Claire's bonds get boost from earnings; OPTI deal hurts debt; Station Casinos falls on numbers

By Stephanie N. Rotondo

Portland, Ore., Nov. 16 - With more new issues coming to market Monday, traders said the focus was largely on those deals, taking interest away from the distressed debt marketplace.

"It's still pretty much all new issues trading," a trader said.

Another trader said the focus was on the pre-Thanksgiving calendar, as cash was coming in and people were looking for places to put it.

Still, the market's inactivity could also be put down to it being a Monday.

"It's Monday and it takes people awhile to really get going on any of this stuff," the first trader said.

Of the day's goings-on, Claire's Stores Inc.'s debt structure moved higher in trading, following the release of preliminary quarterly results. The company also said that it was able to retire some of its debt at a nearly 50% discount.

OPTI Canada Inc. was one of the companies bringing a new issue to market. But word of the new deal put pressure on the company's bonds, which one trader called down as much as 3 points.

Meanwhile, Station Casinos Inc. reported its third-quarter financials, which showed a significantly steeper loss than the prior year. Traders saw the bonds weakening, but volume was thin.

Claire's results boosts bonds

Pembroke Pines, Fla.-based retailer Claire's Stores saw its bonds improving throughout the session on the back of the company's preliminary release of third-quarter results.

A trader said the bonds gained "3 points or so," placing the 10½% notes due 2017 at 71.5 bid, 72 offered. He also saw the 9 5/8% notes due 2015 at 73.

However, he noted that the name was "not very active."

Another trade quoted the 10½% notes at 71 bid, 72 offered and saw the 9 5/8% notes offered at 74.

In the bank debt, the term loan B was quoted at 79 bid, 80 offered, up from 78 bid, 79 offered, a trader said.

For the third quarter, Claire's expects to report net sales of $324 million, a 2.6% decline from the year before. The company is attributing the loss of sales to store closures that occurred in 2009.

Adjusted EBITDA is estimated to be between $52 million and $54 million, versus $45 million for the same quarter of 2008.

As of Oct. 31, the company had $165 million in cash and equivalents, as well as $194 million available under its revolving credit facility.

Claire's also said it retired $28 million of its senior toggle notes and $15 million of its senior subordinated notes. The company paid a total of $26 million to extinguish the debt.

OPTI new deal hurts old debt

OPTI Canada's bonds drifted down in trading, as the company announced a new $425 million issue.

A trader said the bonds - the 8¼% notes and 7 7/8% notes due 2015 - were active around 80 bid, 81 offered. That compares with levels around 83 last week.

"That is kind of an odd one to be active," he said.

Another trader said the notes "traded off some," also quoting them at 80 bid, 81 offered, down from 83 bid, 84 offered.

Both traders noted that the issue had hit a low around 79 before coming back to its closing level.

The Calgary, Alta.-based company intends to use proceeds from the sale of the new 9% three-year notes "to establish sufficient liquidity and flexibility for the company to proceed with its previously announced review of strategic alternatives process," the company said in a press release.

OPTI also said that it had received commitments for $159 million in regard to its amended and reduced credit facility. The commitments are subject to the notes offering being completed.

Both transactions are expected to settle by the end of the month.

Station declines with numbers

Station Casinos posted a wider quarterly loss, resulting in some losses in the bonds, traders reported.

One trader said there were offers around 25 for senior paper, such as the 7¾% notes due 2016. But he said the issue traded at 21, which was down "a point or 2."

Another market source also saw the seniors declining, pegging the 6% notes due 2012 at 21 bid.

For the third quarter, net loss fell to $455.4 million, compared with $23.4 million in 2008. The company blamed $370.7 million in bankruptcy-related costs for the gap.

Revenues meanwhile fell 19% to $255.7 million. Occupancy rates dropped to 84% from 90% and the average daily room rate declined by 21%.

Ply Gem gains continue

A trader said that Ply Gem Industries Inc. bonds - which had firmed smartly on Friday after the company put out numbers and announced progress on increasing liquidity - were firm, but on much less activity than was seen on Friday.

A trader quoted the company's 9% subordinated notes up 2 points from Friday at around 77 bid, 77.5 offered, which he said was 5 points better than the bonds had been on Thursday, before the numbers came out.

However, he said, there was "not a lot of activity" in the credit.

He also saw Ply Gem's 11¾% notes due 2013 trading as high as 97, but mostly hanging around a 96.75 level, which he called essentially unchanged from Friday, when those bonds had jumped more than 4 points, from the lower-90s into the mid-90s.

A second trader agreed that there was "not a lot of quoting going on" in the 9s adding that Trace volume was only about $2 million. He also saw them in a 77 bid, 77.5 offered context, versus 72.5 on Thursday, "the last time these things were reported trading."

He saw the 113/4s between 96.25 and 96.75, but said Trace volume was only about $6 million, versus more than $43 million that traded on Friday between 94 and 97. He noted that the last Friday trade, at 96.5, "was right in the middle of where they were trading today, pretty much unchanged."

The bonds, he said, "had their pop on Friday."

Ply Gem said on Friday that third-quarter net income was $4.4 million, versus a year-earlier net loss before unusual items of $4.1 million; meanwhile, adjusted EBITDA for the 2009 third quarter was $57.6 million, up from $41.9 million for the third quarter of 2008.

Company executives also reported during their post-numbers conference call that the Cary, N.C.-based company increased liquidity by more than $44 million during the third quarter and has since further boosted its liquidity balance through the private placement of $25 million of 11¾% senior secured notes due 2013.

Sara Rosenberg and Paul Deckelman contributed to this article.

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