Six Flags paper heavier; Claire's Stores bonds deteriorate; Nevada casinos hurt by numbers

By Stephanie N. Rotondo

Portland, Ore., June 12 - Investors were mulling what Six Flags Inc.'s completed tender offer would mean to them Thursday, sending the company's bonds down a couple points.

The amusement park operator announced that it had completed the debt exchange, which was oversubscribed. A trader speculated that holders of tendered issues who chose not to participate now have a "better idea" of what the new capital structure will look like.

Meanwhile, Claire's Stores Inc.'s paper continued to slide after posting its quarterly results Wednesday. Traders saw the bonds fall at least another point on the day, despite the new data that showed better sales for the sector in May.

Nevada-based casinos, such as Harrah's Operating and Station Casinos, saw their debt dip after the state released its April revenue numbers. The figures came in well below the year before, though just last week Atlantic City's monthly report showed an increase year over year.

Investors eye Six Flags

Six Flags' bonds traded down a couple points, according to one trader, as investors digested what the company's debt exchange offer meant to them.

The trader quoted the 9¾% notes due 2013 around 60.

"Those that didn't tender are looking at how to value those securities," he said. "Now they have a better idea of what the capital structure will look like."

Another trader placed the 9¾% notes at 59.75 bid, 60 offered and the 9 5/8% notes due 2014 at 61 bid, 63 offered.

Another source called the 9 5/8% notes 61 bid, 62 offered and the 9¾% notes 60 bid, 61 offered.

In a private debt-exchange offer, the New York-based amusement park operator offered new 12¼% notes due 2016 for notes due 2010, 2013 and 2014. The company said the tender - which was oversubscribed - would reduce debt by $130 million, as well as extend maturities and decrease annual interest.

Claire's bonds deteriorate

After reporting weak quarterly numbers Wednesday, Claire's Stores' debt continued to trade lower.

A trader said the 10½% junior notes due 2017 were "active again," closing at 45 bid, 46 offered, compared to 47 bid, 48 offered previously. The 9¼% notes due 2015 were "bracketing 60," and the 9 5/8% pay-in-kind notes due 2015 - deemed "somewhat active" - ended at 52 bid, 52.5 offered.

At another desk, a trader said Claire's bonds "continue to trade off," its 9¼% notes around 60 and the 9 5/8% notes around 52.

But another source said there was "not much follow through in Claire's." He pegged the 9¼% notes at 59 bid, 60 offered, the 10½% notes at 45.5 bid, 46.5 offered and the 9 5/8% notes at 51.5 bid, 52.5 offered.

Claire's term loan was once more lower in trading, quoted at 75¼ bid, 76¼ offered, down from Wednesday's levels of 76¼ bid, 77 offered and from Tuesday's levels of 78 bid, 79 offered, a trader said.

On Wednesday, Claire's posted a 4% decrease in net sales to $327 million. The company attributed the fall to a tougher retail market.

On Thursday, the Commerce Department reported that May retail sales increased more than was expected at 1%. The gain was attributed to the economic stimulus checks that have been reaching certain taxpayers.

Claire's Stores is a Pembroke Pines, Fla.-based specialty retailer.

Rite Aid loan slips

Rite Aid Corp.'s existing term loan headed lower during the trading session after the company announced plans to try and syndicate a $350 million senior secured tranche 3 term loan (Ba3), according to a trader.

The existing term loan was quoted at 92 bid, 93 offered, down from 93 bid, 94 offered on Wednesday, the trader said.

The new term loan, due June 4, 2014, was presented to potential investors via a conference call on Thursday afternoon with price talk of Libor plus 225 basis points with a 3% Libor floor and an original issue discount of 94.

Citigroup and Bank of America are the lead banks on the deal, with Citigroup the left lead.

Rite Aid is getting the new bank debt under the accordion feature in its existing senior secured credit facility.

Proceeds will be used to help fund the previously announced offers to purchase and the consent solicitations related to the company's $360 million 8.125% senior secured notes due 2010, $200 million 7.5% senior secured notes due 2015 and $150 million 9.25% senior notes due 2013.

The remaining purchase price is expected to be funded with a new series of senior secured notes due 2016 that, assuming all notes are tendered, will be sized at $425 million.

Both the new term loan and the notes offering are subject to market and other conditions and are expected to close concurrently upon completion of the tender offers.

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

Nevada numbers hurt casinos

Nevada's gaming numbers came out Thursday, and the softer figures put pressure on the state's casinos.

One market source said the Nevada casino bonds drifted down at least a half point and as much as a point. He quoted the Harrah's Operating 10¾% notes due 2016 at 85.75 bid, 85 7/8 offered versus Wednesday levels of 86 bid, 86.25 offered.

The trader also saw Station Casinos' 6 7/8% notes due 2016 at 59 bid, 60 offered, down a point.

"They have been dropping from the low-60s [recently]," he said. "The last time they dropped below 60, they bounced right back. But I am not sure that it will be the case this time."

Another trader said there was "pretty good activity" in Harrah's bonds, calling them "a little softer." He pegged the 10¾% notes at 85 7/8 bid, 86 1/8 offered, compared to 86 bid, 86.25 offered previously.

"I don't think that matters," the trader said of the slight decline.

For April, Nevada's Gaming Control Board reported that gamblers lost just over $1 billion, a 5.1% decrease from the previous month. On the Las Vegas Strip alone, casino winnings fell 1.3% to $524.1 million.

Housing, financial sectors mostly lower

A trader saw Beazer Homes USA Inc.'s 8 5/8% notes due 2011 unchanged at 88 bid, 89 offered, while Hovnanian Enterprises Inc.'s 6-handle bonds were generically down a point at 66 bid, 68 offered. Another market source saw its 6 3/8% notes due 2014 at 69.5 bid, up half a point, and another saw the 6¼% notes due 2016 down more than a point to end just below 66.

Construction equipment-rental company Neff Corp.'s 10% notes due 2015 were down 1 point at 43 bid.

In the financial sector, Thornburg Mortgage Inc.'s 8% notes due 2013 fell 3 points at 74 bid, 76 offered. But another source said the bonds were unchanged at 71 bid, 73 offered, noting that "they did have numbers out - and the numbers were delayed for 10 days." Yet another saw no quotes in the issue and said there was "a lack of interest by people involved in it."

One of the traders saw Residential Capital LLC's 6½% notes due 2013 unchanged at 48 bid, 50 offered and saw parent GMAC LLC's 8% bonds due 2031 down a point at 73 bid. Another trader quoted the latter bonds at 73.5 bid, 74.5 offered, unchanged on the day.

MBIA Inc.'s 14% notes due 2033 were unchanged at 65 bid, 67 offered.

Broad market mixed

Transmeridian Exploration's 12% notes due 2010 gained 15 points, a trader said, after the company announced it received a $215 million investment from United Energy Group Ltd. He said the bonds closed the day around 80 amid "a fair amount of trading."

Charter Communications Inc.'s debt was deemed virtually unchanged by one trader. Another trader pegged the 11% notes due 2015 at 85 bid, 86 offered.

A trader said Delphi Corp.'s paper "continues to drift lower," quoting the debt at 35 bid, 36 offered.

AbitibiBowater Inc.'s old Abitibi-Consolidated 8.55% notes due 2010 gained 2 points to close at 61.

Sara Rosenberg and Paul Deckelman contributed to this article.

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