Reddy Ice debt rebounds, helped by firm market tone; liquid issues also benefit; Lehman gains

By Stephanie N. Rotondo

Portland, Ore., April 11 - Distressed debt experienced a rebound Wednesday, after two straight sessions of declines for the week.

"We bounced back a little," a trader said. He added that volume in the broader secondary realm was "average," but another trader said it remained slow in the specific distressed arena.

There was also a lack of news out to drive any major movements.

Reddy Ice Corp. continued to be a name on the tip of everyone's tongues as a rumored bankruptcy filing looms. Still, the debt rallied a bit with the overall positive tone of the market.

Elsewhere, Lehman Brothers Holdings Inc. announced Wednesday that it would make its first distribution as early as next week. That resulted in some gains for the defunct investment bank's bonds.

Away from topical names, more liquid issues were attempting to recover recent losses. Caesars Entertainment Corp., for instance, moved up a deuce, while Clear Channel Communications Inc. advanced about a point on the day.

Reddy Ice rebounds

Reddy Ice's 11¼% notes due 2015 moved up as much as 3 points on the day, according to traders.

There was no news out on the company, which is rumored to be filing for Chapter 11 protections as early as this week. The gains were credited to the overall firmer marketplace.

Traders placed the issue at 901/2.

One trader also noted that the 13¼% notes due 2015 remained around 13, adding that only odd-lots were trading.

As previously reported, a trader said the bonds began trading flat on Monday.

On Thursday, it was reported that Dallas-based Reddy ice was in the final stages of preparing a Chapter 11 filing and rumors have been circulating that the company has made a consensual reorganization plan with Centerbridge Partners, its largest creditor.

The company currently has about $450 million in debt. Last week, both Moody's Investors Service and Standard & Poor's downgraded the business, citing an overleveraged balance sheet.

Lehman rises on payout

Lehman Brothers said Wednesday that it would pay out $22.5 billion to creditors next week in its first distribution payment.

The amount is more than double what was previously expected.

On the news, a trader said unsecured issues, such as the 6 7/8% notes due 2018, traded as high as 30 during the midweek session.

Another trader said the 6 7/8% notes and 5 5/8% notes due 2013 were seen among the day's more active junk issues, each trading more than $10 million on the session.

The trader saw them both at 29¾ bid, noting that he had seen trading between 29 and 30 "all week long."

The payouts will begin April 17.

New York-based Lehman went under in September 2008.

Strong tone pushes names higher

The positive tone of the market helped some distressed credits recoup losses incurred in the first two session of the week.

A trader saw Caesars Entertainment's 10% notes due 2018 rising a deuce to end around 74.

He also saw Clear Channel's 10¾% notes due 2016 moving up a point to 721/2.

Also, Exide Technologies Inc.'s 8 5/8% notes due 2018 began an upward climb, gaining over a point to close around 82.

But despite the stronger tone, not all distressed names were reaping the benefits.

For example, a trader said Dynegy Holdings LLC's 8 3/8% notes due 2016 were "kind of the same," trading around 63.

A second trader said Hovnanian Enterprises Inc.'s 8 5/8% notes due 2017 were down 2 points at 59.

EOS liquidation done

A preferred stock trader reported that EOS Preferred Corp. "finally redeemed" its 8.5% series D noncumulative exchangeable preferreds on Tuesday.

The shares have subsequently been delisted.

"Lehman creditors are getting 53% more than thought," the trader said. "So that's good for them."

The redemption price was $25 per share, plus accrued and unpaid dividends from Jan. 1 through the liquidation date.

The redemption is part of the company's plan to liquidate. Furthermore, it is expected that the company will soon liquidate the 8% $1,000-par series B cumulative nonconvertible preferreds.

The redemption of the Ds was first announced March 14.

EOS is based in New York.

Paul Deckelman contributed to this article

© 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.