Tronox soars on Huntsman news; American Axle holds ground; Blockbuster asset sale helps bonds

By Stephanie N. Rotondo

Portland, Ore., Aug. 31 - Tronox Worldwide LLC was Monday's big mover, as news came out that Huntsman Corp. had made a bid for parts of the bankrupt company.

Market players saw the chemical company's debt gaining as much as 7 points on the day on the back of the news. One trader said he wasn't sure if the move was a result of short covering, or if investors were just that jazzed about the prospect.

Meanwhile, American Axle & Manufacturing Inc.'s capital structure held steady during trading. The company secured its third waiver extension from lenders as it tried to restructure out of court.

Blockbuster Inc.'s bonds moved higher during the session, attributed to news out Friday regarding an international asset sale. A trader explained that the sale - along with other potential international sales - could significantly improve the company's balance sheet.

Overall, traders reported a quiet Monday dominated mostly by month-end pricing. One source also noted that Europe was on holiday Monday.

Still, activity is expected to improve after Labor Day.

"I think you get through this week and next week it's back to business," a trader said.

Tronox gains on Huntsman bid

Tronox Worldwide's debt improved as much as 7 points on the day on news that Huntsman Corp. had made a $415 million bid for some of the Oklahoma City-based company's assets.

A trader placed the 9½% notes due 2012 at 29 bid, 29.25 offered, up from around 22 last week.

"I'm not sure if that's short covering or if people think that's good for them," he said.

Other sources quoted the debt at 29 bid, 30 offered, a gain of 4.5 points to 7 points, depending on whom you asked.

Huntsman will become the stalking horse bidder for bankrupt Tronox's assets, including titanium dioxide plans tin Mississippi and the Netherlands. If the deal is completed, Huntsman will become the second-largest producer of the chemical.

"We look forward to the prospect of acquiring these assets," said Peter Huntsman, president and chief executive officer of the company bearing his name, in a statement. "This acquisition, even before expected synergies, would be immediately accretive to our operating earnings and cash flow, as well as reduce our debt leverage."

"By combining our existing pigments division with these assets, we also can realize substantial efficiencies that will benefit the customers, vendors, employees and other stakeholders of the combined business," Huntsman said.

The deal is expected to be financed with at least 50% of debt. Huntsman will not be acquiring any of Tronox's debt, nor will it be purchasing any assets associated with an environmental lawsuit that led to Tronox's Chapter 11 filing earlier this year.

American Axle holds its ground

American Axle & Manufacturing's bonds held their ground Monday as the company secured its third waiver extension from its bank lenders.

Sources placed the 7 7/8% notes due 2017 around 68.

"That's kind of how they went out last week," one trader noted.

American Axle's term loan was also steady on the news, according to a trader.

The term loan was quoted at 88½ bid, 89½ offered, flat when compared to Friday's levels, the trader said.

The waiver, which was previously set to expire on Monday, covers financial covenants relating to secured debt leverage and interest coverage and the collateral coverage requirement.

Under the extension, the company is required to maintain a daily minimum liquidity of $75 million.

The purpose of the extension is to give the company more time to work with key stakeholders on various commercial agreements and financing arrangements that would result in a comprehensive long-term solution outside of bankruptcy.

American Axle is a Detroit-based producer of driveline and drivetrain systems and related components and chassis modules for the automotive industry.

Elsewhere in the autosphere, a trader quoted Lear Corp.'s 8¾% notes due 2016 at 54.5 bid, 55.5 offered, which he said "might be quoted up a point," although he added that there was "not a lot of volume in it."

Blockbuster asset sale helps debt

After taking the weekend to digest Friday's news, Blockbuster investors pushed the company's bonds higher, according to a trader.

The trader said the 9% notes due 2012 were "better today" at 52 bid, 53 offered.

"It didn't look to me like it was big news," he said of Friday's announcement that the Dallas-based movie rental chain had sold its Irish unit Xtra-vision Ltd. for up to $45 million in cash.

However, the trader added that "somebody" in the market commented that the sale is just one of several possible international assets hitting the chopping block and, by divesting itself of those units, Blockbuster could significantly improve its liquidity.

The assets will be sold to Birchhall Investments, a subsidiary of NCB ventures, and includes 186 stores in Ireland.

"Today's announcement furthers our goal of improving liquidity and underscores our intent to advance the sale and licensing of our international assets as we focus on the continued transformation of our North American business," stated Jim Keyes, Blockbuster's chairman and CEO, in a press release issued Friday.

"Xtra-vision is the leading entertainment chain in Ireland and one of the most recognizable brand names in the country. It has performed very well during our ownership and we believe it is well positioned for ongoing success under the ownership of Birchhall Investments," Keyes said.

"We're pleased to have participated in this acquisition, which adds one of Ireland's leading brands to our portfolio," added Michael Murphy, managing partner of NCB Ventures. "We look forward to working with the management team at Xtra-vision to build on its success and grow the business long-term.

"We think there are great opportunities to build on Xtra-vision's high brand recognition and visibility in the home entertainment market in Ireland. The transaction will be seamless for members and employees of Xtra-vision Ltd.," he said.

Among other consumer-related names, Idearc Inc.'s 8% notes due 2016 were seen unchanged around 8.

Sara Rosenberg and Paul Deckelman contributed to this article.

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