas-based power producer had until May 1 to make a move before being considered in default.

On the news, the bonds were holding in, though so even managed to put on a little bit.

"A lot of guys were scrambling around for that stuff," a trader said. He saw the 15% notes holding steady at 241/2, though the unit's 10¼% notes due 2015 inched up half a point to 6.

The trader also saw the parent company's 11¼% notes due 2017 staying around 102, as the 10% notes due 2020 linked to Energy Future Intermediate Holding Co. LLC rose a quarter-point to 1061/2.

And, the TXU Corp. 6½% notes due 2024 jumped 4 points to 37, he said, though on just a few trades.

At another desk, a trader pegged the 10% notes at 1061/2.

Another market source deemed the15% notes unchanged at 24¼ bid, 24½ offered.

Energy Future has been working with creditors for months to develop a plan that would not only speed along the bankruptcy process - given how large the debt structure is - but would also help the company avoid a large tax bill. Part of the plan will spin off the unregulated unit - which lenders will take ownership of in exchange for forgiving debt - allowing the parent company to avoid the tax liability.

However, that part of the plan is conditioned upon approval from the Internal Revenue Service.

Bondholders will then receive majority ownership in the Energy Future that remains post-spinoff. They will also receive some cash.

The company hopes to complete the bankruptcy process within 11 months.

Freddie, Fannie gain

Freddie Mac and Fannie Mae paper was moving around a bit, as the Senate Banking Committee was slated to meet to discuss a bill proposed by Tim Johnson (D-S.D.) and Mike Crapo (R-Ida.) to wind down the mortgage guarantors. However, the committee delayed a panel vote on the bill for up to two weeks, leaving the market to speculate that an actual vote won't occur this year.

"They have a week to finish mark-up," one trader said. "So it probably won't happen."

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were up 13 cents, or 1.2%, at $10.93 and Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) gained 5 cents to close at $10.40.

Clear Channel disappoints

Traders said a new issue from Clear Channel Communications Inc. was not doing so well after pricing at par on Monday.

The $850 million of 10% senior notes due 2018 "didn't trade so well," a trader said, seeing the issue hit as low as "just below 98."

He said the notes went out at 981/2.

"They struggled on the break," another trader said. He saw the issue "going into a 98½ bid.

"It just has not performed," he said.

The trader noted that the company's 14% notes due 2021 were "active on the heels of that [new issue]," slipping nearly a point to 103.

The new notes were issued by a newly formed subsidiary of Clear Channel, CCU Escrow Corp. The offering was upsized from $400 million.

The multimedia company is based in San Antonio.

Select Staffing loan prices

Select Staffing's (Koosharem LLC) credit facility hit the secondary, with the $370 million six-year senior secured term loan (B3) seen at par ¼ bid, par ¾ offered, according to a market source.

The term loan is priced at Libor plus 650 bps with a 1% Libor floor and was sold at a discount of 991/4. There is soft call protection of 102 in year one and 101 for six months thereafter.

During syndication, the term loan was upsized from $350 million, the spread was cut from Libor plus 700 bps, the discount was tightened from 99 and the call premiums were revised from 102 in year one and 101 in year two.

The company's $490 million credit facility LAO includes a $120 million ABL revolver.

Credit Suisse Securities (USA) LLC and RBC Capital Markets are leading the deal that will be used to refinance existing debt and for general corporate purposes in connection with the company's exit from bankruptcy.

Select Staffing is a Santa Barbara, Calif.-based temporary staffing services provider.

Sara Rosenberg contributed to this article

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.