Supervalu gains as Cerberus talks said to move along; Nokia boosted on China deal; Kodak firms

By Stephanie N. Rotondo

Phoenix, Dec. 5 - Distressed bonds continued to gain strength with the rest of the market on Wednesday, but investors were more focused on the news of a merger between Freeport McMoRan Copper & Gold Inc., Plains Exploration & Production Co. and McMoRan Exploration Co.

"That dominated the top trading bonds," one trader remarked.

That aside, "everything was very strong today," the trader said. "There's more news of in-flows" and more negative news was fading to the background.

Supervalu Inc. and Nokia Corp. remained topical names in the market, as both had news out. For Supervalu, it was reports that Cerberus Capital Management LP was looking to buy out at least two of the company's units. For Nokia, it was news that it had gotten approval to sell its Lumia phones in China.

Eastman Kodak Co. also had news out that helped its bonds move higher. The bankrupt company has reportedly received a bid for its patent portfolio that exceeds $500 million. That puts the company closer to exiting bankruptcy, as the sale was a string attached to a recently announced financing deal.

Supervalu rally continues

The Supervalu saga continued on Wednesday, as it was reported that the Eden Prairie, Minn.-based grocery store operator was nearing a deal with Cerberus Capital Management.

Cerberus had previously been interested in a buyout of the entire company, but a financing snag put the kibosh on those plans. However, Cerberus is now said to be looking at two units - Albertsons and Save-A-Lot - as well as considering an equity stake in what would remain of Supervalu as a whole.

A trader called the 8% notes due 2016 "stronger," though he added that there was "limited trading."

He called the bonds up a deuce at 961/2.

Another trader also said the issue was "up a couple points" at 96 bid, 96½ offered.

A third market source placed the notes at 96¼ bid, up almost 2 points.

For its part, Save-A-Lot has also attracted interest from other private equity firms, which could give Supervalu leverage in the negotiation process.

Cerberus is said to want to ink terms by the end of the year.

Nokia on the rise

Nokia paper got a boost on news it inked a deal with China Mobile to offer its Lumia Windows-based smartphone to the telecommunications company's subscribers.

The news was deemed a positive, especially given that Apple's iPhone 5 is set to launch in China next week. The iPhone will be offered to customers of China Unicom and China Telecom.

However, China Mobile has a larger subscriber base, giving Nokia an opportunity to take a majority of market share in that country.

A trader said the 5 3/8% notes due 2019 were up 1½ to 2 points on the day, ending around 92.

Another trader said it was an "up and down" day for the debt, though he also placed the issue around 92.

The 6 5/8% notes due 2039 were meantime quoted at 85 bid, 86 offered.

The news of the China rollout comes one day after the Finnish company said it had sold its headquarters and that it planned to lease back space in the same building. Such asset sales are common when a company is attempting to raise cash.

Kodak boosted by patent bid

Rochester, N.Y.-based Eastman Kodak has reportedly received a bid for its patent portfolio valued at over $500 million.

On that news, the company's second-lien bonds were "up a bunch," a trader said, seeing the 9¾% notes due 2018 at 83 bid, 85 offered.

He called that up 3 to 4 points.

Meanwhile, the 7¼% notes due 2013 were quoted at 11 bid, 12 offered, though there were no trades, he said.

Another trader said the second-liens were receiving bids in the low-80s.

The proposal came from a consortium of bidders, though it was not clear exactly who the individual bidders were.

In November, Kodak inked a deal with creditors in which the creditors would provide up to $830 million of loans in order for the company to exit bankruptcy. However, the financing was contingent on finding a buyer for the patents at a price that was at least $500 million.

But there had been some question as to whether that was attainable, given that Kodak's failed patent auction had high bids only around $250 million.

Kodak had previously valued the portfolio at $2.6 billion.

Distressed arena ends firm

Among other distressed credits, a trader said Overseas Shipholding Group Inc.'s 8 1/8% notes due 2018 slipped to levels around 39.

Another trader saw NewPage Corp.'s 11 3/8% notes due 2014 trading around 441/2.

The second trader also noted that ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 moved back up into double digits, presumably on the Freeport merger news.

"I think people are thinking that maybe there is some value in ATP's leases [in the Gulf of Mexico]," the trader said.

He quoted the bonds at 10½ bid, 11 offered.

© 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.