NewPage keeps dropping; Visteon quiet on new proposal; Leap, Sprint Nextel see active trading

By Stephanie N. Rotondo

Portland, Ore., Jan. 20 - Traders said the distressed debt market continued to be "subdued" Wednesday, but that did not stop NewPage Corp.'s bonds from falling yet again.

The bonds dropped another 8 points on the day, after slipping a few point in the previous session as well. The declines were blamed on management changes and disappointing preliminary fourth-quarter results.

Meanwhile, Visteon Corp.'s bonds were rather quiet, even as it was reported that the company was in talks with bondholders regarding a new reorganization plan that would give unsecured holders some recovery. One trader called the credit "an interesting one."

Leap Wireless International Inc. and Sprint Nextel Corp. saw active trading. But there was no real news out to explain the increased turnover.

NewPage declines continue

NewPage's bonds continued to decline following Tuesday's announcement that its chief executive would exit his post and preliminary quarterly results disappointed investors.

A trader said, "A lot traded" in the 10% notes due 2012. "Looks like the most active bond," he said, placing the issue around 70, down from 78.

"That's down 10 points in the last couple sessions," he added.

Another trader said "probably $100 million" of the paper changed hands. He quoted the notes at 70 bid, 71 offered.

On Tuesday, the Miamisburg, Ohio-based papermaker announced that Richard D. Willett Jr. had resigned from his post as CEO. He will remain as a consultant until March 31. In the interim, until a new CEO is found, former CEO and current executive chairman Mark A. Suwyn will act as CEO.

"After considerable personal reflection on my longer term career interests, I have made the difficult decision to leave NewPage to pursue opportunities in other industries," stated Willett in a press release. "A smooth transition is important to me, and I have agreed to assist Mark Suwyn and the NewPage management team as needed as a consultant to the company, and then further through a two-year consulting arrangement with Cerberus Operations."

"While there is never a perfect time for a transition, Rick and I, along with the board of directors, have mutually agreed on this timing and feel that NewPage is well positioned for the future now that the acquisition of Stora Enso North America has been successfully integrated," stated Suwyn. "Rick has made enormous contributions to NewPage over the past four years and we all wish him well in the future."

In addition to the management change, NewPage also gave preliminary fourth-quarter results in an 8-K filing with the Securities and Exchange Commission.

For the quarter, NewPage is estimating net sales between $853 million and $861 million, compared with $977 million in the same quarter of 2008.

Net loss is expected to be between $52 million and $57 million. The company posted $42 million loss in the fourth quarter of 2008 and a loss of $138 million in the third quarter of 2009.

As of Dec. 31, 2009, NewPage had $4 million in cash and equivalents and $219 million available under its revolving senior secured credit facility.

Visteon quiet on new proposal

Visteon's bonds held in there, a market source said, as the company reportedly considered a reorganization proposal that would offer unsecured creditors some recovery.

The source opined that the situation with the bankrupt automotive pars supplier was "interesting," as it had resulted in a "real good battle of analysts." Some, he explained, believe there is more value in the senior and subordinated issues than has been estimated. Other, however, say the debt is worthless.

At any rate, he noted that there had "been lots of sniffing around [for Visteon paper], but not all that much trading." He said less than $5 million of the 7% notes due 2014 traded at 45 bid, 45¼ offered. He deemed that unchanged day-over-day, but lower compared to levels of 48 bid, 50 offered last week.

"I think some of the euphoria kind of wore off," he said.

In court documents filed Wednesday, the Van Buren Township, Mich.-based company said it was discussing a new reorganization proposal with bondholders. Under the plan, Visteon would conduct a stock offering, the proceeds of which would be used to pay down a portion of the company's $1.6 billion in bank debt. The remaining bank debt would be reinstated.

Unsecured creditors, which under the current plan receive no distribution, would receive some amount of equity, or possibly the rights to make a new investment in the reorganized company.

The current plan - filed Dec. 17 - would give majority control to senior lenders. The proposed plan would not do so.

A confirmation hearing on the current plan is scheduled for Feb. 18.

Meanwhile, a trader said that Ford Motor Co. - which happens to be the former parent of Visteon - traded "pretty active," placing the 7 ¼% notes due 2011 around 101.

Leap, Sprint see active trading

In the wireless technology realm, about $50 million of Leap Wireless' 9 3/8% notes due 2014 traded, according to a source, at 101 bid, 101½ offered.

The pay-as-you-go mobile phone company is reported to be considering its strategic options as the fight for market share in that industry heats up. Some market players have speculated the company should combine with MetroPCS, another pay-as-you-go company.

Also, Sprint Nextel's 7 5/8% notes due 2011 closed at 102 bid, 102½ offered, on $50 million traded.

On Tuesday, Sprint's equity received a downgrade, which was preceded by news that rivals AT&T and Verizon had cut some pricing plans.

Broad market mostly steady

Also in the distressed space, Energy Future Holdings Corp.'s 10 7/8% notes due 2017 closed around 85, according to a trader.

Washington Mutual Inc.'s 0% notes due 2011 were trading "a lot," the trader said, around 43.

"That's about the same, a little better than a couple days ago," he said.

Also, LyondellBasell's 10¼% notes due 2010 continued to gain ground, ending around the 82 mark.

A trader said he "didn't see any action" in Tribune Co.'s debt, even as the newspaper company increased its cash flow projections for 2009. He said the 4 7/8% notes due 2010 were "still quoted" at 27 bid, 28½ offered, and added that the 7½% notes due 2023 were "in that same range, but not really trading."

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