Travelport pulls back as investors digest earnings; Dex trends at 'upper end' of tender range

By Stephanie N. Rotondo

Portland, Ore., March 23 - In the land of distressed debt, Travelport LLC's bonds were seen weakening further on Friday.

The bonds - which had been on a climb into higher territory before Thursday's session - were continuing to falter as investors react to the company's earnings report.

Meanwhile, Dex One Corp.'s paper was holding in around the "upper end of that tender range," a trader said. The phonebook publisher had announced a tender of the 12%/14% PIK notes due 2017 earlier in the week.

And, AMR Corp.'s unsecured debt was up as much as 3 points on the day, traders reported. The gains came as rumors were circulating - based on a report put out by Bloomberg - that U.S. Airway was attempting to find an "in" with the company in hopes of merging the two entities.

Overall, traders said the market remained subdued.

"It was a rather lackluster day," a trader said.

Travelport losses mount

Travelport's 9 7/8% notes due 2014 were continuing to soften Friday, a trend set Thursday after the company put out its fourth-quarter and full-year results.

One trader called the bonds down "a couple points" at 651/2. He said about $5 million of the notes changed hands.

Another trader said the debt was "a little bit weaker," quoting the notes at 65 bid, 65½ offered.

As previously reported, the bonds had been on the rise until Thursday, when the notes posted declines on the back of the company's earnings release.

For the fourth quarter, the Atlanta-based travel services company reported revenues of $465 million, a 3% increase year over year. Revenues for the full year rose 2% to $2.035 billion.

However, the loss for the fourth quarter was higher at $82 million, versus $69 million the year before. For the year, profit was $175 million.

Dex trends upward

Dex One's 12% PIK notes were "about a point better," trading around 30, a trader said.

He added that the notes were trading "at the upper end of that tender range," referring to an offer the company made for a portion of the debt earlier in the week.

Another trader also placed the notes around the 30 level.

On Monday, the Cary, N.C.-based phonebook publisher said it was tendering for a portion of the bonds. The company is looking to redeem about $26 million of debt at a discounted price of $270 to $300 per $1,000 of notes tendered.

The final price will be set via a Dutch auction.

Additionally, Dex said on Thursday it and its subsidiaries had successfully completed a discounted loan buyback. The company paid $70 million for about $142 million in bank debt. Of the three loans bought back, two of the offers were oversubscribed.

"We will continue to take steps to strengthen our balance sheet," Alfred Mockett, chief executive officer, said in a press release. "Given the significant level of interest in our tender offers, we are able to reduce a meaningful amount of our outstanding debt obligations. As a result of our debt restructuring initiatives and other obligatory payments, we are targeting the retirement of at least $500 million of total debt in 2012."

AMR up on merger chatter

Rumors that U.S. Airways was snuggling up to AMR creditors in an attempt to form a merger with the bankrupt Fort Worth-based airline helped the company's debt fly higher Friday.

One trader said the unsecured paper - such as the benchmark 6¼% notes due 2014 - was "stronger," gaining as much as 3 points on the day to end around 44.

Another trader said the unsecured were firmer, pegging them generally at 42 bid, 43 offered.

Bloomberg reported Friday that U.S. Airways was in talks with some of AMR's creditors regarding a takeover plan. At a recent media day for its company, U.S. Airways executives noted that the best way to get such a deal to move forward was to get in good with the employees. That could be indicative of the suitor's plan, as it has also been widely reported that AMR and its labor unions have not been able to come to terms.

As previously reported, Delta Airlines and private equity group TPG are also considering making bids for the American Airlines parent company.

Broad market mixed

Elsewhere in the distressed space, a trader said Caesars Entertainment Corp.'s 10% notes due 2018 were "starting to fade a little bit late in the day." He quoted the notes at 77 bid, 77½ offered, down from 78 bid, 79 offered.

The trader also saw Sprint Nextel Corp.'s 6% notes due 2016 slipping "half a point or so" to 88½ bid, 89 offered.

At another desk, a trader said Bon-Ton Stores Inc.'s 10¼% notes due 2014 were better at 84½ bid, 85½ offered.

However, he saw Clear Channel Communications Inc.'s 10¾% notes and 11% notes due 2016 falling to levels around 761/2.

Eastman Kodak Co.'s 7¼% notes due 2013 meantime inched up to end around 30, while Hovnanian Enterprises Inc.'s 10 5/8% notes due 2016 lost as much as a point, finishing around 90 bid, 91 offered.

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