Distressed space fares well; coal sector ends mixed; Caesars stays busy; TXU debt ticking down

By Stephanie N. Rotondo

Phoenix, Feb. 11 - Distressed debt was generally firm Tuesday, led by the broader market as it reacted positively to Janet Yellen's testimony in front of Congress.

Yellen, the new Federal Reserve chairman, said that the central bank would maintain its stimulus tapering policy, but noted that the labor market still had a ways to go before being considered fully recovered.

As for specific goings-on, the coal sector finished the day mixed. Walter Energy Inc. saw its bonds dipping, while Arch Coal Inc. and Alpha Natural Resources Inc. pushed higher.

For its part, Caesars Entertainment Corp. debt was unchanged to better on the day, just one day after the company said it had hired restructuring advisors.

Though the company copped to putting the advisors on the payroll, it maintained that a bankruptcy filing was not imminent.

Energy Future Holdings' was meantime softening a bit as reports surfaced that the company was searching for bankruptcy financing.

Coal sector mixed

A trader saw Walter Energy bonds losing ground in Tuesday trading.

He pegged the 8½% notes due 2021 at 68, "down 2 points from their high earlier in the day." The 9 7/8% notes due 2020 ended down 1½ points at 711/2, he said.

Arch Coal meantime put on about half a point, the 7% notes due 2019 closing at 773/4.

Arch Coal raised $21 million from the sale of its ADDCAR Systems unit, the company said in a press release Monday.

St. Louis-based Arch sold the Kentucky-based manufacturer of cascading conveyor cars to Australia's UGM Holdings Pty. Ltd. The purchase price will be paid out in three installments throughout the year.

Sector peer Alpha Natural was also on the rise, its 6¼% notes due 2021 inching up almost a point to 81 bid.

The company is slated to release earnings on Wednesday.

And, James River Coal Co.'s 7 7/8% notes due 2019 were called unchanged, trading around 18.

Caesars on the move

Caesars' debt was unchanged to "a little better," depending on whom you asked.

One trader said the 10% notes due 2018 were steady at 491/4. Another trader called the issue up, quoting it at 49½ bid, 49 ¾ offered.

On Monday, The Wall Street Journal reported that the Las Vegas-based hotel and casino operator had hired Lazard Ltd. as a restructuring advisor. Despite trying a number of different strategies to improve its balance sheet, the company has been unable to get ahead of its about $24 billion of debt, especially as revenues have declined. Most analysts have deemed the company's debt structure unsustainable at current levels.

Caesars was taken private in 2008 by private equity firms Apollo Global Management LLC and TPG Capital.

TXU lining up financing

Dallas-based power producer Energy Future - or TXU, as it is more commonly referred to - saw its debt slipping a touch as news came out alleging the company was on the search for bankruptcy financing.

A trader called the 10% notes due 2020 off slightly at 1051/4.

TXU is currently laboring under nearly $46 billion of debt - a fair bit of that amount came from the company's 2007 leveraged buyout. It is believed that the parent company will try to stay out of bankruptcy itself, instead putting one or more of its underperforming subsidiaries under Chapter 11 protections.

Verso extends tender date

Verso Paper Corp. extended a previously announced exchange offer Tuesday in response to tepid participation.

A trader said the 8¾% notes due 2019 were "up almost 2 points from their last trade a week ago" at 551/2. The 11 3/8% notes due 2016 were meantime "pretty much unchanged" at 65.

Both issues are the subject of the exchange offer, which is being done in connection with a planned merger between Verso and NewPage Corp. Verso needs to get at least 85% of participation from both issues in the exchange in order for the merger to go through. Because participation has not been as robust as hoped, Verso extended the deadline to 5 p.m. ET on Feb. 14 from midnight ET on Monday.

However, Verso also expressed concern that the exchange offer might not yield the needed results.

"In light of substantially less participation by the early tender time as compared to the minimum participation thresholds, and based on the large disparity between what a group of non-participating noteholders has requested and what Verso is able to offer under the merger agreement governing the pending merger, Verso is concerned about its ability to consummate the exchange offers as required under the merger agreement," the papermaker wrote in a letter to NewPage. That letter was also filed with the Securities and Exchange Commission.

YRC amends planned credit facility

YRC Worldwide Inc. flexed pricing higher on its $700 million five-year senior secured term loan (Ba3/CCC+) to Libor plus 700 bps from Libor plus 675 bps and changed the soft call protection to 102 in year one and 101 in year two from just 101 for one year, according to a market source.

As before, the term loan has a 1% Libor floor and an original issue discount of 99.

Recommitments were due at noon ET on Tuesday and allocations are expected on Wednesday.

The company's $1.15 billion credit facility also includes a $450 million ABL revolver.

Credit Suisse Securities (USA) LLC and RBS Citizens are leading the deal that will be used to refinance existing bank debt.

YRC is an Overland Park, Kan.-based less-than-truckload carrier.

Sara Rosenberg contributed to this article

© 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.