Exide's revenue decline pressures bonds; Momentive heralds preliminary figures, debt takes dip

By Stephanie N. Rotondo

Portland, Ore. Feb. 10 - Concerns about Greece and a declining equity market pressured the distressed debt arena on Friday, according to traders.

Earnings misses were to blame for declines in Exide Technologies Inc. and Momentive Performance Materials Inc. For its part, Exide reported that profits more than doubled for its most recent quarter, but revenues unexpectedly took a dip. The company warned that revenues might continue to be impacted moving forward, which did little to help the bonds.

The debt ended the day down as much as 5 to 6 points.

Meanwhile, Momentive released preliminary quarterly results, which did not please investors either. Those bonds were also down about 5 points and the bank debt was weaker as well.

Exide paper loses energy

A trader said Exide Technologies' 8 5/8% notes due 2018 were "getting rocked" after the company put out earnings that missed the market.

The trader saw about $42 million of the bonds turn over, falling as much as 5 points on the day to end at 791/4. That compared to an intraday low of 77½ and closing levels around 86 on Thursday.

Another trader said the bonds "traded off half a dozen points" to 79 bid, 80 offered.

The Milton, Ga.-based battery maker reported its fiscal third-quarter earnings on Friday. Profit more than doubled due to a $76.7 million French tax benefit, but revenues unexpectedly declined.

The company blamed the revenue dip on "unseasonably warm" weather.

For the quarter ended Dec. 31, net profit was $68.2 million, or 84 cents per share, versus $31.2 million, or 38 cents per share, the year before. Revenues declined 2% to $784.1 million.

Analysts polled by Thomson Reuters were expecting earnings of 20 cents per share on revenues of $847 million.

Looking forward, Exide said that continued mild weather in North America and Europe would likely impact its results, as would a slowing economy.

"A continued focus on costs will allow us to partially mitigate these negatives," said Jim Bolch, president and chief executive officer, in the earnings release. "In light of these continuing uncertainties, the company expects its fiscal 2012 operating income will be less than previously projected and does not anticipate providing specific earnings guidance for the foreseeable future."

Momentive debt declines

Momentive Performance Materials' debt was getting hammered as well after the Albany, N.Y.-based specialty chemical manufacturer released preliminary fourth quarter results.

A trader saw about $32 million of the 9% notes due 2021 change hands, calling the issue down "almost 5 points" to 883/4.

Another trader said the issue was down 5 to 6 points - but still up from the day's lows - around "88-ish."

In the bank debt, the extended term loan was seen at 97¾ bid, 98¾ offered, down from 99 bid, par offered, according to a trader.

For the quarter, the company expects operating income in the range of $14 million to $24 million, down considerably from $161 million in the previous year.

Sales for the quarter are expected to be about $1.2 billion, flat from 2010 fourth quarter sales.

And, segment EBITDA is anticipated in the area of $101 million to $111 million, versus $143 million in the prior year.

"Global macroeconomic volatility and inventory destocking negatively impacted our fourth quarter 2011 results," said Craig O. Morrison, chairman, president and chief executive officer, in a release.

"While we posted strong results in our phenolic specialty resins, North American forest products, formaldehyde and oilfield proppants businesses, weaker demand in Europe and Asia drove softer results across the balance of our portfolio," Morrison added.

Broad market soft

The broader distressed market was "a touch weaker," a trader remarked.

Clear Channel Communications Inc.'s 10¾% notes due 2016 continued to slip, falling as much as 3 points on the day to end around 75, a trader said.

Meanwhile, a trader said Residential Capital LLC was downgraded by Standard & Poor's on Friday. However, he noted that he had not "seen any kind of reaction" in the bonds to the news.

Sara Rosenberg contributed to this article

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