AMR bonds keep rising; Sorenson announces financing plans, debt gains; Tribune up on sale talk

By Stephanie N. Rotondo and Sara Rosenberg

Phoenix, Dec. 11 - The investment community continued to keep a keen eye on the new issue arena on Tuesday, leaving little time for activity in the distressed debt realm.

Despite the "slow grind," as one trader put it, the overall market remained firm.

"I didn't see much to the downside," the trader said.

AMR Corp.'s bonds were "again the bond du jour," according to a trader, given a wealth of news out about the company and the airline industry in general.

Meanwhile, Sorenson Communications Inc.'s debt was on the rise, as the company announced plans for a new bond issue, as well as its intent to secure a new term loan. Proceeds from both would be used to fund an exchange offer for the 12% 11/2-lien notes due 2020.

In distressed bank debt, Tribune Co.'s term loan was pushed higher on talk that the company was considering selling off assets once it exited Chapter 11 protections. A trader said the company's bonds didn't trade much, though the securities had inched up last week on no fresh news.

AMR takes flight

AMR's 6¼% benchmark convertible notes due 2014 continued to firm Tuesday following a busy day of news on the company and its industry in general.

A trader pegged the bonds at 82, up from 80 on Monday.

Several reports came out on Tuesday indicating that AMR's CEO Thomas Horton still intended to retain management of the currently bankrupt airline.

Part of Horton's argument is that AMR - the Fort Worth-based parent of American Airlines - has sped through its bankruptcy proceedings at a pace much quicker than those of United Airlines and Delta Airlines just a few years ago.

But certain creditors, as well as labor unions, have disagreed, believing that the current management is to blame for the filing to begin with.

One creditor group has offered to provide exit financing for the company, provided the entire management team is axed. The pilots' union - which recently approved a new labor contract - has also expressed a desire to see management ousted.

In fact, the pilots' union has also expressed an interest in a merger with U.S. Airways. Some have said that such a combination would be mutually beneficial, though perhaps more so to AMR, as U.S. Airways has been turning profits despite lower revenues.

Meanwhile, hopes of the said merger might have been stoked on Tuesday, as Delta announced it had bought up a 45% stake in Virgin Air. Many in the industry and those that focus on the sector have been calling for more consolidation since the days of Delta and United's bankruptcies.

Sorenson rises on new financings

Sorenson Communications revealed that it is seeking a $200 million seven-year term loan B (B3/B) and $400 million of first-lien senior secured notes, and all of the debt is expected to price either on Friday or on Monday, according to market sources.

On the news, the term loan was pegged at 99¾ bid, par ¼ offered, up from 99 bid, par offered on Monday. The 10½% notes due 2015 meantime were called "up a couple" at 89 bid, 90 offered, according to a trader.

"I wouldn't be surprised if they upsized [the new bond issue] as well," the trader said.

J.P. Morgan Securities LLC, Goldman Sachs & Co. and Deutsche Bank Securities Inc. are leading the financing.

Proceeds will be used to repay an existing term loan and fund the cash portion of a notes exchange offer. The company is looking to exchange up to $635 million of 12% 11/2-lien notes due 2020 for its $735 million 10½% second-lien notes due 2015, and will make a $100 million cash payment on a pro-rata portion of the notes exchanged at par.

Sorenson is a Salt Lake City-based provider of Video Relay telecommunication and interpreting, and CaptionCall telephone service for deaf and the hard-of-hearing.

Tribune gains on sale chatter

Tribune's loans were stronger with chatter that following emergence from bankruptcy, the company may look to sell its newspaper assets, according to a trader.

The term loan B, incremental loan and term loan X were all quoted at 83½ bid, 84½ offered, up from 82½ bid, 83½ offered, and the revolver was quoted at 86 bid, 88 offered, up from 85 bid, 86 offered, the trader said.

Another trader saw the term loan move up to 83 bid, 84 offered from 82 bid, 83 offered previously. He added that the company's bonds "didn't really trade," though there were odd-lots going out around 40.

Last week, the rarely traded bonds had moved up to levels around 40, though on no news.

Tribune, a Chicago-based media company, filed for bankruptcy on Dec. 8, 2008. The anticipation is that the reorganization process may be completed by year-end.

Broad market reaches higher

Among other distressed issues, a trader said Nokia Corp.'s 5 3/8% notes due 2019 "continue to inch higher," seeing the notes close at 921/2, up over half a point.

Caesars Entertainment Corp.'s 10% notes due 2018 - a name that has "been kind of roughed up lately," according to the trader - benefited from the overall positive tone of the market, putting on a point to end around 653/4.

At another shop, a trader said Overseas Shipholding Group Inc.'s 8 1/8% notes due 2018 were on the active side, hitting a high around 37.

Last week, the credit default swaps on the debt was settled at 351/2.

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