Neiman, Bon-Ton firm on sales; Accuride mixed on bankruptcy filing; Clear Channel holds firm

By Stephanie N. Rotondo

Portland, Ore., Oct. 8 - There was "reasonable activity" in the distressed debt market Thursday, according to one trader, even as shops were gearing up for a long holiday weekend.

The trader said the overall market closed "flat to better," while another said the market was about half a point better.

"It seemed like a pretty slow day," the second trader said. Of the things that were trading, he said that the focus was "a few larger issues.

"There is more cash to be put to work, but there are less bonds available," he added.

Retailers were by and large firmer on the day, following the release of new September sales data. Neiman Marcus Group Inc. saw its debt - bonds and bank debt - moving higher, while Bon-Ton Stores Inc. also got a boost.

Elsewhere, Accuride Inc.'s bonds were reportedly better, though in thin trading, after the company said it had filed for Chapter 11 protections. However, its bank debt did not fare as well.

Clear Channel Communications Inc.'s notes held their ground, traders said, even as the company fights off rumors that it is considering restructuring possibilities. Sources said the debt closed steady to somewhat better.

Neiman, Bon-Ton firm on sales

Retailers like Neiman Marcus Group and Bon-Ton Stores saw their debt improve following the release of September sales reports.

Neiman's bonds "looked up a bit," a trader said, pegging the bonds generically at 87 bid, 87¼ offered. Another source saw the 10 3/8% notes due 2015 gaining a point to 87½ bid.

Neiman Marcus's term loan was also stronger bid on Thursday as the company announced September revenues, despite those results showing a year-over-year decline, according to traders.

The term loan was quoted by one trader at 86½ bid, 87½ offered, up a half a point on the day, and by a second trader at 86½ bid, 87 1/8 offered, up on the bid side from 86¼ bid, but down on the offer side from 87¼ offered.

For September, the company reported total revenues of $354 million, down 14.8% from $415 million in the comparable period last year.

Comparable revenues for the month were $344 million, down 16.9% from $414 million in the prior year.

In terms of liquidity, the Dallas-based company ended the month with about $330 million of cash and had no borrowings outstanding under its $600 million asset-based revolving credit facility.

Meanwhile, Bon-Ton reported sales that beat management's previous forecasts and, as a result, the 10¼% notes due 2014 moved up about a point, traders reported.

At one desk, a trader pegged the issue at 741/4, which he said was "up a little bit, but not on any real volume." He noted that the bonds have been 71¾ bid, 72 offered previously.

Another trader quoted the paper at 74 bid, 74½ offered, compared to levels around 72 on Wednesday.

For the five weeks ended Oct. 3, Bon-Ton's comparable-store sales dropped 4.8%. Total sales declined 5.5% to $282.9 million, compared to $299.4 million the year before.

"We are very pleased with our September sales results, which again exceeded our plan, and are encouraged by the improvement in our sales trend compared with the spring season," said Tony Buccina, vice chairman and president of merchandising, in the sales report release.

The York, Pa.-based company said it had about $169 million available under its revolver at the end of the five weeks.

Retailers overall experienced a better September, according to data released by Retail Metrics. U.S.-based chain stores open at least one year saw sales increase 1.1% for the month, the data showed.

Accuride mixed on bankruptcy

Accuride's bonds gained some ground, trader said, even as the company announced it had filed for bankruptcy.

A trader quoted the 8½% notes due 2015 at 61¼ bid, 61½ offered.

"There was only a couple million trading," he said. "They haven't traded in at least three weeks."

Another trader placed the notes around the 61 mark, noting that it was up from the last trade around 59.

"Maybe they have some value," he speculated.

The first trader added that it was only a small issue and opined that a few big name investors had the bulk of the debt.

"They probably own the lion's share of it," he said. "So I can see why there wouldn't be a ton of trading in it."

But Accuride's term loan moved lower in the secondary market following the news, according to traders.

The term loan was quoted by one trader at 97½ bid, 98½ offered, down from 98 bid, par offered, and by a second trader at 96 bid, 98¾ offered, down from 98 bid, 102 offered.

Under the proposed restructuring, the company will amend its existing credit facility to modify financial covenants and extend the maturity through June 30, 2013.

And, Accuride's 8½% senior subordinated notes will be cancelled. Noteholders will receive 98% of the common stock of the reorganized company, subject to dilution, including dilution for stock issued upon conversion of the new notes and warrants.

The company has secured a $50 million debtor-in-possession credit facility that will be provided by certain of its senior lenders and noteholders.

In addition, the reorganized Accuride will complete a $140 million rights offering of new senior unsecured convertible notes to current noteholders.

A portion of the proceeds from the rights offering will be used to repay the last-out term loan currently held by an affiliate of Sun Capital Partners, with the remainder to provide ongoing liquidity.

"Accuride's debt restructuring efforts are designed to create a sustainable capital structure that will support greater profitability and solidify the company's position as the market leader in its product categories," said Bill Lasky, president, chief executive officer and chairman of the board, in a news release.

"Accuride expects to quickly emerge from Chapter 11 having rationalized its capital structure and de-levered its balance sheet. I believe this restructuring transaction maximizes our financial flexibility and positions Accuride for future growth," Lasky added.

Standard & Poor's cut its rating on Accuride to D on the announcement.

Accuride is an Evansville, Ind.-based manufacturer and supplier of commercial vehicle components.

Clear Channel holding its ground

Clear Channel Communications' notes were "not much different" to "up a little," according to traders, as the company fights off rumors of a restructuring.

A trader said about $20 million of the 10¾% notes due 2016 traded at 551/2, while some "$10-odd million" of the 11% notes due 2016 traded with a 37 handle.

"They are both up a little bit," he said.

Another trader saw the 10¾% notes at 54 bid, 55 offered, compared to 53 bid, 54 offered the day before. The 11% notes ended up half a point, he said, at 36 bid, 37 offered.

Earlier in the week, reports started circulating that some of Clear Channel's private equity owners had been making the rounds at the big banks in an effort to stall a potential default on the company's loans by year-end. But the company and its owners later refuted the rumors, stating that there are no plans to restructure at this time.

Clear Channel is a San Antonio-based media company.

Broad market flat to somewhat better

In the rest of the distressed space, Visteon Inc.'s 8¼% notes due 2010 ended "about the same" at around 24, a trader said.

Harrah's Entertainment Inc.'s 10¾% notes due 2016 meanwhile closed at 801/4, on about $10 million traded, according to another market source.

A trader said that "a couple hundred million" of Wells Fargo's tier 1 paper traded during the session, ending around 701/2.

"They traded in a 3-point range but ended up near the high end," the trader said. "So they are up about a point on the day."

Sara Rosenberg contributed to this article.

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