NII Holdings posts more subscriber defections; Alpha Natural debt gains; Caesars bonds subdued

By Stephanie N. Rotondo

Phoenix, Nov. 10 – It was nearly all quiet on the distressed debt front Monday, as market players looked instead to a holiday on Tuesday.

Veteran’s Day is Tuesday and the bond market will be closed. The stock market, however, will remain open.

Banks will be shut down for the day.

But of the bonds that were trading, many experienced upward momentum.

NII Holdings Inc. released earnings early in the day, showing more subscriber losses for the bankrupt company and a wider loss. Still, the bonds perked up during the session.

Alpha Natural Resources Inc. was also rising, despite news of an idling mine. In fact, one trader noted that there was a “rebound” in energy names across the board.

Caesars Entertainment Corp., however, was not on the gaining list. The company reported its quarterly results during the day and held a conference call after the market closed. But leading up to the release and the subsequent call, the bonds were not all that active.

NII loses more subscribers

NII Holdings’ debt gained ground Monday, even as the company reported more subscriber losses and a wider loss for the third quarter.

One trader said the 7 5/8% notes due 2021 inched up half a point to 21½, while the 10% notes due 2016 gained a quarter-point to 33¼. The 7 7/8% notes due 2019 were deemed up 2 points from the round-lot trades two weeks ago, closing around 66½.

The 11 3/8% notes due 2019 finished at 67½, up 3 points from a week ago, the trader said.

At another desk, a trader said the 7 5/8% notes were “up a couple points” at 21½ and agreed that the 11 3/8% notes were 3 points higher at 67½.

For the quarter, the Reston, Va.-based provider of Nextel mobile technology in Latin America and Mexico saw 40,000 subscriber losses, which losses in Mexico offsetting gains in Brazil. The company ended the quarter with 9.1 million subscribers, a 5% decline year over year.

Consolidated operating revenue was $927 million, down 15% from the previous year. Consolidated operating loss was $213 million.

Consolidated average monthly service revenue per subscriber fell to $28 from $32. Consolidated average monthly churn was slightly better at 3.4%, versus 3.59%.

Overall, net loss was $457 million. Capital expenditures came to $56 million and the company ended the quarter with $740 million of cash and equivalents.

NII filed for bankruptcy protections in September. Because of its bankruptcy status, it will not hold a conference call to discuss the results.

Alpha Natural shutters mill

Alpha Natural’s bonds finished firm Monday, even as the company announced the permanent idling of its Brooks Run South Mining Cucumber mill in West Virginia.

A trader said the 6¼% notes due 2021 rose over 2 points to close around 49½, while the 6% notes due 2019 gained over a point, ending around 52.

The 9 3/8% notes due 2018 were a point better at 72.

Another market source deemed the 6¼% notes at 49 bid, up 1½ points, while another said the issue was “up a bit,” trading “close to 50.”

A total of 36 employees were notified of the mill’s closing on Monday – the same day the plant was idled. The move was blamed on oversupply of metallurgical coal.

Elsewhere in energy names, bonds were mostly on the stronger side.

A trader said Quicksilver Resources Inc.’s 7 1/8% notes due 2016 finished a point higher at 21, while Samson Investment Co.’s 9¾% notes due 2020 inched up a touch to 72¾.

Caesars releases earnings

Caesars Entertainment’s earnings came out late in the day Monday, but investors weren’t moved to do much in the name.

One trader said the 9% notes due 2020 were slightly weaker ahead of the numbers, seeing the paper trade at 74. Another market source saw the 10% notes due 2018 falling almost 2 points to 15 bid.

Despite a gain in revenue, the Las Vegas-based casino and hotel operator reported a wider loss of $908.1 million, or $6.29 per share.

Revenue increased 6% during the quarter to $2.21 billion.

Caesars Acquisition Co. – an affiliate of Caesars Entertainment and joint venture partner in Caesars Growth Partners LLC – meantime saw a 49.1% increase in its quarterly revenue, which came to $485.8 million.

The gain was attributed in part to the addition of the Horseshoe and Cromwell hotels.

Revenue from properties and development was also higher, rising 31.3% to $324.2 million. Interactive entertainment revenue increased 104.8% to $161.6 million.

Income from operations was $82.1 million, up from $46 million in the previous year.

It was also announced on Monday that Donald Colvin, chief financial officer of Caesars Entertainment, was retiring, effective Dec. 31.

Eric Hession, a senior vice president and treasurer, was named as Colvin’s successor.

With Caesars currently in talks to deal with its debt-laden Caesars Operating unit, the company was quick to point out that Colvin was leaving of his own accord.

“Colvin’s departure from the company is unrelated to the company’s financial condition or financial reporting,” Caesars said in a statement. “There is no disagreement between Colvin and the company.”

© 2015 Prospect News.
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