Realogy plans new issue, debt climbs up; Kodak revises DIP, bonds decline; Bon-Ton gains again

By Stephanie N. Rotondo

Portland, Ore., Jan. 25 - The distressed debt arena was generally firmer on Wednesday, following an uptick in the equity markets.

Realogy Corp. paper was trending upward after the company announced a two-tranche debt sale. The company will sell $918 million of new notes, with proceeds going toward paying down bank debt.

Meanwhile, Eastman Kodak Co. was slipping a bit after the bankrupt company tweaked pricing on its debtor-in-possession loan.

Bon-Ton Stores Inc., however, continued to gain strength. The bonds had begun rallying on Tuesday on news the retailer had hired a new chief executive officer.

Among other retailers, Sears Holdings Corp. was again moving downward. One trader opined that the losses were due to news of more layoffs, this time at Sears' Canadian unit.

Realogy boosted on new issue

Realogy announced a new $918 million debt issue in two tranches, the proceeds of which would be used to pay down bank borrowings.

The news gave the bank debt a boost, as well as the bonds.

One bond trader said the 11½% notes due 2017 were up 4 points to 941/2, in "pretty active" dealings. The 12% notes due 2017 were deemed up 10 to 13 points at 95, but on only a single trade.

At another desk, a trader pegged the 11½% notes at 95 and the 7 7/8% notes due 2019 at 96.

In the bank debt, the extended strip was quoted at 93½ bid, 94 offered, up from 90¼ bid, 91¼ offered on the open and 90½ bid, 91½ offered in the previous session, and the second-lien loan was quoted at 102¾ bid, 103¾ offered, up from 101¾ bid, 102¾ on the open and 102¼ bid, 103¼ offered on Tuesday, the trader said.

Specifically, proceeds from the notes - split between $593 million of senior secured first-lien debt and $325 million of senior secured half-lien debt - will be used to pay down $629 million of first-lien term loans due in October 2013, all $133 million drawn under the non-extended revolver due in April 2013, and $156 million drawn under the extended revolver due in April 2016.

In conjunction with the revolver repayment, the Parsippany, N.J.-based provider of real estate and relocation services will reduced its revolver size by the equivalent amount.

Kodak falls, DIP tweaked

Eastman Kodak's debt was "a touch weaker," a trader said, as the company revised pricing on its DIP.

The trader quoted the 7¼% notes due 2013 at 27 bid, 27½ offered.

Another trader said the paper was "down a bit" around 27.

Eastman Kodak moved the original issue discount on it $700 million term loan to 98, compared with talk at launch of 97 to 97½ and early guidance of 97, according to a market source.

Pricing on the loan remained at Libor plus 750 bps with a 1% Libor floor, which is where it launched on Monday but considerably tighter than the early guidance of Libor plus 850 bps with a 1.5% Libor floor that began circulating last week.

The company's $950 million 18-month debtor-in-possession credit facility also includes a $250 million revolver priced at Libor plus 325 bps.

Citigroup Global Markets Inc. is the lead bank on the deal that will be used to enhance liquidity and working capital.

Kodak, a Rochester, N.Y.-based provider of imaging technology products and services to the photographic and graphic communications markets, expects to exit Chapter 11 in 2013.

Bon-Ton rises again

Bon-Ton Stores' 10¼% notes due 2014 "continued to climb," according to a trader.

He said the bonds were trading "pretty active" and "close to 60."

Another trader also saw the paper straddling 60.

The debt started to gain momentum on Tuesday, on word the York, Pa.-based retailer had hired Brendan L. Hoffman as its president and CEO, effective Feb. 7.

Hoffman previously worked at Lord & Taylor LLC and at Neiman Marcus Direct.

Sears slips, jobs cut

Elsewhere in the retail space, Sears Holdings' 6 5/8% notes due 2018 were weaker following news the company's Canadian unit was laying off about 400 workers.

A trader placed the issue at 82, down from 85. Other traders also pegged the notes around the 82 mark.

Sears Canada said it would cut about 400 jobs in its Canadian unit, mostly in its cafes, as well as support staff and head office personnel.

Support staff and office personnel will be cut immediately.

Additionally, Sears is shuttering all of its cafes - except for two, located at flagship stores - within the next two weeks.

Sears is a retailer based in Hoffman Estates, Ill.

Broad market strengthens

Among other distressed credits, Petroplus Holdings AG's debt - which is trading flat, or without accrued interest, and is also trading in line with one another - were "quoted lower" early in the session, a trader said.

But he said the bonds then "started to catch a bid," ending up n the mid-30s.

There was meantime "not much" going on in Mohegan Tribal Gaming Authority's debt, despite news the casino operator was launching an exchange offer for five series of notes.

A trader placed the 6 1/8% notes due 2013 at 83 - "kind of unchanged" - and the 8% notes due 2012 at 82.

Another trader said NewPage Corp.'s 11 3/8% first-lien notes due 2014 were stronger, trading around 68.

He also said Lehman Brothers Holdings Inc.'s notes were up again, trading around 271/2.

Buyers were also starting to come out for Ahern Rentals Inc.'s 9¼% notes due 2013. He remarked that he was seeing "34-ish" bids for paper, compared with bids around 30 previously.

Sara Rosenberg contributed to this article

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