Sears bonds gaining momentum; Dynegy debt steady as creditors fight disclosure statement, plan

By Stephanie N. Rotondo

Portland, Ore., Feb. 17 - The upcoming three-day weekend was too alluring to keep many distressed debt players in their desks Friday, resulting in thin trading for the session.

"It was pretty much a dead day," a trader said.

Still, the market was "generally better," another trader said. The first trader deemed the tone "unchanged to slightly better."

Sears Holdings Corp. was moving higher in Friday trading, though there was not news to explain the move. News outlets did report that the retailer had laid off about 100 corporate employees and that its Canadian unit was slashing prices in order to regain market share.

Meanwhile, Dynegy Holdings LLC was on the quiet side, but steady as the company's creditors objected to a disclosure statement.

And, while NewPage Corp. was "not nearly as active" as it had been earlier in the week, according to a trader, the bonds were attempting to inch upward.

Sears gaining ground

Sears Holdings' 6 5/8% notes due 2018 were up "almost 2 [points]" at 853/4, a trader said.

Another trader called the debt better at 86.

The Hoffman Estates, Ill.-based retailer issued about 100 pink slips Friday to corporate employees as the company attempts to cut costs. The layoffs take effect immediately.

Also, Sears Canada said it was planning to reduce prices on 15% to 20% of its inventory by 20% to 30% in order to boost lagging sales. The price cuts will be permanent and are a part of the company's overall effort to overhaul pricing.

Dynegy steady, creditors balk

Dynegy Holdings' creditors filed objections to the company's disclosure statement Friday, calling the document "inadequate."

But the unit's bonds were holding their ground, according to traders, albeit in light trading.

One trader placed the bonds generally around the 63 mark, while another saw the debt trading around "641/2-ish."

Creditors of the Houston-based bankrupt subsidiary of Dynegy Inc. said in court documents that the current iteration of the disclosure statement was "inadequate" and that the plan of reorganization was "unconfirmable." Furthermore, the creditor group wants to delay a hearing on the statement until an examiner's report can be filed and analyzed.

The report is due March 12.

"It would be illogical to approve a disclosure statement and permit a plan to be voted on, when the very subjects and beneficiaries of these proposed releases are being investigated by the examiner at this court's direction, and the examiner report is due to be filed a mere 17 days later," the creditors said in court documents.

NewPage action dies down

NewPage's notes had been trading on the active side throughout the week as investors reacted to news the company was seeking to relax certain covenants under its debtor-in-possession credit facility.

However, come Friday, the action had died down a bit, a trader said.

He saw the 11 3/8% first-lien notes due 2014 trading around 58.

"Maybe that's a smidge better," he said.

Another trader called the issue up half a point at 573/4.

NewPage is a Miamisburg, Ohio-based bankrupt papermaker.

Broad market ends firm

Among other distressed issues, Caesars Entertainment Corp.'s 10% notes due 2018 moved up 1½ points to 751/2, a trader said.

ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 meantime inched up half a point to 64.

At another shop, a trader said Eastman Kodak Co.'s 7¼% notes due 2013 were lower at 27 bid, 28 offered.

And, after falling the previous session, Clear Channel Communications Inc.'s paper "rebounded," the trader reported. The 10¾% notes due 2016 ended around 76 bid, 77 offered and the 11% notes due 2016 gained half a point, closing around 74.

© 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.