OPTI Canada bonds get a boost; NewPage posts wider loss, subs head up; Dynegy debt ends mixed

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., Feb. 17 - The distressed debt market was "pretty much the same as it has been," a trader said Thursday. "Firm, a little better."

"There was a lot of trading," said another trader. "And everybody loved everything."

OPTI Canada Inc. paper benefited from the love, as some of its issues jumped as much as 4 points on the day. There was no news out, but a trader said that investors might be more optimistic on the credit.

Meanwhile, NewPage Corp. issued its quarterly results, which showed a wider loss on improved sales. In response, the subordinated bonds crept up a bit in trading.

With billionaire investor Carl Icahn's tender offer slated to expire Friday, traders said Dynegy Holdings Inc. debt was mixed. Shareholder Seneca Capital has also stepped up its efforts to defeat the $5.50-per-share bid.

OPTI subs boosted

A trader said OPTI Canada's subordinated issues popped about 4 points on the day, seeing the 7 7/8% and 8¼% notes due 2014 closing at 51 bid, 52 offered.

The senior notes, he added, were climbing toward par, as those issues were "money good." He saw the 9% "super seniors" due 2012 at 99¾ bid, par ¾ offered and the 9¾% notes due 2013 at 99 bid, 99½ offered.

"Everybody is starting to do reports on them and everybody has a different take on it," he said as a way of explaining the day's gains. On top of that "there is so little to choose from" in the distressed debt realm.

Another trader called the sub notes 3 points better, ending around 51.

There has been no fresh news out on the Calgary, Alta.-based oilsands producer since it released its quarterly results last week.

NewPage gets a lift

NewPage reported its fourth quarter and year-end results during the session and one trader said the subordinated debt headed up in response.

He saw the 10% notes due 2012 inching up half a point to end around 65. However, he remarked that there was "not much action" in the company's other issues.

Another trader said that the bonds "did OK today," following the release of the results.

He saw its 10% notes as "quite active," seeing them around 65 bid, 65½ offered, up from around the 64¾ level seen late Wednesday and the 64-64¾ context observed Tuesday, "so they were up a little on the news."

He also saw the company's 11 3/8% notes due 2014 "also up from [Wednesday], but kind of unchanged from the day before.

He quoted the bonds as trading Thursday between 100½ and 100¾ bid, up from a 991/2-to-99¾ range seen on Wednesday, "but the day before, they were trading around the par level."

"So it's up - not dramatically, but up."

The Miamisburg, Ohio-based coated papermaker posted net sales of $946 million for the fourth quarter, a 10% increase year over year. For the full year, sales came to $3.6 billion, up 16% from 2009. The gains were due, in part, to an increase in printing paper demand in 2010.

"This was a result of a recovery of advertising spending and magazine and catalog circulation during 2010 following a decline in 2009 attributable to weak economic factors and inventory reductions by customers," the company said in its earnings release.

Still, NewPage posted a wider fourth-quarter loss at $240 million, compared with $55 million the year before. Full-year net loss came to $656 million, up from $308 million the previous year.

"The decrease was primarily a result of lower average sales prices, asset impairment charges and lower other income recognized for the alternative fuel mixture tax credits, partially offset by higher core paper sales volume and lower interest expense," the company said.

As of Dec. 31, NewPage had $149 million of liquidity, consisting of $8 million of cash and equivalents and $141 million available under its revolving credit facility.

Dynegy debt mixed

Traders gave mixed reports of Dynegy Holdings' debt as shareholder Seneca Capital continued to fight against a Carl Icahn takeover.

A trader said the 8 3/8% notes due 2016 closed up half a point at 811/2, while the 7¾% notes due 2019 fell a half-point to around 74.

But at another desk, the 7¾% notes were seen a half-point better at 74 bid.

On Monday, Icahn extended his tender offer for all outstanding Dynegy shares. Icahn has received all regulatory approvals he needs to take over the Houston-based power producer, but has not yet received the required number of shares to finalize the deal.

The tender will now expire at 5 p.m. ET on Friday.

As previously reported, Icahn has offered $5.50 per share for the company, but Seneca Capital has urged shareholders to reject the offer, valuing the company at $7.50 to $8.50 per share.

On Thursday, Seneca issued a press release stating that it had received enough consent solicitations to go forward with its attempt to ouster Dynegy's current chairman, along with one other board member. As the second-largest investor with a 12% economic interest in the company, Seneca said its proposed replacements - Hunter Harrison and Jeff Hunter - "should provide substantial value-added to the Dynegy Board through their proven ability to create shareholder value, drive cost efficiencies and provide specialized knowledge regarding coal transportation (in the case of Mr. Harrison) and financing (in the case of Mr. Hunter)."

Seneca was also optimistic that Icahn's proposal would be defeated on Friday and given such, "an overhang will be removed that will enable substantial investor interest in the stock. Defeating the tender offer will also allow investors to participate in the positive changes at Dynegy that Seneca Capital is working to advance."

Ahern bonds improve

A trader saw Ahern Rentals Inc.'s 9¼% notes due 2013 having improved on Thursday to around a 41-43 context with final trades around 42 bid - a gain of 5 to 6 points from the mid-30s levels seen late Wednesday, when the bonds gyrated wildly after the company missed the scheduled Feb. 15 interest payment on those bonds. He saw "decent volume" in the name.

Ahern, said another trader "had a little more bounce" on Thursday, continuing the upside momentum the Las Vegas-based equipment rental company's bonds had shown late in the session on Wednesday, when the paper came back from its early lows that included quoted levels in the upper 20s to end around the middle 30s.

On Thursday, the trader saw the bonds at 41 bid, 42 offered, trading flat after missing the coupon payment.

Another trader placed the bonds around the 41 mark at Thursday's close.

Rite Aid firms

A trader said Rite Aid Corp. bonds "looked better," as the company sought a new term loan to refinance existing debt.

He said the 9 3/8% notes due 2015 improved about 1½ points to "almost 94," while the 8 5/8% notes due 2015 gained a point to 931/4.

Another market source deemed the 8 5/8% notes 1½ points higher at 93¼ bid.

The new $343 million term loan matures in seven years.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Hawker quoted stronger

Hawker Beechcraft Corp.'s bonds were quoted higher following release of the Wichita, Kan.-based commercial aircraft manufacturer's quarterly results and operations update, according to a trader, but he said he really did not see much trading in the name.

He said that its 8 7/8% senior pay-in-kind notes due 2017 ended the day quoted at 83 bid, up from around 78 on Wednesday.

He also saw its 9¾% senior subordinated notes due 2017 likewise up 5 points at 69 bid, 70 offered - but he said that was as a result of just one trade.

"They're quoted higher, and the only one that traded was the 93/4s, up like 5 points."

Another market source pegged the company's 8½% notes due 2015 up more than 4 points on the day at the 82 bid, level.

Hawker Beechcraft reported lower net sales and deliveries of finished aircraft to customers in 2010 versus the previous year. However, it reported a sharp decline in operating losses, which narrowed to $173.9 million in 2010 from 2009's $712 million of operating red ink. The company said the change was primarily due to lower charges related to asset impairments.

© 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.