Caesars hires Lazard as advisor, bonds inch up; Alcatel-Lucent firms; Arch Coal to sell assets

By Stephanie N. Rotondo

Phoenix, Feb. 10 - It was a big news day for distressed debt on Monday.

First up, Caesars Entertainment Corp. reportedly hired restructuring advisors to deal with its massive debt load - a problem made significantly worse by declining revenues. Still, investors reacted generally positive to the news, pushing the casino's paper upward.

Meanwhile, investors might have been reacting to news out late last week regarding the potential sale of one of Alcatel-Lucent SA's units, as the bonds put on over 2 points by the end of the session.

Arch Coal Inc. also had news regarding an asset sale out on Monday. The coal producer has been divesting non-core assets in order to deal with declining supply and prices for metallurgical coal. Sector peer Alpha Natural Resources Inc. was meantime unchanged to slightly better as the market prepares for the company's Wednesday earnings release.

Caesars hires Lazard

A trader said Caesars Entertainment's 10% notes due 2018 rose a point to 49¼ in Monday trading.

The gain came as it was reported that the Las Vegas-based hotel and casino operator had hired Lazard Ltd. as a restructuring advisor. Despite trying a number of different strategies to improve its balance sheet, the company has been unable to get ahead of its debt, especially as revenues have declined. Most analysts have deemed the company's debt structure unsustainable at current levels.

However, at another desk, a trader called the 10% notes "about half a point lower" at 481/2.

Alcatel-Lucent on the rise

Last week, Alcatel-Lucent was reported to be in talks with China Huaxin to sell its enterprise unit.

Come Monday, the company's debt was pushing higher.

One market source saw the 6.45% notes due 2029 gaining over 2 points on the day to end at 92¼ bid.

The French telecommunications equipment manufacturer has posted a yearly loss nearly every year since 2006. In 2013, that loss totaled €1.3 billion, which was better than the €2 billion posted the year before.

The company has engaged in many turnaround efforts, including selling off non-core businesses to raise cash and to focus on what it does best.

In an earnings release last week, the company maintained that it was on track to reach cash flow and revenue targets by 2015.

Arch, Alpha gain

Arch Coal raised $21 million from the sale of its ADDCAR Systems unit, the company said in a press release Monday.

St. Louis-based Arch sold the Kentucky-based manufacturer of cascading conveyor cars to Australia's UGM Holdings Pty. Ltd. The purchase price will be paid out in three installments throughout the year.

On the news, a trader saw the 7¼% notes due 2021 inching up half a point to 75.

Also in the coal space, Alpha Natural Resources is scheduled to put out earnings on Wednesday and the results are not expected to be good.

According to Yahoo! Finance, analysts are expecting a loss of 62 cents per share, versus a year-ago loss of 19 cents per share. Revenues are expected to drop 24.5% to $1.18 billion.

But while the results are not expected to be earth shattering, the bonds were pushing up nonetheless.

A trader said the 6¼% notes due 2021 were steady at 793/4, but another market source saw the issue creeping up half a point to 80½ bid.

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