Young bonds fall again, seen flat; Trump jumps despite loss; GM bonds, loan still up, Metaldyne mauled

By Paul Deckelman and Sara Rosenberg

New York, Aug. 7 - Young Broadcasting Inc.'s bonds, particularly its junior issues, were seen continuing their slide to nowhere Thursday, with traders quoting those bonds has having tumbled down as low as the mid-20s and trading flat, without their accrued interest. There was still no specific news seen out about the New York-based television station group owner, whose downturn was being explained as part of a broader downside move by companies dependent on advertising in a sagging economy. Quarterly results due out next week are not expected to help its situation any.

Quarterly results out Thursday were seen helping the bonds of such issuers as Trump Entertainment Resorts Inc. and Yankee Candle Co. Inc., both of whose bonds were seen firming smartly on the numbers, although the Trump bonds later came off their highs to end only up around a point on the day.

In the automotive realm, General Motors Corp.'s bonds were once again seen cruising higher, and its term loan was better as well, although there was no fresh news out on the Detroit-based world's top vehicle maker (for now) that might explain the rise. Not all automotive names were doing so well, with Metaldyne Corp.'s bonds seen tumbling, again on no news.

Young retreat rolls on

A trader said that "one name that's really been moving a lot" in recent days has been Young Broadcasting. He saw the company's 8¾% notes due 2014 trading down to the 29.5 level from prior levels in the mid-30s, and quoted them late in the day as left at 25 bid and trading flat, or without their accrued interest.

"The fact that people are even quoting them flat," in the absence of a formally announced event of default, "is very interesting."

He said that the company has its quarterly earnings call scheduled for next week, "and the way they're trading, it doesn't look too pretty."

Another trader also saw the bonds "hit hard" and going out at 25 bid, flat, versus levels in the mid-30s Wednesday.

A market source meantime saw its 10% bonds due 2011 continuing to languish in a low-to-mid 40s context, although quoting them up a point on the session.

The traders have seen no specific news out about the company that might explain the dramatic recent fall in its bonds, but the first allowed that the paper "has fallen off a cliff in roughly the past month. They started drifting, and then every print was down 5 points. It's such an illiquid issue that there've been no stops in between."

Rather than look for a credit-specific reason for the slide, he noted that, "that whole [television] sector has been under pressure," as the economic downturn affecting a wide range of businesses have caused those advertisers to cut back on the amount of advertising they will buy.

Among other TV names under pressure, he mentioned Univision Communications Inc. and Sinclair Broadcast Group Inc.; the latter's 8% notes due 2012 have lately been trading in a 97.25-98.25 context, including a 98 bid level Thursday, up slightly, but "they were in the par neighborhood forever" before that, "it didn't seem like they ever moved around" from a par-101/100.5-101.5-type level "for a long time."

Looking at the broader world of advertising-dependent media in general, he continued, "it's scary, but when you really start thinking about any of these credits that rely on ad revenue, it's not pretty going forward."

As an example, he cited telephone directory publishers Idearc Inc. and R.H. Donnelley Corp. "Look what happened to them in the past week," when Idearc's bonds nosedived after poor earnings from the Dallas-based company, which in turn helped pull the bonds of its Cary, N.C.-based rival, Donnelley, and the latter's wholly owned Dex Media Inc. subsidiary, lower.

He also cited Lamar Advertising Co., whose second-quarter earnings report earlier in the week was "less than stellar" - the Baton Rouge, La.-based billboard company's net was down 22% from a year earlier - "and their forecast [for revenues in the current third quarter] were kind of dim, so they got beat up a little."

With all of the media companies under pressure - the newspaper sector has also been troubled - "it's like same story-different day."

The trader meanwhile said that Idearc's 8% notes due 2016 were "pretty much unchanged" on the day, trading with a 42-handle. Another also described them with that same phrase, quoting the bonds at 42.5. However, a third trader saw them down a point at 41.

Trump is pumped

Trump Entertainment Resorts' 8½% notes due 2015 were seen to have pushed all the way up to the 51 mark from an opening at 47, which itself was up a little from Wednesday's close at 46.5. The bonds, which were moving around in fairly busy round-lot trading that produced more than $50 million of activity in the issue by mid-afternoon, outpacing most other issues, eventually came down from that peak level to trade in a 48-50 context, participants said, although there were a couple of small-sized trades that tried to take the bonds lower, back down to Wednesday's close.

A trader quoted those notes as having risen "on the back of its numbers" before coming off the 51 peak to end at around 48. A second saw the bonds going home at 47 bid, 49 offered, down from the 51 peak, but still up a point on the day. At another desk, a source saw the bonds up ½ point at 47.

A trader who saw the bonds going out at 48 bid, 50 offered, said that his "first reaction was that the earnings were down," but said the bonds had probably risen on investor feeling that "it could have been worse.

"I don't know what kind of expectations people have in the back of their minds - it's like, 'okay, it's not as bad as it could have been'." He also raised the notion that the bonds were being lifted by some short-covering, and then there was "some selling into strength," causing the bonds to be "hit back down." That level "was better [than Wednesday's close], but not nearly as good as they were at one point."

He said that there may have been "some selling ahead of the earnings - maybe they got a touch oversold, and then there was a collective sigh of relief that the earnings could have been worse, and they moved higher."

Another trader said that the bonds "were trading off going into the numbers. I think a lot of people were probably leaning on it and shorting it. Then the numbers came out, and it wasn't catastrophic."

He said the buying may have been short-covering, but allowed that "it's hard to figure out exactly what people's expectations were. [The reported numbers] don't look good, no - but what were the expectations? It's like every [company dependent on selling to or attracting members of the general public] is going to be putting up bad numbers - but you don't know what the expectations were. It's not like any of them are going to be reporting record growth or anything - but the bonds have been hammered lately, so you wonder if its just some short-covering post the numbers, giving them the catalyst to either knock 'em down or make 'em go one way or the other, and out."

The bonds rose even as the company said that its second-quarter net loss more than doubled from a year ago to $29.8 million, or 94 cents per share, versus $13.5 million, or 43 cents per share. Excluding non-recurring items, the per-share loss was 52 cents, a bit wider than the 50 cents per shares that Wall Street had expected.

Revenues were down 4.1% year-over-year to $226.1 million, and came in below the approximately $228 million that Wall Street was expecting. Gaming revenues fell to $178.3 million, a decline of $11.9 million, or 6.3% from second-quarter 2007 levels.

The company - which operates the Trump Taj Mahal and Trump Plaza hotel-casinos on Atlantic City's famed Boardwalk, and which recently agreed to sell its third New Jersey property, the Trump Marina, for $316 million to Coastal Marina LLC, blamed the wider loss on the weaker economy, which its chief executive officer, Mark Juliano, noted "has had a significant impact on the gaming industry across America."

Additionally, Trump and the other Atlantic City casino operators have had to contend with increased competition in the form of growing racetrack slot-machine gaming in nearby Pennsylvania, Delaware and New York State, three key traditional "feeder" markets for the New Jersey casinos.

Trump said that its review of strategic options on using the proceeds from the Trump Marina sale was continuing. Among the options it is currently considering are investments in Atlantic City itself, including a potential mixed use development on the city's famed Steel Pier, as well as gaming opportunities outside of the Atlantic City market. Another option is using some of the proceeds to cut its debt, which stood at $1.696 billion as of the end of the second quarter on June 30, most of it - some $1.25 billion - in the form of the 8½% bonds. The company said its debt level is up by $52.5 million since the beginning of the year. As of the end of the second quarter, it had cash and cash equivalents of $81.5 million. That sum does not include the $316 million it expects to get from the Trump Marina sale, which has not yet closed, nor does it include $8.3 million in cash included in Trump Marina's assets held for sale and $2.8 million in restricted cash representing amounts used to secure outstanding letters of credit.

Analysts have said that the company has to continue to invest in improvements at its two other aging casino properties if it expects to remain competitive in its market, especially against competitors like the flashy Borgata mega-resort jointly owned by rivals Boyd Gaming Corp. and MGM Mirage, and even the Marina, once buyer Coastal renovates and re-launches it under the tropical-themed "Margaritaville" brand that has proven successful in other gaming markets.

Trump also said that it is currently in negotiations with a third-party developer to lease commercial space at the Trump Ocean Club in Panama, currently under development, and to operate an approximately 35,000 square-foot casino on the property.

Yankee Candle improves on results

Also on the earnings front, a trader said that Yankee Candle's bonds "were somewhat active," quoting its 8½% senior notes due 2015 up between 4 and 5 points on the day, going out at 75 bid, 76 offered.

"Those bonds rallied on the back of their numbers," he said. "I think people were selling them [going] into the numbers. I don't know if people were expecting worse numbers, or what. I guess the numbers were better than expectations."

He saw the South Deerfield, Mass.-based specialty retailer's 9¾% subordinated notes due 2017 meantime "up a good bit," trading up to 61 from Wednesday closing levels around 54 bid, 55 offered.

Another trader likewise saw those bonds 5 points higher on the day "on good numbers," pegging the 81/2s also at 75 bid, 76 offered, while the 93/4s were at 60 bid, 62 offered.

Corporate parent Yankee Holding Corp. reported that in the fiscal second quarter ended June 28, it had a net loss of $9.3 million compared with a net loss of $16.7 million in the second quarter of 2007, taking into account costs, expenses and accounting adjustments connected with its merger last year into an affiliate of Madison Dearborn Partners LLC. Excluding the impact of those factors, its second-quarter net loss was $7.1 million in the quarter versus $12.7 million a year ago.

The company also said that EBITDA during the quarter totaled $18.1 million, well up from $5.5 million for the prior-year quarter.

Among other retailers, the first trader said that Sally Holdings LLC's 9¼% notes due 2014 were trading at 99 on "decent numbers" for the Denton, Tex.-based beauty-supply retailer and distributor.

He also saw Claire's Stores Inc. - whose bonds had been rising over the last several sessions - "actually pretty quiet," although he saw the Pembroke Pines, Fla.-based specialty retailer's paper open "a smidge better," with its 9¼% notes due 2015 reaching the 43 level. However, he said that by the end of the day, the bonds "probably gave back a little bit" of the gains, "that's the way things were feeling." Overall, he called Claire's "quiet. It seems like they took a break today."

Another trader who had seen those bonds trading as high as 44 on Wednesday saw them lose a point to 43, while its 9¼% subordinated notes due 2015 and 10½% subs due 2017 also retreated a point, to 31.

Bon-Ton Stores Inc.'s 10¼% notes due 2014 were called "weaker" by one of the traders, quoted down 1 point at 51.

GM joyride continues

In the automotive sphere, a trader saw General Motors' benchmark 8 3/8% bonds due 2033 up 1 point at 52 bid, 53 offered, and saw the 7.45% bonds due 2031 of domestic arch-rival Ford Motor Co. likewise a point higher at 54 bid, 55 offered, continuing the carmaker's rebound from the lows they hit the previous week when they were pulled down by investor angst over poor July sales data and a huge quarterly loss from GM.

Another market source saw GM'S long bonds arch up to above the 54 level before coming off that peak to end at 52, still up more than 2 points, in active dealings. Its 7 1/8% notes due 2013 were likewise up a deuce at 55.

In the bank-debt market, GM's term loan was meantime quoted higher during market hours, although activity in the name was relatively light, according to a trader.

The trader saw the term loan quoted at 74¼ bid, 75¼ offered, up from Wednesday's levels of 74 bid, 75 offered.

On Thursday, news emerged that GM has agreed to increase its advances to Delphi Corp. by up to $300 million, for which Delphi is now seeking court approval.

In May, GM had agreed to advance up to $650 million to Delphi to support the bankrupt Troy, Mich.-based automotive components maker and former GM unit's objective to maintain a minimum of $500 million of liquidity in available funds through the second half of 2008.

However, even with the increase in the advance, Delphi will only be able to maintain a minimum of $300 million of liquidity through the second half of the year.

"Nothing to do with the news," the trader remarked regarding the increase in GM's term loan levels. "More of a technical picture."

Delphi's second-lien debtor-in-possession loan was unchanged on the news at 84¼ bid, 85¼ offered, the trader added.

While GM's bonds were better and its loan followed along, not everyone in the sector was going along for the upside ride.

A trader quoted the bonds of Plymouth, Mich.-based automotive stamping company Metaldyne sharply lower, seeing its 11% notes due 2012 plummeting to 15 bid, 16 offered, while its 10% senior notes due 2013 fell to 34 bid, 35 offered, each down 5 points on the day.

Another trader saw the 11s at 13 bid, 17 offered and the 10s at 35 bid, 38 offered, after having "not seen those bonds for a while." He said that it was not so very long ago that the 10s had been around 52 bid, 55 offered, while the 11s were at 28 bid, 30 offered.

The first trader said that he saw no specific news out on the company - just generalized auto-parts sector weakness.

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