Petroplus sees slight gain in bonds as 'serious bidders' step up; Hawker debt losing altitude

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., March 29 - The distressed debt market "came in a little bit," a trader reported Thursday.

But on top of the weakness, volume in the distressed realm continued to lag.

"Everyone is searching for the same ideas as everyone else and nobody is finding anything," one trader remarked.

Recent news that Petroplus Holdings AG had some serious bidders on the line for one of its refineries has caused paper to get pushed around a bit, a trader said. The bonds were trending unchanged to higher.

Meanwhile, Hawker Beechcraft Acquisition Co.'s debt was drifting down again as investors wait to see if the company will soon file for bankruptcy. Trading in the name, however, was thin.

Petroplus inches higher

A trader said Petroplus bonds were "moving around a little bit" during Thursday trading.

"They are starting to get serious bidders for their Coryton refinery," he said, explaining why the paper was moving about.

He called the 6¾% notes due 2014 "kind of unchanged" to a quarter-point better around 40. As for the 9 3/8% notes due 2019 and the 7% notes due 2017, they were "stuck in that 38-40 range," he said.

Bids on the English refinery are due by April 2. Book value on the property is $1.3 billion.

Petroplus filed for insolvency in January after losing access to its credit lines and having to shutter some of its refineries. Coryton is still in operation due to an agreement inked with lenders in February.

Hawker dips on bankruptcy concerns

Hawker Beechcraft's debt was weakening on prospects the company could be filing for Chapter 11 protections in the next few months.

A trader called the 8½% notes due 2015 down "a point and change" at 14. The 8 7/8% PIK notes due 2015 were also trading around 14, which he said was unchanged.

On Wednesday, the Wichita, Kan.-based aircraft manufacturer and reseller said that it had secured a new $120 million term loan from its lenders as well as a forbearance agreement that expires in June. Second, toward the end of the day, news outlets started reporting that the company was in process of putting together a prepackaged bankruptcy filing.

The reports cited people familiar with the matter.

Based on the reports, the new loan was part of the overall plan to eventually file for Chapter 11 protections, as it gives the company enough time to negotiate with its creditors, including Centerbridge Partners, Angelo Gordon and Capital Research & Management.

It is expected that these lenders would also provide debtor-in-possession financing of less than $500 million.

Come Thursday, Standard & poor's dropped its rating on Hawker to CC from CCC.

Hawker is owned by Goldman Sachs Group Inc.'s private-equity arm and Onex Corp. The company was purchased from Raytheon Co. in early 2007.

Education Management retreats

A trader said that Education Management Corp.'s 8¾% notes due 2014 tumbled to a 94-95 bid context, well down from prior levels around 99-par.

He cited the news that the Pittsburgh-based provider of private post-secondary education - currently shopping a proposed $350 million term-loan B bank debt deal due 2018 around to prospective lenders, was heard by sources in that market to have "widened the talk on their term loan pretty substantially" - flexing it up to 700 basis points over Libor from the Libor-plus 525 bps interest rate at which the deal was launched at mid-month.

He also heard that "they put a little bit bigger" original issue discount on it versus the proposed 98½ issue price heard at the launch.

"So those bonds got hit on the back of that news," he said, although he added that there was "not a lot of volume" in the name.

Coal still under pressure

A trader said that coal-mining names - which were in retreat on Wednesday in reaction to proposed tougher federal emission standards for coal-fired power plants to cut carbon dioxide - "remains under pressure, although I don't think they moved that much."

He saw the miners' bonds declined by another half-point, but there "no big movements - they were a little weaker."

At another desk, a trader quoted Peabody Energy Corp.'s 7 7/8% notes due 2026 had fallen to about 103¾ bid in round-lot trading Thursday - well down from prior round-lot dealings recently at 106 3/8 bid.

He saw the St. Louis-based coal operator's 6½% notes due 2026 down 1 point, at 100¼ bid.

He saw no round-lot dealings in Patriot Coal Corp.'s 8¼% notes due 2018, which were trading in the high 70s.

© 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.