Bon-Ton bonds weaken again; Clear Channel earnings disappoint, debt tumbles; PDVSA notes slip

By Stephanie N. Rotondo

Portland, Ore., May 4 - The distressed debt market ended Friday's session with a weaker tone, according to traders.

On the downside were Bon-Ton Stores Inc.'s bonds, as investors continued to react to a dismal April sales report that came out Thursday. One trader noted that paper had started to rally a bit early on in the day, but faded by the close of business.

Also weaker were Clear Channel Communications Inc.'s notes. The debt was down about 3 points across the board following the multimedia company's earnings release.

The bright spot of the day was Hawker Beechcraft Acquisition Co. LLC. Paper had begun trading higher on Thursday after the company announced that it had inked a deal with senior lenders and bondholders in which it would file for bankruptcy protections.

Bon-Ton bonds pressured again

Bon-Ton Stores' 10¼% notes due 2014 "started to weaken up again," a trader said.

He called the issue down nearly a point at 77 1/8, with at least $31 million bonds changing hands.

Another trader said that the notes had traded as high as 78½ early on in the session, before falling back down to end around 77.

On Thursday, the York, Pa.-based retailer reported its April sales. For the four weeks ended April 28, total sales dropped 5.3% to $187.2 million. For the first quarter, same-store sales dipped 1.3%, with total sales falling 1.4% to $640.8 million.

The company said the sales results "did not meet our expectations," according to a press release.

Full first-quarter results will be reported later this month.

Clear Channel takes hit

Clear Channel Communications' parent company, CC Media Holdings Inc., posted a wider first-quarter loss Friday, due in part to lagging European revenues.

A trader saw the bonds falling at least 3 points on the earnings release, seeing the 11% notes due 2016 down nearly 4 points at 69½ and the 10¾% notes due 2016 down 3½ points at 71.

Another trader said paper was "lower by a few points," pegging the 11% notes at 69½ bid, 70 offered and the 10¾% notes in a 71 to 71½ context.

For the quarter, CC Media reported a net loss of $143.6 million, versus a loss of $131.8 million the year before. Revenues, however, were up 3% at $1.36 billion.

Operating expenses increased 8.6% to $1.03 billion and debt-related costs gained 1.2% to $374 million.

Clear Channel Outdoor Holdings Inc. also reported Friday. The billboard advertising unit saw a loss of $43.9 million, or 14 cents per share. That compared to a los of $9.5 million, or 3 cents per share, the year before.

Revenues were flat at $651.3 million, with international revenue dipping 2.5% to $371.1 million. The company warned that a lagging European economy would likely also impact second-quarter results.

Americas revenues rose 3.9% to $280.2 million.

Clear Channel is a San Antonio-based multimedia company.

PDVSA loses ground

Despite a gain in the price of Venezuelan crude oil, Petroleos de Venezuela SA debt was on the decline, according to a trader.

The 9% notes due 2021 were the "top volume trader," with about $42 million bonds trading. The trader called the notes down 'a couple points" at 82.

The 8½% notes due 2017 meantime fell a point to 90 3/8, on about $30 million traded.

Venezuela's Ministry of Energy and Petroleum said that crude produced at the state-owned oil company rose in price for the week ending May 4 to $114.03.

The oil had sold for $113.89 the previous week.

Hawker flies up

Hawker Beechcraft paper continued to gain altitude Friday as investors reacted to news of a prepackaged bankruptcy filing.

The 8 7/8% and 8½% notes due 2015 were seen up 3¼ points at 191/4, by a trader.

"That's pretty big at that price," he said, adding that the name was one of the day's biggest price movers.

Another trader said the debt was higher, trading with a 19 handle.

On Thursday, the Wichita, Kan.-based aircraft manufacturer and reseller announced that it had officially filed for bankruptcy.

The filing was based on a deal with senior secured lenders and senior bondholders, in which the company will be able to eliminate $2.5 billion in debt and about $125 million in annual interest expense.

Under the agreement certain lenders have also agreed to provide $400 million in debtor-in-possession financing.

Sprint, Travelport gain

Elsewhere in the distressed space, Sprint Nextel Corp.'s 8¾% notes due 2032 were up nearly half a point to 861/4, according to a trader.

Another trader said Travelport LLC paper was "ticking up a little bit more," placing the 9 7/8% notes due 2014 at 681/2.

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