Caesars remains active, higher; Sprint, Rite Aid edge up on no news; patent value boosts Kodak

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., Aug. 17 - The distressed debt market was generally better Wednesday, but overall volumes were lackluster.

"Distressed was very boring again," a trader said.

Market mainstay Caesars Entertainment Corp. continued to be an actively traded name. Traders saw the bonds rising on no fresh news.

Also up on no specific news were Sprint Nextel Corp. and Rite Aid Corp. For its part, Sprint has been steadily climbing in recent sessions, while improved stats from the retail arena have likely boosted Rite Aid.

Eastman Kodak Co.'s debt meantime got pushed upward by news that the company's patent portfolio value was quite good. However, there was light volume in the name.

There was also thin volume in William Lyon Homes Inc., which announced Wednesday that it had skipped its Aug. 15 coupon payment.

Caesars active, better

As has been the case of late, Caesars Entertainment's 10% notes due 2018 were among the most actively traded of distressed debt in the midweek session.

One trader said the bonds were up a half-point, "maybe a point," at 821/4.

Another market source deemed the paper up half a point at 823/4.

There was no fresh news out on the Las Vegas-based casino operator.

In other recent market mainstays, a trader said NewPage Corp.'s 11 3/8% notes due 2014 were "up a bit" at 811/2.

Sprint steadily climbing up

Sprint Nextel paper has been steadily climbing recently despite a lack of news.

"I think all Sprint paper was better," a trader said, seeing the 6 7/8% notes due 2028 at 881/4. He called that a 11/2-point gain on the day.

Another trader said Sprint bonds were "up about a point," the 6 7/8% notes at 88 and the 6% notes due 2016 around 96.

A third market source pegged the 6% notes at 96 bid, up a point.

Sprint is an Overland Park, Kan.-based telecommunications provider.

Rite Aid heads higher

There was also no news out on Camp Hill, Pa.-based Rite Aid, but the bonds were moving up anyway.

A trader said the 9½% notes due 2017 were "real active" and up about 1½ points around 871/2.

Another trader saw the 9 3/8% notes due 2015 gaining a point to end around 891/2, while the 8 5/8% notes due 2015 inched up to 90.

Yet another source saw the 8 5/8% notes finishing 1½ points higher at 90 bid.

Patent valuation helps Kodak

Eastman Kodak's debt was quoted higher, though there were not many trades in the bonds.

The gains came on the back of "the bullish news story about the value of its patents," a trader said.

He said the 7¼% notes due 2013 edged up a couple points to the mid-80s.

Another trader said a "tiny piece" of the 7¼% notes traded at 86, which was "up a lot," though because of the small size, he said it was "hard to tell" how much the paper was actually up.

They were around 80," he noted.

A third source said the debt moved up 5 points to 86 bid.

In a new research report, MDB Capital Group Inc. said that the Rochester, N.Y.-based company's patents could be worth as much as $3 billion as various companies like Apple Inc. and Google Inc. aim to grab up patents.

Last month, the company said it was shopping its patents in an effort to increase its revenue stream.

William Lyon misses coupon

William Lyon Homes' bonds were quoted, but didn't trade in size, despite news the company had missed an Aug. 15 coupon on its 7½% notes due 2014.

One trader said the 10¾% notes due 2013 were quoted wide at 29 bid, 34 offered. Another saw a market of 33 bid, 35 offered, with "no real trades."

The Newport Beach, Cali.-based homebuilder said it plans to take advantage of the 30-day grace period for making the payment. If no payment is made by Sept. 14, the issue could, however, be accelerated.

If an acceleration occurs, it could also constitute an event of default under William Lyon Homes' $205.4 million in other outstanding senior notes, as well as under the company's $206 million senior secured term loan agreement with ColFin WLH Funding, LLC and a $9.9 million loan agreement between a joint venture subsidiary and U.S. Bank.

Capmark quiet, plan OK'd

A majority of Capmark Financial Group Inc.'s creditors approved the Horsham, Pa.-based company's reorganization plan, and yet the bonds were largely unaffected, a trader said.

"It was very quiet in the name," he said, seeing a 54½ bid, 55 offered for the bonds, which tend to trade in line with one another.

The company filed for bankruptcy in October 2009. A confirmation hearing is scheduled for Friday.

Aquilex in trouble

A trader said that Aquilex Holdings LLC's 11 1/8% notes due 2016 were being offered in the mid-to-high -80s. That was down from offered levels at 90 on Tuesday, which in turn was well down from the most recent actual trades in the credit - around the 98 bid area - near the beginning of the month.

A trader at another shop saw the bonds around 83 bid, 85 offered.

That followed the Atlanta-based company's release late Monday of second-quarter results and its 10-Q filing with the Securities and Exchange Commission - during which it disclosed that it had drawn down the last $24 million available under its $50 million revolving credit facility in order to augment its working capital and said that it would explore as-yet unspecified avenues for increasing its liquidity.

The company - which provides repair, maintenance and industrial cleaning services to oil and gas companies, petrochemical makers and nuclear energy operators, among others - also warned that it couldn't guarantee that it would still be in compliance with its credit facility covenants by the end of the current third quarter, outlined plans to seek waivers of covenant compliance from its lenders, and cautioned that an inability to improve its liquidity picture could raise "substantial doubt about the company's ability to continue as a going concern."

Travelport weakens

A trader said that Travelport, Inc.'s 11 7/8% senior subordinated notes due 2016 were down about 5 points on the day, at 74 bid. He said it was "second-day trading" related to Tuesday's ratings downgrade of the Parsippany, N.J.-based travel distribution services company by Moody's Investors Service.

On Tuesday, its 9 7/8% senior notes due 2014 lost a point or two to finish at 86 bid, and on Wednesday, they dropped another 2 points, to 84 bid.

On Tuesday, Moody's cut the corporate family and probability-of-default rating of parent Travelport LLC to Caa1 from B3. The senior secured, senior unsecured and the subordinated instrument ratings were lowered to B1 from Ba3, to Caa2 from Caa1 and to Caa3 from Caa2, respectively, and the outlook remains negative.

The ratings agency cited weak first-half operating results, with EBITDA falling to $283 million from $295 million in 2010.

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