Nortel pops as company makes deal on interest payout; Visant plans refinancing, bonds rise

By Stephanie N. Rotondo

Phoenix, July 25 – Nortel Networks Corp. was taking focus in the distressed debt space Friday, following news out late Thursday regarding interest allocations for U.S. bondholders.

Traders reported that the company’s Nortel Networks Inc. debt jumped 4 to 5 points in after-market dealings on Thursday. Come Friday, the name stayed active and the bonds inched up slightly more.

Nortel said late Thursday that its U.S. unit, Nortel Networks Inc., had agreed to pay just over $1 billion in interest owed to bondholders owning about $3.9 billion of debt.

If approved by the U.S. bankruptcy court overseeing the case, the deal could irk retirees in Canada and the United Kingdom, who claim that U.S. holders should get no more than $90 million in accrued interest, or none at all.

Under the terms of the deal, the bondholders will receive $876 million of accrued interest. That amount could increase to $1.01 billion if Nortel has not made the payout by June 30.

Meanwhile, Visant Corp. saw its bonds improving as the company announced a refinancing effort.

The maker of class rings and other memorabilia has been selling assets and forming strategic partnerships of late as it works to improve its bottom line.

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