General Maritime 'up big' as 10-K delayed, lender talks continue; Harrahs bonds regain ground

By Stephanie N. Rotondo

Portland, Ore., March 17 - The distressed debt market was "up a little bit," a trader said Thursday, though another trader noted that focus was not necessarily on the market.

The second trader noted that, along with it being St. Patrick's Day, the NCAA tournament had begun.

"Hoops and corned beef sandwiches and green beer: That's what the market was about today," he quipped.

But in between keeping up with March Madness and downing traditional holiday fare, investors still had time to boost General Maritime Corp.'s debt by 3 to 4 points on the day.

The gains came on the back of news that the company had delayed filing its 10-K due to ongoing talks with lenders and investors regarding a potential restructuring.

Meanwhile, Caesars Entertainment Corp. continued to be an active credit. A trader said the bonds - which had come under pressure earlier in the week - were "grinding back some."

OPTI Canada Inc. was also busy and higher, following a monthly production report that came out on Wednesday.

In the land of no news, NewPage Corp. traded up a point or 2, according to traders, in active dealings.

General Maritime 'up big'

General Maritime bonds were "up big," a trader said, after the company delayed filing its 10-K and said it was working with lenders and other investors on a potential restructuring.

The trader said "$25 million to $30-odd million" of the 12% notes due 2017 turned over, gaining 3 to 4 points to end at 851/2.

Another trader also placed the paper in the mid-80s.

The New York-based tanker company said that because of its ongoing negotiations, it wasn't able to file its quarterly report in a timely manner. The company expects to file the report and reschedule its conference call by March 31.

The company did release preliminary results for the fourth quarter of 2010, as well as numbers for the full year.

For the quarter, the company is estimating a net loss of $39 million, compared with a net loss of $12 million the year before. Net voyage revenues are expected to be about $51 million, down from $60.1 million in 2009.

For the year, net loss is forecast at $89 million, versus net income of $28.9 million for the entire year of 2009. Net revenue will be about $235 million, down from $291.6 million.

The market is now pondering what a potential restructuring might look like.

"The only question left to answer is how shareholder friendly the transaction will be," wrote Credit Suisse analyst Gregory Lewis in a note to clients.

Last summer, the company spent $620 million to acquire seven new oil tankers. Rates for crude carriers then fell and its balance sheet got hammered, resulting in a 78% decline in the company's equity since June 2010.

Harrahs 'grinding back some'

A trader said Caesars Entertainment's 10% notes due 2018 continued to trend upward, closing "a little bit higher" at 88½ bid, 89½ offered.

He noted that about $50 million to $60 million traded.

Another trader quoted the notes at 89 bid, 89¼ offered.

"So they are grinding back some," he said.

There hasn't been any fresh news out on the Las Vegas-based casino operator, but Gimme Credit LLC analyst Kim Noland posed a few possibilities as to why the debt has been so active in a note to clients.

Noland noted that weakening equity markets "often dull investors' taste for the most highly leveraged names where unsecured bonds could end up exchanged for equity in a distressed debt exchange or other restructuring." She also said that Caesars' Atlantic City properties continue to underperform.

The recently obtained $400 million secured loan for the new Octavius Tower at the company's Vegas property "could also have negative implications for asset value at Caesars' opco," Noland wrote.

"On the positive side, many of the company's markets are staging a slow recovery from the gaming recession and it received some positive ratings action from one agency," Noland also remarked.

OPTI still busy, higher

OPTI Canada's bonds were "reasonably busy again," a trader said.

He called the 7 7/8% and 8¼% subordinated notes due 2014 up 1 to 1½ points at 51½ bid, 52½ offered. The 9% senior notes due 2012 were at par ¼ bid, par ½ offered and the 9¾% notes due 2013 at 99 bid, 99½ offered.

At another shop, a trader said OPTI subs were trading at 51½ bid, 52 offered.

"They were trading with a 51 handle yesterday, so it's probably not all that changed," he said.

On Wednesday, the Calgary, Alta.-based oilsands producer issued its monthly production report for February. Bitumen production at the Long Lake oilsands project fell to 23,100 barrels per day in February, due in part to a 10-day maintenance shutdown. The company had reported production of 27,000 barrels per day in January.

The project - with partner Nexen Inc. - has continued to produce at lower-than-expected levels, due mostly to operational problems. OPTI and Nexen have yet to produce at capacity, which is 72,000 barrels per day.

OPTI is currently attempting to sort out its balance sheet and has said several times that its financial health depends heavily on ramping up production at Long Lake.

NewPage trending up

About $40 million of NewPage's 10% notes due 2012 changed hands during Thursday's session, a trader said. He saw the bonds improving nearly a point to around 66.

The 11 3/8% notes due 2014 closed at 99½ bid, par ½ offered, with some "$25-odd million" trading, he said.

Another trader called the 10% notes 1 to 2 points better at 66 ½ bid, 67 offered.

There was still no news out on the Miamisburg, Ohio-based coated papermaker.

Kodak better, but quiet

Eastman Kodak Co.'s 7¼% notes due 2013 were "not all that busy, but up," according to a trader.

He pegged the notes around par.

Another source deemed the issue up 2½ points at par bid.

Eastman Kodak is based in Rochester, N.Y.

© 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.