Momentive bonds firm ahead of potential bankruptcy; Alpha Natural gains; Claire's weak

By Stephanie N. Rotondo

Phoenix, April 3 - Momentive Performance Materials Inc. continued to be a topical name in the distressed debt arena as investors prepared for a potential bankruptcy filing.

Traders reported that the company's debt was on the rise during Thursday trading.

Meanwhile, Alpha Natural Resources Inc. was again firm. The name, as well as several others in the coal sector, had moved up Wednesday on comments made by BHP Billiton's chief executive regarding increasing demand for metallurgical coal.

After reporting disappointing earnings Wednesday - as well as the exit of its CEO - Claire's Stores Inc.'s paper continued to be depressed, according to traders.

Away from those names, recently topical distressed credits remained the focus.

A trader saw Global Geophysical Services Inc.'s 10½% notes due 2017 at 631/2, which he deemed unchanged. But another trader said the paper was up a point at that same level.

Lehman Brothers' bonds began trading "ex-the fourth distribution," a trader said. As such, the bonds appeared to be trading down over 6 points, though they were simply trading without the dispersion.

The trader pegged the benchmark bonds around 18.

RadioShack Corp.'s 6¾% notes due 2019 were on the weaker side, losing almost 2½ points to finish around 51 5/8, a trader said.

And, NII Holdings Inc.'s 8 7/8% notes due 2019 fell 1½ points to 46 as the 7 5/8% notes due 2021 dropped half a point to 301/2.

Momentive gains steam

Momentive Performance Materials' debt was inching up as investors ready themselves for a potential bankruptcy filing.

One trader saw the 8 7/8% notes due 2020 closing slightly higher at 1091/2, while the 9% notes due 2021 rose "over a point" to 811/2.

Another trader echoed those levels.

Late Tuesday, the Waterford, N.Y.-based chemical company said in a regulatory filing that it was delaying filing its 10-K to allow more time to analyze the financial statements. It noted that it expected auditors to issue a "going concern" warning given the potential of breaching covenants. As such, it had begun talking to stakeholders in the hopes of coming to some agreement. The company indicated that a bankruptcy filing might be the easiest way to complete such an endeavor.

On Wednesday, Standard & Poor's downgraded the company to CC. Moody's Investors Service followed suit on Thursday, cutting the company to Ca from Caa2.

Also on Wednesday, Bloomberg reported that a group of Momentive's secured debtholders had hired law firm Dechert LLP to represent them in a restructuring.

Back in February, Momentive announced it had hired Lazard Ltd. as a restructuring adviser.

Alpha takes the lead

Alpha Natural Resources' bonds were "on a pretty wild ride," a trader said Thursday.

He said the 6¼% notes due 2021 were "up heavily most of the day," though by the bell, the debt had given back some ground.

He saw the issue hit a high of 78¼ before going out at 77½ offered.

Another trader said the paper was "a bit better," trading "up over a point" around 78.

A third market source placed the issue at 78 bid, up 1¼ points.

At a meeting of the Committee for Economic Development of Australia in Brisbane on Wednesday, BHP Billiton CEO Dalla Valle said he was expecting demand for coal - specifically metallurgical coal - to increase over the next 20 years, especially from India.

However, due to current oversupply, he speculated that prices would remain depressed.

Claire's under pressure

Claire's Stores' 8 7/8% notes due 2019 continued to decline Thursday as investors reacted to news out Tuesday regarding a management shakeup.

The Hoffman Estates, Ill.-based company also released earnings on Tuesday.

A trader said the notes were off "2 and change points" at 861/2. Another trader called the issue "a little lower," also around 861/2.

James Fielding, CEO, left his post effective Wednesday. Beatrice Lafon, the company's president of its European unit, took over.

The company did not give a reason for the departure. Fielding had held the job since mid-2012.

For the quarter ended Feb. 1, the jewelry retailer posted net income of $7.4 million versus income of $42.2 million the previous year.

Revenues took an 11.7% hit, falling to $435.5 million. Same-store sales declined 10.7%.

The company said it was shuttering its Chinese operations, including all stores.

© 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.