Smurfit debt improves; U.S. Concrete expected to gain; Harrah's heads up; Lyondell still firm

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., March 25 - Distressed bonds were largely better to unchanged, traders reported Thursday.

"Offerings are getting lifted," a trader said. "The market is up another half a point to a point in some places, unchanged in others."

"It ticked up a notch today, no doubt," said another trader. "It felt like everybody wanted to own new things."

One of those new things might have been Smurfit-Stone Container Corp., which saw not only a gain in its bonds but also a surge in trading volume. With no news out to explain the sudden interest, traders could only speculate as to what had caused the jump.

Meanwhile, U.S. Concrete Inc.'s debt improved following the company's announcement that it had amended its credit facility in an effort to get its hands on $18.5 million in short-term liquidity. However, trading was thin - but some expected that to change come Friday.

Harrah's Entertainment Inc. also benefitted from the "generally stronger" trading session. Like MGM Mirage the day before, there was no news out to have acted as a catalyst.

LyondellBasell Industries' pre-petition CAM also continued to move up, in line with Wednesday's gains. The company's new bond issue also remained strong, even as the chemical manufacturer tweaked pricing on its new proposed term loan.

Smurfit debt improves

Smurfit-Stone Container bonds moved up in active trading, according to traders.

One source said the debt "traded up a bit," seeing the 8 3/8% and 8½% notes due 2012 closing at 90½ bid, 91 offered. That compared with Wednesday levels around 88½ and opening levels around 883/4.

Another trader said somewhere between $20 million and $25 million of the 8¼% notes changed hands at 90 bid, 91 offered. However, the trader noted that, in the rest of the issues, only "scraps" traded, adding that they all "trade above 89 now."

At another desk, the 8¼% notes were deemed 1½ points better at 90½ bid.

There was no fresh news out to explain the surge, but the traders had various opinions of their own.

"These things have been drifting up for while," the first trader said. "Somebody's been out there buying them, but I don't know why.

"It just may be close to getting [the company's bankruptcy case] resolved," he added.

The second trader offered another view.

"In the last couple of days, people are buying any of the deals where there is an optimism that they will pay par plus accrued," he said. He also suggested that investors are looker for deals that "might pay out quicker."

Smurfit-Stone Container is a Chicago-based paperboard and paper container manufacturer.

U.S. Concrete expected to gain

U.S. Concrete announced it had shored up its short-term liquidity by amending its senior credit facility.

On the news, the Houston-based concrete manufacturer's bonds improved, though trading was thin.

One trader called the 8 3/8% notes due 2014 "slightly better," seeing them trade at 591/2. He also said that he saw bids from 58 to 59 and offerings in the low-60s.

"The credit agreement just gives them the ability to assuage its customers," he said.

Another trader quoted the issue at 59 bid, 59½ offered, though there was "not huge size" trading.

However, the trader speculated that Friday's session could see an uptick in activity in the credit. He noted that cement aggregator Reardon Holdings had brought a new euro-dollar deal on Thursday, with a 7 7/8% coupon. The paper was "trading healthy" around par 3/4, he said.

"It's not the same business, but it makes me think those RMIX will trade above the 60 level [on Friday]," he said.

Amended credit facility

U.S. Concrete's amendment to its credit facility allows the company access to $18.5 million in short-term liquidity. The amendment lowered the springing fixed-charge coverage ratio availability trigger to $1.5 million from $20 million.

The trigger will increase to $25 million on April 30 or immediately prior to its paying the coupon on its bonds, whichever occurs first.

Additionally, the company said it had received a commitment for a debtor-in-possession credit facility should its restructuring be implemented through the courts.

"The amendment to our senior credit facility provides us with a significant increase in near-term liquidity," said Michael W. Harlan, president and chief executive officer, in a press release. "Access to these funds should provide assurance to our customers, vendors and employees that we have adequate resources to operate our business while we complete our restructuring plan.

"I believe that the positive discussions we have had with our bond holders to date, combined with the amendment of our senior credit facility, are good indications that we are moving towards a successful restructuring," he added.

"U.S. Concrete apparently is close to making a deal with bondholders that its banks will approve," wrote Gimme Credit analyst Vicki Bryan in an afternoon note. "Recall that RMIX is engaged in do-or-die conversations with its bondholders to address its unsustainable debt load - predominantly the $272 million outstanding in bonds."

Bryan noted that it was "not likely" that the company would make its interest payment on the notes, but that its "chances for survival are improved - though not assured - if it can eliminate the $23 million it owes in annual bond interest."

Harrah's heads up

Like MGM Mirage on Wednesday, Harrah's Entertainment's debt gained ground during Thursday's session, on no news.

A trader saw about $25 million of the 10% notes due 2018 trading at 82½ bid, 83½ offered.

"That's definitely up a little bit," he said.

The trader also saw the 11¼% notes due 2017 in the "107 range," on $13 million to $14 million traded.

The trader also saw the 5 5/8% notes due 2015 at 651/2.

Harrah's Entertainment is a Las Vegas-based casino operator.

Lyondell CAM, new issue still strong

LyondellBasell Industries' pre-petition CAM was stronger on Thursday as the market in general felt better, according to a trader.

The CAM was quoted at 75 bid, 76 offered, up from 73¾ bid, 74¾ offered, the trader said.

On Wednesday the CAM had a positive day as well, moving up from 73 bid, 74 offered with news of court approval of the exit financing at its subsidiary, Lyondell Chemical Co., and pricing of the company's upsized bond offering.

Also on Thursday, Lyondell Chemical came out with some new changes to its $500 million six-year senior secured term loan B (Ba3), with this round focusing on the pricing of the deal, according to a market source.

Under the revisions, pricing on the term loan was reduced to Libor plus 400 bps from Libor plus 425 bps and the Libor floor was lowered to 1.5% from 2%, the source said, adding that original issue discount was left unchanged at 99.

Recommitments are due from lenders on Friday at 4:00 p.m. ET.

In the first round of changes, which took place earlier this week, the term loan B had been cut in half from $1 billion as the company's bond offering was increased to $2.75 billion from $2.25 billion. Also, the financial covenants - that included a maximum first-lien leverage ratio and a minimum interest coverage ratio - were eliminated.

Lyondell Chemical is presently anticipated to allocate and free up for trading its term loan B on Monday, the source remarked.

The company's $2.25 billion credit facility also includes a $1.75 billion ABL revolver.

Joint bookrunners on the term loan B are UBS, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan, Morgan Stanley and Wells Fargo, with UBS the left lead. Citigroup is the left lead on the ABL revolver.

Proceeds from credit facility, the new senior secured notes, a new European securitization facility and a $2.8 billion rights offering will be used to repay and replace existing debt when the company exits bankruptcy.

The notes comprise a $2.25 billion dollar tranche and a €375 million euro tranche, and priced on Wednesday at par to yield 8%.

The bonds quickly moved past their pricing levels during Wednesday trading to around 102. On Thursday, traders pegged the bonds in the neighborhood of 103.

Lyondell is a U.S. subsidiary of LyondellBasell Industries AF SCA, a Netherlands-based polymer, petrochemicals and fuels company.

MGM loan regains ground

Metro-Goldwyn-Mayer Inc.'s (MGM Studios) term loan gained some ground in trading after taking a noticeable hit during the prior day's activity, according to a trader.

The term loan was quoted at 48 bid, 49 offered, up from 47¾ bid, 48¾ offered, the trader said, explaining that the momentum was likely due to the positive tone in the market.

On Wednesday, however, the paper dropped from around the 50¼ bid, 51¼ offered context as the company held a lender call to discuss an extension of its forbearance agreement related to missed interest payments on its credit facility.

MGM Studios is a Los Angeles-based motion picture, television, home video and theatrical production and distribution company.

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