Distressed bonds unchanged with holiday absences; NewPage stays firm; Skilled Healthcare mixed

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Sept. 3 - Many market players decided to take advantage of the muted marketplace, leaving their desks early on Friday to enjoy the long Labor Day weekend.

"There wasn't much reaction today," a trader said, even as new employment data came out.

"It happened, then everybody went home for the weekend," he said.

With so many people out, that left the distressed market unchanged on the day, with a few exceptions.

NewPage Corp., for example, continued to move higher. The company's bonds added another half-point to its value, making that the third straight day of gains for the papermaker.

Meanwhile, Skilled Healthcare Group Inc. announced its ongoing court case was postponed yet again, as the company attempts to come to a settlement with the plaintiffs. The news didn't do much for the bonds, but traders did see the company's bank debt gaining ground.

The market will be closed on Monday in observance of Labor Day.

NewPage active, firmer

NewPage bonds were one of the more actively traded issues in an otherwise subdued market, traders reported.

One trader placed the 11 3/8% notes due 2014 at 901/2, up about half a point. Another quoted the issue at 90 bid, 90 3/8 offered on "pretty good volume for a day like this."

The session's gains mark the third consecutive day the bonds spent on the incline. The Miamisburg, Ohio-based papermaker's debt began to climb on Wednesday after the company released higher guidance for the third and fourth quarter.

The company is expecting to hit EBITDA between $145 million and $165 million, according to a regulatory filing. NewPage also estimates it will reach EBITDA of $90 million to $100 million for the third quarter.

Elsewhere in the paper industry, Verso Paper Corp.'s 11 3/8% notes due 2016 improved over a point, according to a trader. The trader saw the bonds trading around 873/4.

Another trader said the notes "traded up a bit" to around 801/2.

There was no news out on the Memphis-based manufacturer of coated freesheet and groundwood paper, and supercalendered paper for the printing and publishing industry.

Skilled debt ends mixed

Skilled Healthcare Group's term loan moved up during the final trading day of the week, as the company's court case was once again postponed.

However, the bonds were on the quiet side, with little to no trading to be seen.

The term loan was quoted in the secondary market on Friday at 95 bid, 96 offered, up from 93¾ bid, 94¾ offered, according to a trader.

At another desk, the 11% notes due 2014 were pegged around 91, which was where they had traded on Thursday.

The case is now slated to begin on Sept. 8 after being delayed from Friday and, prior to that, from Thursday and, before that, from Aug. 31.

As was previously reported, in 2006, parties alleged that some of the company's California-based facilities were understaffed and misrepresented the quality of care provided in their facilities.

Then in July, a jury ruled that the company should pay $613 million in statutory damages and $58 million in restitution to the plaintiffs, and before the punitive damages phase of the trial went on, the parties reached an agreement to enter into mediation to settle the lawsuit.

The Foothill Ranch, Calif.-based health care services company later filed for mistrial or new trial on grounds of juror misconduct, but that motion was denied.

Also, the company could be slapped with another lawsuit, this time from its shareholders who were alleging breach of fiduciary duty.

An investigation is currently under way. The probe is focusing on inaccurate and misstated financial statements from Jan. 1, 2006 to March 31, 2009.

"As a result of the announcement that the company misstated its earnings, its stock price has dropped, damaging investors, so the lawsuit," the group said in a press release published late Thursday.

Broad market unchanged

Among other distressed issues, General Motors Corp.'s benchmark 8 3/8% notes due 2033 were unchanged to "maybe a smidge better," a trader said, at 32 bid, 32½ offered.

ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were also unchanged at 81 bid, 82 offered.

And, MGM Resorts International Inc.'s 7 5/8% notes due 2017 were "pretty active," according to a trader, and "up about a point" at 801/2.

Paul Deckelman contributed to this article

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