Poor numbers lower Maax; Tembec active on sale; Calpine better; Tousa subs down

By Stephanie N. Rotondo

Portland, Ore., Oct. 12 - Maax Corp. released poor quarterly numbers late Thursday, prompting the bonds to move lower in Friday trading.

A trader said the figures were expected, but added that the Canadian manufacturer of bathroom and spa fixtures continues to perform poorly.

Elsewhere in the region, Tembec Inc.'s bonds were called active as news of an asset sale was officially reported. Rumors of a sale had been circulating throughout the week, which was seen as the likely cause for gains in the bonds.

Power producer Calpine Corp. has seen its bonds continue to move up over the week, and Friday was no exception.

"Calpine is up, up and away," quipped one trader. "Other than, it is another wasted Friday."

A trader speculated that Technical Olympic USA Inc.'s subordinated debt would likely move to zero, as the bonds have consistently declined over the week. Traders said the bonds fell as much as 5½ points on the session Friday.

Poor numbers lower Maax bonds

Maax released its second-quarter results for fiscal 2008 late Thursday, prompting the bonds to move come Friday.

A trader quoted the 9¾% notes due 2012 down a point at 42.

"The numbers were poor, as expected," he said. "But they are continually poor."

Another trader pegged the debt at 42 bid, 43 offered, which he called "kind of unchanged, maybe a smidge lower."

"They haven't traded in about a week," he noted.

The Montreal-based company posted operating income of $1.7 million, a 72% decline from operating income of $6.1 million in the same quarter of fiscal 2007. Net sales also saw significant declines, attributed to softening market conditions. According to a press release, the company said sales fell 14.9% to $109.9 million from $129 million.

However, in the release, the company noted that consolidated sales, specifically in its bathroom unit, were "favorably impacted" by a stronger Canadian loonie.

Tembec active on asset sale

A trader called Tembec's bonds active as news of a small asset sale was officially released.

The trader, however, said "maybe there was a leak" of the sale earlier in the week, which would account for the gains the notes had garnered since Tuesday.

In fact, on Thursday, another trader told Prospect News that there was a rumor circulating regarding a potential sale.

The trader pegged the 7¾% notes due 2012 around 41.5 and the 8 5/8% notes due 2009 at 45.

The forest products company said it had sold 345 hectares, or about 852 acres, of land around Fernie, B.C., to Ridgemont Holdings Ltd. for $16 million.

Tembec said the sale would have no impact on its sawmill operations and was consistent with the company's recovery plan and its goal to improve liquidity.

"While margin improvement at all sites was the primary focus of this plan, it also included an initiative to monetize non-core assets," said John Valley, executive vice president of business development and corporate affairs, in a press release. "This transaction meets the criteria of this initiative, with lands possessing high economic and development value being monetized. We believe it is a good transaction for both parties and for the Fernie region."

Meanwhile, the company also announced it would indefinitely idle a paper machine and sawmill in Ontario, which will result in the layoff of 200 mill workers. The idle, attributed to a weak market, is set to begin Oct. 23.

Calpine better

Calpine's bonds were "up, up and away," a trader said, which he attributed to increase in demand for clean power.

"Power demand is growing," he said, "and [Calpine] is the cleanest power generator."

The trader placed the 8½% notes due 2011 at 120 bid, 121 offered, which was up about a point.

Cleaner burning energy has become a hot issue. Earlier this year, plans for several coal plants were pulled because of environmental concerns and several governmental leaders, such as Sen. Diane Feinstein of California, have been pushing for laws that require power companies to produce cleaner energy.

At another desk, a trader said Calpine's bonds were "pretty sideways," but noted that Calpine Generating Co.'s third-lien floating are notes were active in the 43.5 area. He called that up 1½ to 2 points.

Tousa sub debt falls

Technical Olympic's subordinated debt continues to drift lower, traders reported, though they noted there was no fresh news out to move the bonds.

A trader said the 10 3/8% notes due 2012 fell 3 points on the day to around 18.

"Those bonds are going to zero," he said.

Another trader called the 7½% notes due 2011 and 2015 down 3 to 4 points, at 18 and 17, respectively.

At another desk, a trader saw the homebuilder's bonds down across the board, with its 8¼% notes due 2011 down a point at 63.5 bid, 64.5 offered, its 9% notes due 2010 down 1½ points at 64.5 bid, 65.5 offered, its 10 3/8% notes 5½ points lower at 16.5 bid, 17.5 offered, its 2011 paper 5 points down at 16 bid, 17 offered and its 2015 issue 4½ points lower at 15.5 bid, 16.5 offered.

Another trader said the homebuilders had been "roughed up," and Technical Olympic had "given up its gains" of the past few sessions, its 10 3/8% notes trading as low as 17, left at 16.5 bid.

The junior issues started falling Tuesday, while the senior paper started racking up gains after the Hollywood, Fla.-based homebuilder said it hired Lazard Freres to review its capital structure. One trader speculated that investors were looking for value in the structure, adding: "It's not in the juniors."

Elsewhere in the sector, a trader said WCI Communities Inc.'s 9 1/8% notes due 2012 were down about 1½ points at 81.25 bid 83.25 offered, its 7 7/8% notes due 2013 at 71.5 bid, 73.5 offered, down 2½ points, and its 6 5/8% notes due 2015 down 3 points at 68 bid, 70 offered.

Broad market mixed

Sea Containers Ltd.'s 10½% notes due 2012 were deemed a couple points better at 75.5. A trader said there was no news out, but noted that there was "no paper being offered," which was driving the price up.

Thornburg Mortgage Corp.'s 8% notes due 2013 closed ½ point up to 87.75.

A trader said distressed automotive parts supplier names were quiet, though Federal-Mogul Corp.'s bonds remain active. He said the bonds, which have been gaining over the week, ended the day "down a little" at 91.5.

Paul Deckelman contributed to this article

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