Clear Channel debt buoyed by amendment, exchange news; Kodak ready for plan talks, bonds rally

By Stephanie N. Rotondo and Sara Rosenberg

Phoenix, Oct. 12 - It was a broadly positive day in the distressed debt arena on Friday, despite an unchanged to somewhat weaker equity market.

Clear Channel Communications Inc. was the nom du jour as the company proposed a bank debt for new notes exchange. The company is also seeking amendments to its bank debt that would allow it to do more such exchanges in the future, without penalty.

Clear Channel's term loan B was also rising on the news.

Elsewhere, Eastman Kodak Co.'s second-lien paper was gaining ground after the company said it was ready to begin talks with creditors in order to come up with a reorganization plan. The company also posted its cash flow projections though 2015.

Clear Channel debt boosted

Clear Channel Communications' bonds were heading upward Friday, as the company launched a private exchange offer for up to $2 billion of term loans.

A trader said the shorter-dated issues moved up on the news, seeing the 5½% notes due 2014 in a 94-95 context, versus levels around 92 previously.

The trader also saw the 10¾% and 11% notes due 2016 trade as high as 79 bid, 80 offered before settling back in to 76 bid, 77 offered.

He said that was "probably still up a couple points."

Another trader placed the 9% notes due 2021 at 90 7/8, up over a point on about $35 million traded. The 11% notes were deemed up a deuce at 761/2, with at least $15 million changing hands.

After the exchange news emerged, one trader was quoting the term loan B at 85½ bid, 86½ offered, up from 85 bid, 86 offered, and the term loan A at 96 bid, 97 offered, up on the bid side from 95½ bid, 97 offered. A second trader, meanwhile, was quoting the B loan at 85¼ bid, 86¼ offered, up from 84½ bid, 85½ offered, and the A loan as high as 97¾ bid, 98¾ offered.

The company's term loan B had already rallied on Thursday as talk of a lender call first hit the market, with levels jumping up from the 82-plus bid, 83-plus offered context into the mid-80s area.

The San Antonio-based multimedia company wants to exchange the bank debt for new 9% priority guarantee notes due 2019. The notes would first be callable in July 2015 and contain MFN protection designed to enable participants to exchange their notes for new notes that may be issued in future loan-for-bond exchanges.

In addition to allowing for the exchange, Clear Channel's credit facility amendment would combine the term loan B and two delayed-draw term loans into one tranche that would keep the current pricing of Libor plus 365 bps, preserve revolver capacity if all revolver borrowings are repaid, eliminate certain restrictions on Clear Channel Outdoor Holdings Inc.'s ability to incur debt and gain more flexibility to prepay term loan A debt.

Also, after the repayment or extension of all of the term loan A, the company would be allowed to buy back term loans at a discount through Dutch auctions and repurchase up to $200 million of junior debt maturing before January 2016 with cash on hand.

Consents for the amendment and commitments for the exchange are due by noon ET on Oct. 19.

Citigroup Global Markets Inc., Morgan Stanley and Goldman Sachs are leading the transactions, with Citi the left lead on the amendment and Morgan Stanley the left lead on the exchange offer.

Kodak second-liens gain

Eastman Kodak's second-lien debt was thinly traded Friday, but was up nonetheless as the company said it was ready to sit down and hammer out a reorganization plan with creditors.

A trader called the 9¾% second-lien notes due 2018 up 2½ points to 64. Another trader quoted the issue at 63 bid, 63½ offered, up from levels around 60.

In order to facilitate discussions, Kodak also posted its cash flow projections through 2015. The predictions are based solely on its commercial imaging units.

The company is forecasting flows of $33 million through the first half of 2013, on revenues of $1.2 billion. For the remainder of 2012, is expecting profits of $1 million and $9 million in September and December, respectively, while losses are of $20 million and $8 million are projected for October and November.

During the next 10 months, the company is predicting more losses than profits, with the largest loss coming in January at $49 million.

Kodak is based in Rochester, N.Y.

Broad market tidbits

In the rest of the distressed space, a trader said Momentive Performance Materials Inc.'s 9% notes due 2021 were "fairly active," but down a deuce at 75.

The trader also saw AMR Corp.'s 13% EETC notes due 2016 continuing to rebound, pegging them at 1053/4, up a point.

Another trader said all three EETC issues that the company hopes to call at par - the 13% notes, the 10 3/8% notes due 2019 and the 8 5/8% notes due 2021 - were "still active," trading around 1041/2.

At another shop, a trader said Supervalu Inc.'s 8% notes due 2016 were not all that active, but continued to slide, falling to 831/2.

© 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.