Solo Cup bonds boosted on earnings; Dynegy, Edison regains ground; NewPage firms on asset sale

By Stephanie N. Rotondo

Portland, Ore., March 18 - The trading week started off like a lamb, but ended like a lion, distressed debt traders reported Friday.

Distressed bonds had been pressured earlier in the week as investors scrambled to decipher what Japan's 8.9 magnitude earthquake on March 11 meant for the global economy. By mid-week, things were starting to bounce, resulting in a firm tone by Friday's close.

Solo Cup Co. was the nom du jour as the company released its fourth-quarter and full-year earnings. While sales were up year over year, net loss was wider. Still, the bonds ended the day about 3½ points better.

Power producers continued to have some focus. As with the rest of the market, the space began the week under pressure, but by Friday, credits like Dynegy Inc. and Edison International Inc. had regained ground.

Elsewhere, NewPage Corp. remained an active trader. The company's debt moved upward and the company announced yet another asset sale.

Solo Cup boosted by numbers

Solo Cup bonds "rallied a bunch," a trader said, after the company reported its fourth-quarter and full-year earnings.

He quoted the 8½% notes due 2014 at 88 bid, 89 offered.

Another trader said the paper was up 3½ points on the day on the back of the numbers - "I guess they were good," he said - pegging the notes around the 88½ level.

For the fourth quarter of 2010, the Lake Forest, Ill.-based company saw net sales increase to $409.2 million, compared with $387 million the year before. Net loss, however, widened to $17.2 million from $4.5 million.

For the full year, sales came to $1.58 billion, versus $1.5 billion for 2009.

Again, net loss was larger at $104.2 million. Net loss was $35.7 million in 2009.

As of Dec. 26, the company had a total of $637.7 million in debt, including $325 million of the 8½% notes, $295.5 million of the 10½% notes due 2013, a $10 million asset-based revolving credit facility, $2.7 million under its Canadian credit facility and $4.5 million of capital lease obligations.

Solo Cup manufactures single-use products used to serve food and beverages for the consumer/retail, foodservice and international markets.

Dynegy, Edison firm

After starting the weak out lower, power producer Dynegy and Edison International saw their bonds ending the week on a high note, trending in line with the market.

One trader said Edison's debt was "still moving higher," seeing the 7% notes due 2017 up a deuce at 79 and the 7.20% notes due 2019 up 1½ points to 77.

The trader also saw Dynegy's 7¾% notes due 2019 gaining "almost 2 [points]" to end around 761/2, while the 8 3/8% notes due 2016 moved up 1½ points to around 821/2.

A second trader placed Edison's 7% notes at 78½ bid, 79, compared with levels around 77½ on Thursday.

He also saw Dynegy's 7¾% notes at 76 bid, 76½ offered, "up about 2 points."

There was no news out on Rosemead, Calif.-based Edison, but Houston-based Dynegy did receive a rating downgrade from Standard & Poor's during Friday's session.

The company's corporate credit rating was dropped to CC from CCC and all ratings were placed on CreditWatch with negative implications.

S&P said its actions were based on the possibility of a bankruptcy filing if Dynegy cannot resolve its compliance issues.

NewPage selling assets

NewPage's 10% notes due 2012 were trading actively yet again and also managed to move up a point or 2 on the day.

A trader deemed the paper up 1½ points at 671/2, while another quoted the notes at 66½ bid, 67.

Late Thursday, the Miamisburg, Ohio-based coated papermaker said it was selling off yet another asset via its subsidiary Rumford Paper Co. Rumford is entered into an agreement to sell its cogeneration energy assets to a unit of ReEnergy Holdings LLC for $61 million.

The transaction is expected to close mid-year.

OPTI steady, GenMar higher

Among other recent notables, OPTI Canada Inc.'s 7 7/8% and 8¼% subordinated notes due 2014 were "pretty much flat," a trader said, around 52.

The bonds had been gaining in the previous two sessions following the release of a monthly production report.

Meanwhile, General Maritime Corp.'s 12% notes due 2017 were "a little better," according to a trader, at 86½ bid, 87 offered. The notes were "up big," a trader said on Thursday, as the company delayed its 10-K filing and said it was in talks with lenders and other investors regarding a potential restructuring.

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