WaMu loses ground on JPMorgan lawsuit; First Data debt better; Las Vegas Sands loan continues climb

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., March 25 - The distressed bond market ended with an overall positive tone, traders reported Wednesday, with one source stating that names were up half a point on average.

But Washington Mutual Inc. did not benefit from the firmer feel of the day. The bank's bonds dropped as much as 6 points on the day on news that its new parent company, JPMorgan Chase & Co., had filed a lawsuit against the company's former parent and against the Federal Deposit Insurance Corp.

Meanwhile, First Data Corp.'s debt structure gained some strength, despite the company's wider fourth-quarter loss. During its conference call to discuss those results, the company claimed that it had enough resources to not only fund its obligations but to also invest in the company.

A recent amendment announcement was still boosting Las Vegas Sands Corp.'s bank debt, traders said. The debt was up a deuce on the day.

WaMu loses ground

Washington Mutual's holding company paper took a hit following news that JPMorgan had filed a lawsuit against the bank's former parent company, as well as against the FDIC.

One trader placed the senior holding company bonds - like the 4%notes due 2009 - at 82 bid, 83 offered, versus levels around 85 bid, 86 offered on Tuesday. He also saw the subordinated issues, such as the 4 5/8% notes due 2014, at 61 bid, 62 offered, compared with 67 bid, 68 offered previously.

"Initially, I think [the news] spooked a bunch of people, but [the bonds] firmed up a bit as the day wore on," the trader commented.

Another trader called the senior issues off 2 to 3 points, also at 82 bid, 83 offered, while the subordinated paper dropped about 5 points to end around 60.

JPMorgan, which took over WaMu in September 2008 following FDIC intervention, filed the suit to protect its $1.9 billion purchase and in response to a lawsuit WaMu brought against the company alleging the purchase price was too low. WaMu claims that the FDIC valued the company and its assets too cheaply and that it thus equaled "a taking of plaintiff's property without just compensation, in violation of the Fifth Amendment of the U.S. Constitution."

"JPMorgan Chase brings this action in order to ensure that JPMorgan Chase and its subsidiaries are not divested of their assets and interests purchased in good faith from the Federal Deposit Insurance Corp.," JPMorgan said in the complaint filed late Tuesday.

First Data debt better

First Data's term loan B debt gained some ground during market hours following the release of earnings results, even though the company did see a hefty net loss on impairment charges, according to traders.

The term loan B-1 was quoted by one trader at 66¾ bid, 67½ offered, up from 65¼ bid, 66¼ offered on Tuesday, and the same trader quoted the B-2 at 66 5/8 bid, 67 1/8 offered, up from 65½ bid, 66½ offered.

Meanwhile, a second trader placed all of the company's term loan B debt in the context of 66 bid, 70 offered, up about 2 points on the day.

In the bonds, a trader called the 9 7/8% notes due 2015 about 1.5 points better at 57.25, with $25 million to more than $30 million trading. Another trader deemed the issue a couple points better as well at 57 bid, 57.5 offered, up from around 55.

For the fourth quarter, First Data posted a net loss of $3.218 billion, compared with a net loss of $273 million in the fourth quarter of 2007. The loss included a non-cash goodwill impairment charge of $3.2 billion.

However, revenues for the quarter were $2.317 billion, up 8% from $2.143 billion in the previous year.

And, EBITDA for the quarter was negative $2.676 billion, compared with positive $512 million in 2007, while adjusted EBITDA was $667 million, up 1% from $663 million in the prior year.

Still, the company's top executive, Michael Capellas, said that the company has enough money to meet its obligations, as well as to invest in new product lines, during a conference call.

First Data is a Greenwood Village, Colo.-based provider of electronic commerce and payment services.

Sands loan posts gains

Las Vegas Sands' strip of institutional bank debt was stronger in trading, with the momentum still spurred on by the company's recent amendment announcement, according to traders.

One trader had the strip quoted at 50 bid, 51 offered and a second trader had the strip quoted at 50 bid, 52 offered. During the previous session, the debt went out around 48 bid, 50 offered.

On Tuesday, the company revealed that it is in discussions with its bank group about an amendment to its credit facility that would allow for the repurchase of $800 million in term loan debt.

Under the amendment proposal, the company would have until Sept. 30, 2010 to conduct the Dutch auctions and there would be a minimum repurchase offer of $25 million.

Las Vegas Sands is a Las Vegas-based developer of multi-use integrated resorts.

Elsewhere in the gaming arena, MGM Mirage's bonds were seen recouping some of the losses it posted the day before, according to a trader.

The trader called the 6% notes due 2009 - which he deemed a "very volatile issue" - 3 points better at 53, while the 6¼% notes due 2012 moved up to 36.5 bid, 37 offered from 33.5 bid, 34 offered.

"The short stuff was definitely better," he said, adding that the longer issues did firm but not as much as the nearer maturities.

Among the longer issues, he quoted the 13% notes due 2013 at 73 bid, 74 offered, compared with 72.5 bid, 73.5 offered the day before.

Trading in Harrah's Entertainment Inc.'s 7 7/8% notes due 2010 was "quiet," the trader noted, placing the debt at 37.5 bid, 38 offered, compared with 35 "just a few days ago."

Freescale loans unchanged

Freescale Semiconductor Inc.'s term loan debt held steady on Wednesday after the company released bond exchange results and sizing of its new incremental term loan, which, according to a trader, came in line with expectations.

The old term loan was quoted at 38 bid, 40 offered and the new incremental term loan was quoted at 50 bid, 53 offered, with both tranches unchanged from previous levels, the trader said.

On Wednesday morning, Freescale announced the final results of its offer to holders of the 9 1/8%/9 7/8% senior pay-in-kind election notes due 2014 to participate as a lender in new incremental term loans.

Under the exchange offer, the company received commitments with respect to approximately $956.8 million aggregate principal amount of senior toggle notes.

Based on the amount of commitments delivered, the company will incur approximately $236.1 million principal amount of new incremental term loans.

This brings the total incremental term loan amount to around $917.5 million when combined with the incremental loans obtained on March 17 for exchanges of senior floating-rate notes due 2014, 8 7/8% senior fixed rate notes due 2014 and 10 1/8% senior subordinated notes due 2016.

As was previously reported, Freescale's incremental term loan due Dec. 15, 2014 carries pricing of 12.5%, and is guaranteed by the same guarantors under the company's senior secured credit facility.

Citibank is the administrative agent on the deal, which was allowed to carry a maximum size of $1 billion.

The company's existing credit facility lenders were invited to participate in the new loan as well but declined since the incremental debt is dilutive to bank holders.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets.

Broad market stronger

Hertz Global Holdings Inc.'s 8 7/8% notes due 2014 continued to gain, a trader said, moving up 1 to 1.5 points to 56 bid, 57.5 offered.

Freeport-McMoRan Copper & Gold Inc.'s 8 3/8% notes due 2017 edged up to 93, while its 8¼% notes due 2015 also firmed slightly to 94.25.

Sprint Nextel Corp.'s 7 3/8% notes due 2015 gained half a point to close at 52.25.

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