Bon-Ton better post-sales report; Trump notes reacting to Trump bid; American Axle strong

By Stephanie N. Rotondo

Portland, Ore., Aug. 6 - The distressed marketplace continued to strengthen Thursday as more money kept flowing in.

"The market just stays strong, cash keeps coming in," a trader said. The bad news, however, is that the supply of securities is not as plentiful. "Larger issues are garnering most of the traffic."

Another trader said he felt there were "better buyers" out during the session.

"I get the sense that on Thursdays people are trying to get a lot done, because there won't be diddly done on Friday," he speculated.

Bon-Ton Stores Inc. saw some action during market hours, after the company released its July sales report. One trader said the bonds had moved up before the report as well, "probably in anticipation."

Elsewhere, Trump Entertainment Resorts Inc.'s debt firmed, traders reported. The move was attributed to a late reaction to news that Donald Trump is looking to bid for the casino.

Meanwhile, American Axle & Manufacturing Inc.'s notes remained on an upward path. The bonds had started to move higher on Wednesday when the company posted a narrower-than-expected quarterly loss.

Bon-Ton better post-sales report

Bon-Ton Stores' debt got some help Thursday after the company reported its July sales results.

A trader quoted the 10¼% notes due 2014 at 53 bid, 53¾ offered on $5 million to $10 million traded. He said that was "up a tiny bit from yesterday."

Another trader called the bonds up half a point to three-quarters of a point at 52¼ bid, 53¼ offered.

"They moved up yesterday also," he said, "probably in anticipation" of the numbers.

For the four weeks ended Aug. 1, Bon-Ton saw its comparable-store sales drop 9.8% compared to 2008 levels. Total sales for that time period came to $178.8 million, down from $197.9 million the year before.

For the second quarter, comparable-store sales also declined 9.8%, with sales dipping to $609.2 million from $673.4 million.

Year-to-date sales decreased 9.2%. Total sales revenue fell 8.7% to $1.25 billion.

"We delivered July sales results that met our expectations," said Tony Buccina, vice chairman and president of merchandising, in the sales report release. "With significantly less clearance inventory than the prior year, sales continued to be challenged, however, as in prior months, reduced clearance sales favorably impacted our gross margin rate.

The company also said it ended the second quarter with $174 million available under its revolving credit facility, "well above the required minimum availability of $75 million."

York, Pa.-based Bon-Ton will report its full second-quarter results on Aug. 20. A conference call is scheduled that day at 10 a.m. ET.

Among other retailers, Rite Aid Corp.'s 8 5/8% notes due 2015 gained more than a point to close at 78.5 bid, while Neiman Marcus Group Inc.'s 10 1/8% notes due 2015 improved almost a point to 77.5 bid.

Trump bonds gain ground

Trump Entertainment Resorts' notes finally showed some reaction to news published earlier in the week regarding the company's potential new owner - none other than The Donald himself.

A trader placed the 8½% notes due 2015 at 83/4, with about $10 million changing hands.

"I would have thought it would be more than that," he said. "He's making the move to buy it back, so you would have thought that there would be more movement in the bonds."

Another trader said there were bids in the "high single digits" and trades as high as 10 and as low as 8. However, he said the bulk of trading occurred around the 8½ level, compared to 6¾ previously.

"So they had a little pop, on a percentage basis anyway," the trader said.

Yet another trader saw the notes due 2015 trading between 8 and 10 "for most of the day," before ending at 81/2. He noted that the bonds had traded as high as 10 and called it "pretty significant" that they were going out 1½ points below that peak, "having a 10 trade and then finishing at 8.5. It is a big deal. It's not as if it were 98 and par," but the bonds "did have some volume today."

He said there were "big trades, big spreads - a 1½ spread is a lot when you're in the single digits."

On Tuesday, word hit the street that Donald Trump - with the help of BNAC Inc. - was planning to repurchase the Atlantic City casinos bearing his name for $100 million in cash. Trump and his bankers also have plans to restructure the casino's $486 million in debt.

"As a private enterprise under the ownership of the Trump family and BNAC, the company will be well capitalized and positioned for success, and we are hopeful for the court's expeditious approval so that the new capital can start being invested," said Mark Juliano, Trump Entertainment's chief executive, in a statement

"I am pleased that the reorganization affords me an opportunity to make a new investment and help revive a company that has borne my name, but not performed to my standards or been under my management," added Trump. "My daughter Ivanka and I will work tirelessly to make this company great again."

Trump Entertainment filed for bankruptcy protection in February.

American Axle drives up

American Axle & Manufacturing's bonds continued to gain strength just one day after the automotive parts supplier posted a narrower-than-expected loss.

A trader called the 7 7/8% notes due 2017 up some at 431/2. Another market source quoted the issue at 43 bid, 44 offered and the 5¼% notes due 2014 at 48 bid, 49 offered, both 1 to 3 points higher.

On Wednesday, the Detroit-based company reported a second-quarter loss of $288.6 million. However, that was an improvement year over year. In 2008, the company reported a loss of $644.3 million, which was largely due to a three-month strike by the United Auto Workers union.

In addition, American Axle said it had plans to shrink its business but planned to do so out of court.

"It is AAM's primary objective to complete our restructuring outside of a bankruptcy process," said Richard Dauch, CEO, during the earnings conference call Wednesday. "Bankruptcy is far too extreme a disruption for AAM and our shareholders."

Broad market stronger

Among other distressed names, Ford Motor Co.'s 7½% notes due 2012 continued to be active, though still remaining around the 93 level.

American International Group Inc.'s 8.175% notes due 2058 closed at 35 bid, 36½ offered, up about 3 points.

A trader said Continental Airlines' 8¾% notes due 2011 had "moved up a couple points over the last day or two," ending Thursday's session at 65 bid, 66 offered.

Another trader saw no activity whatsoever in Finlay Fine Jewelry Corp.'s 8 3/8% notes due 2012 following the specialty retailer's Chapter 11 filing.

"I haven't seen that in a while," he said, noting that the bonds were "down at drill-bits - little single digits, 1-2. There was no activity - and it hasn't traded in weeks."

At another desk, however, a market source saw three round-lot trades in the credit, all around the 2 level - but agreed with the first trader that before that, the last activity in the bonds took place way back around early to mid-July.

Paul Deckelman contributed to this article.

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