Tropicana notes whipsaw on license ruling; Dura dips on delayed bankruptcy exit

By Stephanie N. Rotondo

Portland, Ore., Dec. 13 - Inclement weather prompted many New York staffers to flee their desks Thursday, causing an already slow day to lag even more.

"Nobody did nothing," a trader said. "A very dull day."

In what another trader called the "general melee" of the day, the bond market across the board fell about 1 to 2 points.

"You name it, it was lower," the trader said, adding that "more dicier credits" were down even more.

"There is a real risk aversion out there," he said. As market players look to year-end, most are "playing very defensive."

Tropicana Entertainment LLC, also known as Wimar Operating, was active yet again during the session - though this time, the results were not as positive as the previous day.

Traders had reported that the Atlantic City hotel and casino's bonds were active and better on Wednesday. But a court ruling announced early Thursday resulted in the bonds losing ground. While the debt attempted to rally, it still closed lower on the day.

But the company's term loan gained momentum, as news that proceeds from a forced asset sale would likely be used to pay down its bank debt.

Meanwhile, the hits keep on coming from Dura Automotive Systems Inc. Early in the week, the company asked a bankruptcy judge for more time to get its exit financing together. On Thursday, the company said it would have to hold off securing the cash until next year, thus delaying its confirmation hearing indefinitely. With that, the automotive parts supplier's debt fell another couple of points.

With only about a week left of "real' trading, traders are anticipating the light volume to continue.

"If this is any indication of what is to come, it is going to be hard to hold on," one trader quipped.

And as the day ended, another trader warned of "a few more days" like Thursday.

Wimar loses license, bonds take a ride

News that the New Jersey Casino Control Commission had revoked its license sent Tropicana bonds, a.k.a. Wimar, on a ride.

One trader said the 9 5/8% notes due 2014 opened down 9 points, and began trading "all over the map." However, he said the debt rallied to close almost unchanged in the mid-60s.

Another trader said the bonds opened lower at 59 bid, 60 offered, before hitting a high around 66.5. The bonds eventually came off those highs to close at 64 bid, 65 offered.

"There was probably some short covering to begin with," the trader said of the run up.

Another source trader said the notes fell as much as 12 points during the session in response to the New Jersey licensing controversy, but bounced off those lows to only end down 4 points at 62.5 bid, 64.5 offered.

But while the corporate debt got beat up, the bank debt just plain went up.

The first-lien term loan ended the day around 97 bid, 98 offered, up from Wednesday's levels of around 95 bid, 96 offered, traders said.

Traders attributed the increase in the term loan to the buzz of a possible repayment.

"The Atlantic City Tropicana Casino lost its gaming license and they will have to sell the Atlantic City asset. They will pay down first-lien bank debt," one trader remarked.

The trader went on to say that the paper didn't move all the way up to par since there are still a lot of factors that need to be figured out before the Atlantic City asset is sold.

"Plus, it's still unclear whether the entire first-lien term loan will be taken out," the trader added.

Along with the license revocation, the gaming commission ordered that the property be transferred immediately to a trustee until a sale can be arranged. According to the company, proceeds from the Atlantic City sale will be used to repay debt under its credit facility.

The trustee is required to complete the sale of the Tropicana Atlantic City within 120 days of the transfer of the property to his control, although the commission has the ability to extend this period.

Tropicana Entertainment intends to appeal the Commission's determination through the New Jersey appellate court system.

If the company's appeal is unsuccessful by Dec. 19, it will be in default under its credit facility, and if lenders accelerate the bank debt, then the company will also be in default under its senior subordinated notes and Las Vegas term loan.

The company said that it plans to continue to work with its credit facility lenders to prevent an acceleration from occurring.

There can be no assurance that the lenders will not accelerate, which could compel Tropicana Entertainment to seek alternatives including possibly bankruptcy protection.

In reaction to this news, Standard & Poor's lowered its corporate credit ratings on Tropicana Entertainment and its unrestricted subsidiary, Tropicana Las Vegas Resort & Casino LLC, to CCC from B and placed the ratings on CreditWatch with developing implications.

Dura dips on delayed exit

Dura's debt took another spill on news that the company would delay its bankruptcy exit.

A trader quoted the 8 5/8% senior notes due 2012 at 16 bid, 17 offered, down from 18 bid, 20 offered.

Another trader pegged the senior debt at 13 bid, 17 offered.

"Fantastic," the trader said.

In the subordinated notes, the first trader said the 9% notes due 2009 ended at 1/32 bid, 1/16 offered.

"I can't make these markets up if I tried," he said. "That's next to nothing."

Another trader saw the 8 5/8% notes retreat to 13 bid, 16 offered from a wider 15 bid, 20 offered.

Meanwhile, the company's second-lien bank debt fell to 76 bid, 81 offered from the previous levels in the mid-90s.

Early in the week, the Rochester Hills, Mich.-based company asked the bankruptcy court overseeing its case to postpone a confirmation hearing, a move aimed at giving the company more time to line up exit financing. The resulting increase in speculation that the company was having difficulty rounding up the cash needed to emerge from Chapter 11 weighed on its debt.

In a statement released Thursday, the company said it would need to delay its exit until next year, as the current credit market made it difficult to find financing.

"The credit markets have continued to move against us these past few weeks and the financing terms available in this market are not acceptable to the company," said Larry Denton, chief executive officer, on the statement.

Last week, the company said that Goldman Sachs and Barclays Capital had arranged most of its $425 million exit loan.

Autos weaker

Elsewhere in the autosphere, Delphi Corp.'s 6½% notes due 2013 slipped 2 points to 54.5 bid, 55.5 offered, while its 7 1/8% notes due 2029 were likewise down 2 at 55.5 bid, 56.5 offered.

At another desk, a trader placed the 6.55% notes that were to have come due last year at 54 bid, 56 offered, well down from 59 bid, 61 offered previously, although another trader saw the bonds at 56.25, down about 4 points. Another trader said they were 2 points lower at 55 bid, 56 offered.

Dana Corp.'s 6½% notes due 2008 were off 1½ points to 69.5 bid, 70.5 offered. Federal-Mogul Corp.'s bonds were at 73 bid, 75 offered, down 2 points.

Metaldyne Corp.'s 11% notes due 2012 were a point lower at 66 bid, 67 offered.

Mortgage names mixed

Residential Capital LLC's stepped-up 8% notes due 2013 were deemed unchanged by one trader at 69 bid, 71 offered. However, another market source saw its 7% notes due 2011 up 1¼ points, just below the 72 level, while its 8 3/8% notes due 2015 were ½ point better at 70 bid.

Another trader called the latter bonds up a point at 69.5 bid, 70.5 offered, while its 6 1/8% notes due 2008 gained 1½ to 82 bid, 83 offered.

E*Trade Financial Corp.'s 8% notes due 2011 were 2 points lower at 83 bid, 85 offered. At another desk, the 8% notes were being quoted at 83.5 bid, also down 2 points, although its 7 3/8% notes due 2013 were actually seen up nearly a point at 77.5

A trader said Countrywide Financial Corp.'s 6¼% notes due 2016 fell a point at 59.5 bid, 60.5 offered, while its 5 5/8% notes due 2009 were half a point lower at 77.5 bid, 78.5 offered.

Another market source called the 2016 issues nearly 2 point losers at 60.5

Broad market mostly lower

Technical Olympic USA Inc.'s bonds "started to come in toward the end of the day," a trader said. He pegged the 8¼% notes due 2011 down a point at 43 bid, 44 offered and the 9% notes due 2010 at 41 bid, 43 offered, which he deemed "off a little." He noted there was not much activity in the name - like the rest of the distressed market.

Primus Telecommunications Group Inc.'s 8% notes due 2014 ended unchanged at 55 bid, 57 offered.

"There's something going on there," a trader said. "The name has just got deadly quiet."

Elsewhere, Movie Gallery Inc.'s 11% notes due 2012 were down a little, trading around 16. A news report released Thursday indicated that the former owner of Hollywood Entertainment, a Movie Gallery subsidiary, wants his company back.

Neff Corp.'s 10% notes due 2015 were also lower at 57.5 bid, 58.5 offered, which one trader called down 3 points.

Sara Rosenberg and Paul Deckelman contributed to this article.

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