Petroplus bonds up as company looks to sell assets; Kodak notes firm; Sears paper gains

By Stephanie N. Rotondo

Portland, Ore., Jan. 20 - Distressed bonds closed out the week on a positive note, according to traders.

Petroplus Holdings AG was moving up on news the European oil refiner was looking to unload three of its idled refineries. The company also said it was looking into "strategic alternatives" for two of its other refineries. As a result, the bonds traded up 3 to 5 points on the day, a trader said.

Eastman Kodak Co. was also climbing higher, just one day after the company announced it had filed for Chapter 11 protections. A trader speculated the gains were based on potential recovery models for the debt.

And, Sears Holdings Corp. continued its climb into higher territory. The bonds had popped on Thursday on news that CIT Group Inc. was beginning to offer financing to the retailer's vendors again, after halting such loans earlier in the week.

While the rest of the market was down, Dynegy Holdings LLC's debt was on the decline, losing as much as 4 points. The losses came as the company filed a new plan of reorganization that could provide more relief to junior creditors.

Petroplus pops on asset sales

Petroplus' bonds were "all higher," a trader said, after the company said it was seeking buyers for one of its idled refineries in Europe.

Still, the trader noted that there were more quotes than trades, seeing all the issues - which tend to trade within a point or two of each other - bid for in the low-50s. The 6¾% notes due 2014, for instance, were pegged at 53 bid.

The trader called that up 3 to 5 points on the day.

Another trader also saw paper trading in the low-50s, "depending upon which flavor you're talking about."

The Zug, Switzerland-based company has begun looking for buyers for its refinery in Petit-Couronne, France. Petroplus is also considering selling of its mills in Antwerp, Belgium, and Cressier, Switzerland.

The potential sales come as the company attempts to unfreeze its credit lines from lenders, which were frozen in late December. Earlier in the week, the company was able to ink a temporary deal with its banks, but that was set to expire Friday.

Without access to those funds, the company could be forced to file for bankruptcy.

Kodak trades better

Eastman Kodak's 7¼% notes due 2013 were also faring better, according to traders.

One trader saw the bonds trading as high as 38½ on Friday, compared to 29¾ at the open.

"There's some discussion [going on] about what the bonds will be worth in a reorganization," he said.

Another trader said the issue was "better," placing it around 30.

A third source called the notes a point higher at 30¼ bid.

The bonds are trading flat, or without accrued interest.

On Thursday, the Rochester, N.Y.-based photo imaging technology company said it was filing for bankruptcy in an effort to "bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities and enable the company to focus on its most valuable business lines."

Citigroup has provided a $950 million 18-month debtor-in-possession facility "to enhance liquidity and working capital," Kodak said in a statement. "The company believes it has sufficient liquidity to operate its business during Chapter 11 and to continue the flow of goods and services to its customers in the ordinary course."

Kodak was granted approval to access $650 million of the DIP loan on Friday. The company was also given until 2013 to file a plan of reorganization.

Sears' gains continue

News that CIT Group was again opening the flow of financing to vendors of Sears Holdings continued to help the Hoffman Estates, Ill-based retailer's bonds improve.

"They've been inching up the last couple days," a trader said, calling the 6 5/8% notes due 2018 up about a point to 84.

Another trader said the issue "continued to tick up," closing around 84.

On Thursday, news outlets reported that CIT was going to begin lending to vendors again. Last week, it was reported that CIT was halting such loans to vendors. Though the lender has agreed to provide financing, it is also looking for more detailed information about Sears' finances and may require letters of credit for any and all orders.

Rumors have been circulating recently that the company's chairman, Eddie Lampert, is considering taking the company private. Last month, the struggling Hoffman Estates, Ill.-based retailer said it intended to shutter 120 underperforming stores in an effort to bolster its balance sheet.

Dynegy powering down

A trader said Dynegy Holdings' debt was "definitely heavier" on Friday.

He quoted the 8 3/8% notes due 2016 at 56½ bid, 57 offered, down from previous levels in the high-50s.

Another trader saw the issue falling about 4 points to 561/2, with at least $10 million bonds changing hands.

Late Thursday, Dynegy filed a new plan of reorganization that increases the recovery amounts given to junior bondholders. Holders will now receive $400 million in cash and $2.1 billion in new convertible preferred stock. Holders will also get new senior notes, and Dynegy upped the total amount to $1.015 billion.

Additionally, subordinated noteholders can claim 35 cents on the dollar for their holdings, up from 25 cents on the dollar previously.

Bondholders could also see the recovery levels go up again if it is determined that certain leases should be up for grabs. The leases in question were diverted from the company and placed in holding companies late last year as part of a restructuring effort. The bondholders have sued the company, alleging that the action stripped them of assets.

Elsewhere in the power sector, Edison International Inc.'s 7% notes due 2017 were weaker, a trader said. He called the notes down a couple of points at 53 bid, 53½ offered.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.