Cooper paper flies on equity commitment; Sprint, Leap up on sale buzz; GM sales, bonds improve

By Stephanie N. Rotondo

Portland, Ore., Feb. 2 - The secondary market picked up Tuesday, giving many distressed credits marginal gains.

But Cooper-Standard Automotive Inc. was the day's big winner, as its bonds gained as much as 10 points during the session. The hefty price move came after the company announced it had received commitments for a $245 million rights offering.

Meanwhile, Sprint Nextel Corp. and Leap Wireless International Inc. were among the day's most active names. One trader went so far as to call Leap "probably the second most active" name in Tuesday trading. Both companies bonds' improved slightly on talk that Leap was seeking a buyer - and the market wondered whether Sprint would step up.

General Motors Corp. released its January sales report, showing a 14% increase form the year before. As a result, the carmaker's debt headed for higher ground in "pretty active" trading.

Among the day's few losers was Smurfit-Stone Container Corp. Those bonds dropped as much as 2 points, traders reported.

Cooper flies on equity commitment

Cooper-Standard Automotive's bonds jumped as much as 10 points on the day after the company announced it had received commitments for a $245 million backstopped rights offering.

The offering is part of the company's plan of reorganization, which was filed with the bankruptcy court on Monday.

"Cooper was up big, almost 10 points," a trader said, quoting the 7% notes due 2012 at 119 bid, 120 offered. That market was echoed at several other desks, as well.

The trader also saw the 8 3/8% notes due 2014 around 40.

At another desk, the 8 3/8% notes were seen at 40 bid, 41 offered, a gain of 7 to 8 points. Yet another source pegged the issue at 41 bid, 43 offered, noting that the credit was "quite active."

The Novi, Mich.-based automotive parts supplier announced Tuesday that it had entered into an equity commitment agreement with holders of the 7% and 8 3/8% notes. The agreement will allow the company to conduct a rights offering for eligible senior and senior subordinated noteholders.

According to the terms of Cooper's reorganization plan, its debtor-in-possession and prepetition credit facility will be paid in full with cash. Holders of senior debt will receive 18.75% of new equity in the company, as well as the right to participate in the offering for up to 45% new equity. Senior subordinated bondholders will get 6.25% of new equity, along with warrants to purchase another 5% of the stock. Those holders can also participate in the rights offering, for up to 15% of new common shares.

Cooper expects the plan will "significantly" delever its balance sheet, leaving it with about $430 million in debt, a $700 mill reduction to prepetition debt levels.

"Obtaining a $245 million equity investment and filing our plan are significant achievements that pave the way for our expeditious and efficient emergence from bankruptcy," stated James S. McElya, chairman and chief executive officer, in a press release.

"The equity commitment agreement is a strong statement of support by a significant group of the company's current creditors, and the fact that the official committee of unsecured creditors fully supports the plan and the rights offering strongly indicates that the transaction is in the best interests of all of our unsecured creditors. The plan and equity commitment agreement will allow the company to emerge from bankruptcy with a stronger balance sheet and maintain its leadership position in the industry."

Sprint, Leap up on sale chatter

Sprint Nextel and rival Leap Wireless International saw their bonds heading upward, as the market eyed industry consolidation.

A trader said Leap's 9 3/8% notes due 2014 - linked to its former Cricket Communications moniker - were "quite active" at 101¼ bid, 102¼ offered. He called that a 11/2- to 2-point gain on the day.

The trader also saw the 7¾% notes due 2016 at 102½ bid, 103½ offered, up along with the same lines as the 9 3/8% notes.

Another trader called the 9 3/8% notes "up about 2 points" around the 101½ mark.

In Sprint's debt, the first trader said "a bunch were trading," placing the 7 5/8% notes due 2011 at 102 and the 8 3/8% notes due 2017 at 981/2. The 6 7/8% notes due 2013 were also active, ending at 92½ bid, 93½ offered.

"It all looks a little better, like a point better," he said.

Yet another market source deemed the 6% notes due 2016 up nearly a point to 88 bid.

Late Monday, the Wall Street Journal reported that Leap was looking for a buyer. As MetroPCS - considered to be the most likely partner - has said it was not interested in purchasing the company, eyes turned to Sprint as a potential buyer.

Sprint has been losing subscribers to rivals like Verizon and AT&T, and a glut of wireless companies has only increased competition. Should Sprint go after Leap, it could not only increase its pay-as-you-go subscriber base, but also reduce industry-wide competition.

However, some reports have indicated hesitancy on Sprint's part to take over yet another company - it recently bought Virgin Mobile USA. Still others think Sprint would be better off merging with another big name, such as T-Mobile.

GM sales, bonds improve

With Toyota entrenched in a massive recall effort, General Motors was able to increase its January 2010 sales, which then resulted in a boost to the automaker's bonds.

A trader called the debt "higher" and "pretty active." He quoted the 8 3/8% notes due 2033 and the 7.20% notes due 2011 at 28½ bid, 29½ offered.

Another trader said the benchmark issue was "up about a point" at 29 bid, 29½ offered.

For the month of January, GM saw its total U.S. sales increase 30% to 145,098 vehicles sold. Retail sales made up 102,420 of that number, which was a 3% increase year over year.

GM dealers as a whole saw sales jump 14% to 146,825 vehicles sold.

"This is the fourth month in a row that Chevrolet, Buick, GMC and Cadillac have shown a collective year-over-year retail sales increase," said Susan Docherty, vice president of sales, service and marketing, in a press release. "Our long-term plan to continue to focus and strengthen our brands is delivering results."

Smurfit issues slip

Smurfit-Stone Container's debt ended the day unchanged to lower, according to market sources.

One source said the 8¼% notes due 2012 drifted about 1 point lower to 82½ bid, 83½ offered. Yet another deemed the issue more than a point weaker at 82¾ bid.

A trader at another shop said the paper was "down a little bit" at 82½ bid, 83 offered.

But another trader called the debt "about unchanged roughly," placing the 8¼% notes and the 8 3/8% notes due 2014 at 82½ bid, 83½ offered.

Smurfit-Stone is a Chicago-based paperboard manufacturer.

Cinram regains ground

Cinram International Income Fund's term loan D came back a little in trading after experiencing a big slide on Monday on news that service agreements with Warner Home Video Inc. will terminate on July 31, according to traders.

The term loan D was quoted by one trader at 75 bid, 77 offered, up from 67 bid, 72 offered. A second trader, however, had the term loan D quoted at 75½ bid, 76½ offered, up from 74 bid, 76 offered where he said it moved up to late in the day Monday.

Prior to the announcement of the cancelled agreements with Warner Home Video, the term loan D was being quoted in the 86½ bid, 88½ offered area.

Warner Home Video revenues for 2009 represented approximately 28% of Cinram's total consolidated revenues.

Cinram is a Toronto-based provider of pre-recorded multimedia products and related logistics services.

Sara Rosenberg contributed to this article.

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