Bon-Ton bonds rising; ATP active, but ResCap activity trails off; Petroplus off after meeting

By Paul Deckelman

New York, March 12 - Amid a generally lackluster trading session in the high-yield market generally, and in the distressed-debt component thereof, Bon-Ton Stores Inc.'s bonds were seen better in active trading on Monday, as the retailer continues to ride the wave of momentum generated by last week's release of sales data for February.

Another active issue was ATP Oil & Gas Corp., whose bonds have been on a tear recently, helped by the offshore energy exploration and production company's recent oil strike at one of its Gulf of Mexico wells.

But an energy name seen on the downside Monday was Petroplus Finance Ltd. after the troubled Swiss refining company held a meeting and conference call with bondholders to update them on its possible options for going forward.

Activity slacked off in Residential Capital LLC bonds, along with those of its Ally Financial Inc. corporate parent. Both companies' bonds rose on Friday amid news reports that Ally may have lined up a buyer for the money-losing mortgage company.

And market buzz that educational services provider Cengage Learning Acquisitions Inc. is working with its lenders on amending and extending its credit facility was seen by traders giving its bonds a lift on Monday.

Bon-Ton keeps getting better

"Bon-Ton continues to move up in the retailing space," trading with an 80 handle on Monday, a trader said.

"That one continues to move up," the trader added.

It was the latest milestone for the York, Pa.-based department-store operator's 10¼% notes due 2014, which saw nearly $10 million of turnover on Monday, at levels as high as 81½ bid.

A market source pegged them going out at 80 5/8, calling that a nearly 41/2-point jump.

That continued the strong momentum seen last week when the bonds firmed smartly over several days.

The bonds firmed from the mid-60s into the mid-70s after the company said that for the four weeks ending Feb. 25, it saw a 0.7% increase in same-store sales in stores open at least one year. This is considered the key retailing industry performance metric.

Its total sales came to $199.4 million, up nearly 1% year-over-year.

The company also ended the month with $453 million available under its credit facility.

ATP active at higher levels

Among specific names, a trader said that ATP Oil & Gas's 11 7/8% second-lien senior secured notes due 2015 were still up today, seeing the Houston-based offshore energy exploration and production company's notes trading around 73 bid.

"They seemed pretty active today, with a 73 handle most of the time," the trader said. "There were a couple of trades lower and some odd-lot trades higher."

A second trader saw the bonds trading between 73-74, or maybe 721/2-731/2.

More than $20 million of the bonds changed hands on Monday at levels as high as 74, putting ATP far up on the junk market's most-actives list.

On Friday, ATP was the most actively traded junk issue of the session, with volume of more than $44 million recorded, including over $33 million of round-lot transactions.

Those bonds rose 4 points on Friday to close in the low- to mid-70s area. That continued the momentum seen the previous week when they jumped from around the 60 level up to the high-60s over several sessions on news that one of its Gulf of Mexico wells had indeed struck oil, and the company's subsequent announcement that the newly active well could yield as much as 7,000 barrels per day of oil and equivalents.

Petroplus gets pounded

Elsewhere in the energy sphere, a trader said that Petroplus Finance's 9 3/8% notes due 2019 were off by a couple of points, down to the mid-30s.

A trader cited news that the Zug, Switzerland-based petroleum refiner held a conference call with bondholders to update them on the company's possible restructuring options.

"Obviously, what was coming out of that was not promising," the trader said.

Petroplus, which slid into bankruptcy in January after being battered by tight margins, volatile oil markets, high crude prices and tightened credit standards, was forced to close its several refineries in Switzerland, France, Germany and England. It also was forced to seek buyers for some or all of those facilities.

British unit Petroplus Refining & Marketing Ltd.'s court-appointed joint administrators were scheduled to hold a noteholders' meeting and information call on Monday to update the investors on the status of the company's restructuring.

At the meeting, they were expected to outline the options for the company and consequences for creditors, and factors that are key to any possible restructuring.

ResCap relaxes after rise

Back in the domestic market, traders said that there was considerably less activity Monday in the bonds of Ally Financial Inc. and its money-losing Residential Capital mortgage unit, both of which had traded actively on Friday as news outlets reported that Ally had potentially hooked Fortress Investment Group LLC as a buyer for the unit.

A trader said that he saw "a bunch" of Ally paper trade.

"Ally paper rallied a good amount on Friday. It was quiet today, ResCap as well," a second trader said.

Another trader agreed that "even Res Cap was pretty quiet."

He noted that on Friday, the Minneapolis-based mortgage company's 9 5/8% notes due 2015 were down, but then it came back.

On Monday, the trader said the notes notched a couple of trades around the 81 level.

"They had traded into the high-70s for a brief moment on Friday, then it seems like paper traded right back up," he said, on Monday to around 81-82.

But activity levels were off from Friday's pace.

According to news reports that circulated Friday, ResCap would likely be sold as part of a prepackaged bankruptcy plan.

Currently, there are 22 mortgage-linked securities lawsuits facing the unit, which dragged down Ally's bottom line.

If Detroit-based Ally - the former GMAC LLC - were to keep the unit, it also would have to deal with $2.4 billion in maturing debt over the next three years.

Cengage climbs on loan talk

A trader called Cengage Learning Acquisitions' 10½% notes due 2015 better, gaining a point to 851/2-86 bid.

He cited "more chatter" in the market about the company amending and extending its current credit facility.

According to bank-debt market sources, the Stamford, Conn.-based provider of teaching, learning and research services for the academic, professional and library markets is scheduled to hold a lender call on Wednesday afternoon to launch an amendment and extension of its $300 million revolving credit facility and $3.897 billion of term loan B borrowings.

That term loan B debt is comprised of about $3.294 billion tranche due in 2014 that is priced at Libor plus 225 basis points and about $603 million incremental tranche due in 2014 that is priced at Libor plus 375 bps.

Market buzz is that the company is looking to extend the term loan B debt to July 2017 at pricing of Libor plus 500 bps, sources said.

And there is talk of a 30% paydown as well, the sources continued.

Lenders will be offered a 15 basis points extension fee and a 10 bps consent fee, sources added.

J.P. Morgan Securities LLC is the lead bank on the deal.

Last month, the company said at the J.P. Morgan High Yield & Leveraged Finance Conference that it was planning a credit facility amendment and extension transaction within two weeks so as to capitalize on the improved loan market conditions.

Stephanie N. Rotondo and Sara Rosenberg contributed to this report

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