NewPage bonds reverse course, heading upward; DirectBuy debt quoted higher, with trading light

By Stephanie N. Rotondo

Portland, Ore., April 21 - NewPage Corp. continued to dominate distressed debt trading on Thursday, traders reported.

"They were probably the most active name out there today," a trader said.

However, after declining for the better part of the week - first on news of an executive's departure and then on word the company had hired advisors for a restructuring - the bonds picked back up, gaining about a point on the day.

Also on the stronger side was DirectBuy Holdings Inc. Traders said the debt was being quoted higher, though trading was thin.

The bond market closed early Thursday and will be closed entirely on Friday in observance of Good Friday.

As a result of the shortened day and week, a trader noted that it "wasn't a very active day.

"There wasn't a lot of trading, given that it's sort of a Friday," another trader said.

NewPage bounces back

A trader said there was "a fair amount" of NewPage's 10% notes due 2012 trading.

He called the issue "a smidge better" at 58 bid, 58½ offered. That compared with levels around 57½ previously.

The 11 3/8% notes due 2014, however, were deemed unchanged at 99¼ bid, 99½ offered.

Another trader said the 10% notes made the day's most active list, calling the bonds up 1½ points at 591/4. The 0% notes due 2012 were also better, by about half a point, at 521/2.

The trader said the 11 3/8% notes were a point weaker around 99.

Thursday's gains mark the first positive day for NewPage since Friday, when the Miamisburg, Ohio-based coated papermaker announced that its chief financial officer, David Prystash, had resigned.

The notes were further depressed come Wednesday, as news outlets reported that the company had hired Lazard Ltd., FTI Consulting Inc. and law firm Dewey & LeBoeuf LLP to advise on a potential restructuring plan.

"The speculation [of a restructuring] has already been out there," a trader said. Now, the debate will be over how much the second-lien paper will be worth.

"If you think they are worth more than 60, then you should be buying them now," he said.

The trader also noted that the company recently said it would be able to pay its bond coupons through June, which might have given the debt a boost.

DirectBuy quoted higher

DirectBuy Holdings' 12% notes due 2017 were being quoted higher, even if trading was light, according to traders.

One trader pegged the $335 million issue that sold in January at 53 bid, 55 offered.

"That's the same as yesterday, maybe up a little," the trader said. Still, he said the bonds were down from Tuesday's levels, but definitely higher than the 51 bid, 52 offered markets seen Wednesday.

"So they are bouncing back a little," he said.

Another market source saw the paper at 54 bid, 55 offered, up a point.

Back in March, the Merrillville, Ind.-based shopping club told investors that its chief financial officer had resigned and that memberships were declining. That resulted in a massive decline for the notes.

And, the company is currently embroiled in a class action lawsuit that alleges improper sales practices. Directbuy recently made a settlement offer, to which 37 states, plus Puerto Rico and Washington, D.C., objected.

Broad market modestly higher

Elsewhere in the distressed space, Caesars Entertainment Corp.'s 10% notes due 3018 were about a quarter-point better at 901/4, a trader said.

Another source placed the notes at 901/2.

The source also saw Clear Channel Communications Inc.'s 11% notes due 2016 at 941/4.

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