Kodak holds steady despite another bout of bankruptcy fears; Bon-Ton paper heads lower

By Stephanie N. Rotondo

Portland, Ore., Jan. 13 - The distressed debt market "tried to hang in there," a trader said Friday, "but some bids were definitely getting hit."

Volumes were also on the subdued side, as the stock market was weakening and investors were more focused on the flow of new issues.

Eastman Kodak Co. paper managed to "hang in there" even as news outlets reported that the company was still considering a bankruptcy filing. Traders said activity in the name was thin and bonds were mostly unchanged.

In the retail space, Bon-Ton Stores Inc. continued to weaken, though on no fresh news.

Meanwhile, a trader commented that there was "no follow through" in AMR Corp. paper, just one day after it was reported that Delta Air Lines, U.S. Airways and TPG Capital were considering making a bid for the bankrupt parent company of American Airlines.

Kodak holds its ground

Eastman Kodak paper was unchanged on the day, despite news the company is still considering a bankruptcy filing after its much-lauded restructuring plan was announced earlier in the week.

"It doesn't really trade," one trader said, seeing the 9¾% notes due 2018 steady at around 80.

Another trader said the 7¼% notes due 2013 were hanging around 30.

"They're leaking a little bit, but there's not enough volume" to really tell, he said.

In a Bloomberg article, sources familiar with the matter were cited as saying that the Rochester, N.Y.-based company was in talks with Citigroup Inc. on a potential bankruptcy filing. The filing could come within a matter of weeks, the article said, and the company would then auction off its digital-imaging patents.

The company in a press release Tuesday said it was reducing its business segments to two from three in an effort to "increase productivity, reduce cost and accelerate its transformation into a digital company that delivers sustainable profitability and creates value for its stakeholders."

Bon-Ton losses mount up

Bon-Ton Stores' 10¼% notes due 2014 "have really been taking it on the chin," a trader said.

He called the notes "down another couple [points]" at 53 bid, 54 offered. The paper had lost at least 4 points in the previous session and has been slowly creeping down all week.

There hasn't been any fresh news out on the York, Pa.-based retailer since the company released its same-store sales report for the fourth quarter.

Among other retailers, Rite Aid Corp.'s 8 5/8% notes due 2015 dropped a point to 97 bid, according to a market source.

No-go in AMR

A trader said there was "no follow through" in AMR bonds just one day after it was reported that Delta, U.S. Airways and private equity firm TPG Capital were considering making bids for the bankrupt airline.

"There's not really any trading in it," the trader said, seeing unsecured issues - such as the 6¼% notes due 2014 - around 23.

Another trader said he saw a few levels but "no huge volume" in AMR bonds.

He said that his shop had been watching American's 10½% notes slated to come due in October "a lot," but he saw them up only slightly - perhaps one-eighth point, while its 13% notes due 2016 were down a half-point at 10¼ bid.

He also saw the company's 8 5/8% notes due 2021 up one-eighth at 106 7/8 bid.

AMR is the Fort Worth, Texas-based parent company of American Airlines.

Ahern, NewPage, RBS firm

Elsewhere in the distressed debt arena, a trader said Ahern Rentals Inc.'s 9¼% notes due 2013 were "slowly creeping up," pegging the issue near 30.

NewPage Corp.'s 11 3/8% first-lien notes due 2014 meantime inched up slightly to 661/4, the trader said.

At another shop, a trader said Royal Bank of Scotland Group plc's 4.709% notes due 2049 were rising 4½ points to 571/2.

Paul Deckelman contributed to this article

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