GM up, down as loans repaid early; Smurfit flat to weaker; Rite Aid, Blockbuster mixed

By Stephanie N. Rotondo

Portland, Ore., April 21 - The distressed debt market continued to be firm on Wednesday, but traders noted that another round of new issues - plus a recent surge in Teck Cominco bonds - was dominating action in the secondary world.

"It's definitely gotten infinitely busier again," a trader said.

Another trader, however, said that while the market was "firm, better in spots," it was also "getting squeezed tighter and tighter."

General Motors Corp. saw some of its bonds ending toward the up side, while others were gravitating toward the weaker side. The mixed performance of the carmaker's debt came as it announced it had repaid loans received from the government - and ahead of schedule to boot.

Meanwhile, Smurfit-Stone Container Corp.'s bonds also finished the session mixed. Some sources claimed the notes had held in, but others saw the bonds slipping, as the company secured its exit financing.

In keeping with the general trend, Rite Aid Corp. and Blockbuster Inc. closed the day mixed.

And, Six Flags Theme Parks Inc.'s amended credit facility entered the marketplace. The bank debt quickly traded higher.

GM up, down as loans repaid early

General Motors' debt was mixed during midweek trading, as the company announced it had repaid the U.S. and Canadian governments back in full - and ahead of schedule.

A trader called the benchmark 8 3/8% notes due 2033 unchanged at 37 bid, 37½ offered. The 7.2% notes due 2011 meantime traded up "maybe a quarter" to 35¾ bid, 36 offered.

Another trader, however, said the 8 3/8% notes were "probably a little softer" around the 37 level. But the 8¼% notes due 2023 were "a little bit higher" around the 36 mark.

The trader noted that about "$40-odd million" of the benchmark notes changed hands.

At a ceremony to highlight its recent $257 million investment in some of its assembly centers, Ed Whitacre, GM's chairman and chief executive officer, made the announcement that the Detroit-based automaker had made a final payment of $5.8 billion to the U.S. Treasury and Export Development of Canada.

"GM is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse we build here in Fairfax," said Whitacre at the event. "We are now building some of the best cars, trucks, and crossovers we have ever built, and customers are taking note. Our dealers are increasing their sales, we are investing in our plants, and we are restoring and creating jobs."

During the peak of the economic crisis, GM had received $8.4 billion from the U.S. and Canadian governments. Of the funds repaid Wednesday, $4.7 billion went to the Treasury, while C$1.1 billion went to Canada.

"GM's ability to pay back the loans ahead of schedule is a sign that our plan is working, and that we are on the right track," Whitacre continued. "It is also an important first step toward allowing our stockholders to reduce their equity investments in GM.

"We still have much hard work ahead of us, but we are making progress toward our vision of designing, building and selling the world's best vehicles."

Elsewhere in the autosphere, Exide Technologies Inc.'s rarely traded 10½% notes due 2013 moved in good size, according to a trader.

The trader said about "$20-odd million" of the bonds changed hands, quoting them at 102 bid, 103 offered.

"That's probably a little bit up from where they last were," he said.

Smurfit unchanged to weaker

Sources also gave mixed readings of Smurfit-Stone Container's bonds, with some deeming the debt unchanged and others claiming it was weaker.

One source saw around $25 million of the 8¼% notes due 2012 trading in the 92 area.

"That's kind of where it has been, but there was good size," he said.

Another source called the paper down almost a point at 92¼ bid.

On Wednesday, Smurfit said in a regulatory filing that it had secured a $650 million asset-backed loan facility, the proceeds of which would go toward the company's exit from bankruptcy and to fund operations thereafter.

The loan is comprised of a $550 million U.S. facility and a $100 million Canadian facility.

During the previous session, Smurfit and its shareholders met in court to battle the company's current plan of reorganization. Shareholders allege that management has undervalued the company, thus providing for no recovery for them in the bankruptcy case.

The plan received "overwhelming support" from creditors, according to an April 14 press release.

Smurfit-Stone Container is a Chicago-based manufacturer of containerboard and paper packaging.

Rite Aid, Blockbuster mixed

In the retail arena, a trader said Rite Aid's bonds were reasonably active, seeing the 9½% notes due 2017 at 86 bid, 87 offered.

About $20 million to $30 million of the paper traded, he added.

Another market source saw the 8 5/8% notes due 2015 improving slightly to 89½ bid.

Meanwhile, Blockbuster's bonds saw some activity, but "not as much as yesterday," a trader said.

The trader called both the 11¾% notes due 2014 and the 9% notes due 2012 unchanged at 75½ and 25, respectively.

At another desk, a trader also placed the 9% notes around that 25 level, though he called the 11¾% notes "about unchanged, maybe off a quarter or so" at 74½ bid, 75½ offered.

Six Flags loan enters market

Six Flags Theme Parks' amended exit credit facility hit the secondary market during Wednesday's trading hours, with the first-lien term loan quoted in the par context and the second-lien term loan wrapping around 103, according to traders.

Specifically, the $770 million six-year term loan was quoted by one trader at 99½ bid on the break and then moving up to 99 7/8 bid, par 5/8 offered, by a second trader at par bid, par ½ offered and by a third trader at par 1/8 bid, par 5/8 offered.

And, the $250 million 61/2-year second-lien term loan was quoted by one trader at 102¼ bid, 103½ offered and by a second trader at 102½ bid, 103¼ offered.

Six Flags' first-lien term loan is priced at Libor plus 400 basis points with a 2% Libor floor, and it was sold at an original issue discount of 99, which is the tight end of the initial 98½ to 99 guidance. There is 101 soft call protection for one year.

The second-lien term loan is priced at Libor plus 725 bps, after flexing down from Libor plus 800 bps, with a 2.5% Libor floor, increased from 2%, and it was sold at an original issue discount of 98½ that was reduced from initial talk of 97. There is hard call protection of 103 in year one, 102 in year two and 101 in year three.

The term loans are part of an amended exit credit facility that was revised to accommodate the company's new plan of reorganization.

Under the amended exit facility, Six Flags is also getting a $120 million five-year revolver with an allowance for an additional $30 million in revolver commitments in the future.

Originally, the company was only going to get a $100 million revolver, a $730 million first-lien term loan priced at Libor plus 375 bps with a 2% Libor floor and an original issue discount of 99, and no second-lien term loan to fund its exit from Chapter 11.

Proceeds from the credit facility will be used to repay debt and for general corporate purposes. The $40 million of incremental first-lien term loan debt under the revised plan will be used to repay an existing TW loan.

JPMorgan is the administrative agent on the revolver and first-lien term loan, and Goldman Sachs is the administrative agent on the second-lien term loan.

Six Flags is a New York-based regional theme park company.

Sara Rosenberg contributed to this article

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