NewPage debt remains weak; Clearwire, Sprint hang in ahead of numbers; LightSquared loan tanks

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., Feb. 15 - It was a mixed sort of day for distressed bonds, traders reported, with many names ending steady to slightly weaker.

NewPage Corp.'s bonds took another hit Wednesday, as investors continued to react to Tuesday's news regarding the company's attempt to amend its debtor-in-possession credit facility. The paper had lost 3 to 4 points in the previous session and dropped another 3 to 4 points come Wednesday.

Meanwhile, Clearwire Corp. was on the quiet side and holding steady ahead of its earnings release after the bell. However, a trader opined that the numbers "didn't look too good to me," and that he therefore expected the debt to decline on Thursday.

Furthermore, Clearwire seemed little perturbed by news that regulators had rejected a proposal from LightSquared to use satellite spectrum for a mobile network venture. LightSquared's bank debt, however, took a tumble.

NewPage weakness continues

NewPage's 11 3/8% first-lien notes due 2014 were "definitely lower," a trader said, as investors continued to react to the company's plan to amend its DIP facility.

The trader called the issue down "a couple more points" around 59.

The bankrupt Miamisburg, Ohio-based papermaker said Tuesday that it was looking to amend its amended and restated super-priority debtor-in-possession credit and guaranty agreement in order to reduce its minimum consolidated adjusted EBITDA requirements and to increase the notes payment reserve, among other things.

Clearwire unmoved pre-earnings

Clearwire bonds were hanging in there ahead of the company's after-market earnings release on Wednesday.

A trader quoted the 12% notes due 2015 at 97 bid, 97½ offered and the newer 14¾% notes due 2016 at 103 bid, 103½ offered.

Another trader also saw the new deal at 103 bid, 103½ offered.

"The numbers just came out I don't think they were very good," the second trader said. He added that he expected the debt to decline come Thursday.

The Bellevue, Wash.-based wireless spectrum provider reported revenues of $361.9 million for the fourth quarter, up 107% year over year. Total subscribers gained 140% during the quarter, ending at 10.5 million.

Net loss was $236 million, or 81 cents per share.

The company also provided guidance for 2012, stating expectations of $1.15 billion to $1.25 billion in total revenues. Capital expenditures were expected to amount to $450 million to $550 million.

Sprint holds steady

Meanwhile, Clearwire's network partner Sprint Nextel Corp. was also holding steady.

A trader said the 6 7/8% notes due 2028, the 6% notes due 2016 and the 8¾% notes due 2032 were all unchanged at 76, 89¾ and 86, respectively.

Another market source pegged the 6% notes at 89¾ bid, down nearly a point.

Sprint is an Overland Park, Kan.-based wireless telecommunications provider and a majority stakeholder in Clearwire.

LightSquared debt tanks

The Federal Communications Commission announced late Tuesday that it had denied a proposal from LightSquared to use satellite spectrum for its mobile network venture. Come Wednesday, the company's bank debt was trading "a lot lower," a trader said.

He said the debt fell to the high-30s from the mid- to high-40s previously.

Another trader quoted the loan at 37¾ bid, 39¾ offered, down from 44½ bid, 46½ offered.

The FCC said its decision was based on the fact that the service disrupts navigation systems used by planes, autos and boats. For its part, LightSquared refuted the decision, noting that it has been working on fixing the GPS problem.

Though the news was considered bad for LightSquared, it could be a positive for Clearwire. Just after the FCC's decision was announced, FreedomPop, a former LightSquared customer, said it had chosen Clearwire to provide its mobile broadband service.

Rite Aid firms

A trader said that Rite Aid Corp.'s new 9¼% senior guaranteed notes due 2020 were trading between 100 1/8 and 100 3/8 on Wednesday, estimating that "a gazillion" of the Camp Hill, Pa.-based Number-3 U.S. drugstore chain operator's bonds traded.

"You really can't tell because it's 144A" - but he said that one large firm his company deals with sent out 38 messages on it, "so here's one big shop that had its 38th run on it, and every run is a market. So I'm sure it was a lot of trading."

Rite Aid had priced $481 million of the bonds at par in a drive-by deal on Tuesday, and they had traded as wide as 99 7.8 bid, 100 3/8 offered in the immediate aftermarket late Tuesday.

He said that Rite Aid's 7.70% notes due 2027 "did a lot more volume" on Wednesday than they did on Tuesday, when they jumped as much as five or six points on the day, though only on a few million traded.

On Wednesday, he saw $17 million of the bonds having traded, noting that "it could be a lot higher than that" since some of the trades were "$1 million-plus" transactions - the plus could be anything from $1 more to $10 million more, he said. He saw the bonds last trading 85½ bid, 85¾ offered, saying that was up 4 points from Tuesday "and last week. They were in the 70s. So they're loving life."

He saw Rite Aid's 8 5/8% notes due 2015 - which on Tuesday had firmed by 1½ to 2 points on brisk round-lot volume of over $30 million to the 102½ level, since Rite Aid is using the new-deal proceeds to fund a tender for these bonds - little changed on Wednesday, quoting them at 102 5/8, on "very small activity, just one round-lot trade," the bonds presumably having made their move the session before.

ATP gains on loan

A trader said that ATP Oil & Gas Corp.'s 11 7/8% senior secured notes due 2015 were at 64 bid, 64½ offered, which he called up 1 point on "decent volume" of $25 million to $30 million.

"That's up a little bit [from] the last couple of days."

The Houston-based offshore energy exploration and production company said it would seek a $140 million increase in its first-lien senior secured term loan facility; that facility, which is based on the amount of the company's proven reserves, currently stands at $208 million, but the company said it expects its end-of-year data to show that its reserves have grown, allowing for more borrowing.

Broad markets fall

Among other distressed issues, Eksportfinans ASA's 2 3/8% notes due 2016 were down a point at 853/4, according to a trader.

The trader also saw Caesars Entertainment Corp.'s 10% notes due 2018 fall to 74½ from levels around 77 previously.

Another trader called Clear Channel Communications Inc.'s 10¾% notes due 2016 down "a good point" to 741/2.

Sara Rosenberg contributed to this article

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