Verso, NewPage slide from recent highs; Bon-Ton tender wrapped, bonds unfazed; PDVSA gains

By Stephanie N. Rotondo

Phoenix, July 5 - The post-holiday trading day was "pretty thin," a distressed debt trader reported Thursday.

"It was a complete nonevent," said another trader, noting that many market players remained absent.

Still, the first trader remarked that "there must be in-flows coming or something," as there were "lots of offers wanted" going around.

In the distressed realm, Verso Paper Corp. and NewPage Corp. continued to be topical. On Tuesday, Verso had announced that it had proposed a merger with bankrupt NewPage, sending the bonds of both companies up 5 to 10 points on the day.

The paper came off of those highs during Thursday trading, however.

Meanwhile, Bon-Ton Stores Inc. announced the final results of its tender offer for its 10¼% notes due 2014, in which 71% of noteholders participated. The company also released same-store sales results for June.

Neither piece of news, however, had any effect on the retailer's debt.

Verso, NewPage slide down

A trader said Verso Paper's 8¾% notes due 2019 "came off the top," dropping 1½ points to 461/2.

Another trader echoed that level and also pegged NewPage's 11 3/8% first-lien notes due 2014 at 67 bid, 68 offered, down from 69 bid, 70 offered on Tuesday.

On Tuesday, Memphis-based Verso said it had been in discussion with certain first-lien noteholders "to achieve a potential business combination involving Verso and NewPage."

The merger would be done while NewPage was in bankruptcy, Verso said. Under the terms of the proposal, NewPage's first-lien noteholders would receive $1,075,000,000 of Verso first-lien notes, $150 million of Verso stock and $150 million in cash.

Verso would also pay NewPage's debtor-in-possession facility in full.

"Verso believes that a combination with NewPage would create a stronger business in the global coated and supercalendered paper industry because of the material cost savings that would be achieved," Verso said in the statement. "Verso also believes that a combination with NewPage would provide a compelling option for a restructuring in that it would afford NewPage's first-lien noteholders a very attractive recovery, while at the same time treating fairly the other NewPage constituencies, including its employees, other creditor classes, and customers."

Verso did note, however, that the discussions had not gone as well as they hoped.

Miamisburg, Ohio-based NewPage responded to the statement on Tuesday.

"After thoroughly evaluating this proposal, NewPage determined that the combination posed significant downside risks to its stakeholders, employees, and business," NewPage said in a statement. "NewPage has also been advised that the first lien noteholder group did not support the proposal. Accordingly, NewPage does not anticipate further discussions regarding this proposal."

Bon-Ton wraps tender

Bon-Ton Stores' tender offer for its 10¼% notes officially came to a close on July 3, the company said in a press release Thursday.

All told, $330 million, or 71%, of notes were tendered - the same amount as had been tendered as of the early deadline. That leaves about $135 million of the paper still outstanding.

Those that did participate in the tender will receive new 10 5/8% second-lien notes 2017.

The York, Pa.-based retailer also announced its same-store sales results for June, which showed a 0.8% decline. Total sales dropped 1% to $238.3 million.

Year-to-date same-store sales were down 0.7% and total sales fell nearly 1% to $1.06 billion.

Neither piece of news did much to move the bonds, traders said.

"They were dead," a trader said.

Another market source said that all the trades during the session were odd-lots occurring between 80 and 84.

Among other retailers, J.C. Penney Co. Inc.'s 7.4% notes due 2037 were down slightly at 823/4, according to a trader.

PDVSA creeps up

Petroleos de Venezuela SA's 9% notes due 2021 were among the day's most active issues, a trader said.

He called the bonds up modestly at 76.

PDVSA is a state-owned oil company in Venezuela.

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