Edison Mission files for bankruptcy, bonds bounce; Geokinetics firms as Dec. 15 coupon skipped

By Stephanie N. Rotondo

Phoenix, Dec. 17 - Edison Mission Energy was the name of the day in the distressed debt arena on Monday.

The focus came as the unit of Edison International Inc. announced it had filed for bankruptcy. The filing was not a surprise, given that the company had skipped a Nov. 15 coupon and another Dec. 15 coupon was not expected to be paid.

All of Edison Mission's bonds are now trading flat, though the debt was up across the board.

In other missed coupon-turned-bankruptcy-filing news, Geokinetics Inc. said it was skipping a Dec. 15 payment as it attempted to come to terms with bondholders over a restructuring. Whether a deal is struck or not, the company said a bankruptcy filing was likely either way.

Meanwhile, Sorenson Communications Inc.'s debt fall as much as 7 to 8 points on the day, after the company delayed two new financing deals.

Edison Mission debt gains

A trader said that all of Edison Mission Energy's bonds were now trading flat - or without accrued interest - as the company officially filed for Chapter 11 protections.

The filing did not come as a huge surprise. Last month, the Santa Ana, Calif.-based power producer missed a $97 million coupon on three series of notes. Another coupon came due on Monday for another two series of notes.

The trader said the debt "rallied" up to 55½ on the news, closing out at 54½ cross all of the issues.

"That's still up another buck from Friday," he said.

Another trader said the name was "the top dog for the day, volume-wise." He called the 7% notes due 2017 up 2¼ points to 543/4, the 7.2% notes due 2019 up over 2 points to 55¼ and the 7¾% notes due 2016 up 5 points to 553/4.

Edison Mission has previously operated as a unit of Edison International. With the bankruptcy filing, that will cease to be the case.

Edison Mission "will be deconsolidated from Edison International as of the filing date and EIX expects to report the results of EME as discontinued operations for current and prior periods," the former parent said on its website. "EIX has reached an agreement with [Edison Mission] and a majority of its noteholders that would transition EIX's ownership to [Edison Mission's] creditors upon approval of a plan of reorganization by the bankruptcy court."

Geokinetics skips coupon

Geokinetics, a Houston-based provider of seismic data acquisition, seismic data processing services and multi-client seismic data to the oil and gas industry, announced Monday that it would forgo a $14.6 million interest payment on its 9¾% notes that came due Dec. 15.

The company had previously said that it was in talks with creditors on a possible restructuring. Those talks ended Friday without any indication - at least from the company - how they had went.

However, the company said in its press release on Monday that regardless of whether or not a deal can be reached with bondholders, an "in-court restructuring" was likely.

On the news, a trader said he saw the 9¾% notes move up "a couple points" to end around 42.

Sorenson bonds slide

Sorenson Communications postponed two new financing deals on Monday, which put pressure on the company's bonds.

A trader said the 10½% notes due 2015 fell to an 81-82 context from 87-88 previously.

He "didn't see too much trading in it though."

Another trader called the debt down 7 to 8 points, trading around 82 versus previous levels around 90.

The Salt Lake City-based telephone services provider for the deaf did not give a reason for delaying a $400 million offering of seven-year first-lien senior secured notes, as well as a new $200 million seven-year term loan B. Sorenson had said it would use proceeds to repay its first-lien loan and to fund the cash portion of an exchange offer for the 10½% notes.

Tribune rises on exit deal

Tribune Co.'s exit financing credit facility began trading on Monday, with the $1.1 billion seven-year term loan (Ba3/BB+) quoted at 99¾ bid, par ¼ offered on the open and then it moved to par bid, par ¼ offered, according to a trader.

Pricing on the term loan B is Libor plus 300 basis points with a 1% Libor floor, and it was sold at an original issue discount of 99. There is 101 soft call protection for one year.

Last week, the spread on the loan was reduced from Libor plus 350 bps on strong demand.

In addition to the term loan, the company's $1.4 billion deal includes a $300 million five-year ABL revolver, which, based on court documents, is expected to be priced at Libor plus 150 bps.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC and Bank of America Merrill Lynch are the lead banks on the deal, with JPMorgan the left lead on the term loan and Bank of America the left lead on the revolver.

Proceeds will be used by the Chicago-based media company to fund cash plan distributions for some creditors and operations after its plan of reorganization takes effect.

On the back of the completed deal, a trader said that "a fair amount of scraps" of Tribune's bonds traded in a range of 42-43, which he said was firmer.

Sara Rosenberg contributed to this article

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