Softer marketplace pressures Caesars, Clear Channel, Dynegy; Reddy Ice active as filing looms

By Stephanie N. Rotondo

Portland, Ore., April 10 - The distressed debt market was again softer on Tuesday, following the trend set by the broader marketplace.

"In general, things were just down with the market," a trader said.

The weaker tone of the day pushed names such as Caesars Entertainment Corp., Clear Channel Communications Inc. and Dynegy Holdings LLC down on no specific news.

But among recently topical names, Reddy Ice Corp.'s debt remained "on the active side," a trader said. Paper continued to move around a bit as the market awaited a rumored bankruptcy filing.

On the bank debt side of things, Hawker Beechcraft Acquisition Co.'s strip of institutional debt continued to lose altitude in Tuesday trading.

Market tone weighs on bonds

The weakness that pervaded the equity markets seeped into the distressed realm again on Tuesday, traders reported.

"Things were lower," one trader said.

Caesars Entertainment's 10% notes due 2018, for example, dropped as much as 3 points, a trader said, pegging the notes at 72.

Another market source called the issue down nearly a deuce at 73¾ bid.

The first trader also saw Clear Channel Communications' 6 7/8% notes due 2018 down 3 points at 53. Another trader placed the 10¾% notes due 2016 around the 72 mark.

Even Dynegy was on the decline, according to sources.

At one desk, the 7¾% notes due 2019 were seen falling over a point to 621/2. Another source deemed the 8 3/8% notes due 2016 down a point to 63.

In other distressed credits, a trader said Bon-Ton Stores Inc.'s 10¼% notes due 2014 were "down a couple" at 84.

Meanwhile, another trader saw Exide Technologies Inc.'s 8 5/8% notes due 2018 "continue to leak," slipping down to 801/2.

And, ATP Oil & Gas Corp.'s 11 5/8% notes due 2015 hit a low of 70 by the end of the day, the trader said.

Reddy Ice stays busy

A trader said Reddy Ice's bonds were "on the active side," as the market waits to see if the company will in fact file for Chapter 11 protections this week.

The trader called the 13¼% notes due 2015 steady at 11 bid, 13 offered and saw the 11¼% notes due 2015 trading in a range of 85 to 87.

A second trader called the 11¼% notes down 3 points on the day at 873/4, but said the 13¼% notes due "for the most part unchanged or maybe up a little" around 13.

As previously reported, a trader said the bonds began trading flat on Monday.

On Thursday, it was reported that Dallas-based Reddy ice was in the final stages of preparing a Chapter 11 filing and rumors have been circulating that the company has made a consensual reorganization plan with Centerbridge Partners, its largest creditor.

The company currently has about $450 million in debt. Last week, both Moody's Investors Service and Standard & Poor's downgraded the business, citing an overleveraged balance sheet.

Hawker loan remains weak

Hawker Beechcraft's strip of institutional bank debt has now dropped to 64½ bid, 66½ offered from 65 bid, 67 offered, according to a trader. Over the course of the last week and a half, the debt has seen a roughly 10-point decline.

Pressure on the debt has been attributed to ratings downgrades, a missed 10-K filing deadline, skipped April 2 interest payments on notes, news of expected 2011 losses from operations of roughly $481.8 million and deferred loan interest payments.

As previously reported, the company has reached a forbearance agreement through June 29 with about 70% of credit facility lenders to defer the interest payments and get covenant relief, and has obtained a new $124.5 million senior term loan due June 29 to fund ongoing operations.

Hawker Beechcraft is a Wichita, Kan.-based manufacturer of business, special mission, light attack and trainer aircraft.

Sara Rosenberg contributed to this article

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