Calpine active, dips slightly; Solutia bonds boosted by rival plan; Sea Containers up

By Stephanie N. Rotondo

Portland, Ore., April 24 - Calpine Corp. continued to be a name thrown around in Tuesday trading, though the structure dipped slightly on the day.

In Calpine news, the company has reached an agreement with its partner in one of its plants, in which Calpine will sell its interest in the natural gas plant.

Meanwhile, a reorganization plan agreed on by an ad hoc committee of bondholders and Solutia Inc.'s former parent was given credit for a rise in the company's bonds, called up 1 point across the board. The plan proposed by the committee rivals that of the company.

Under the plan, bondholders would backstop a $200 million rights offering, while existing stockholders would receive warrants.

Separately, Sea Containers Ltd.'s bonds are gaining in popularity. Traders said the notes ran up as much as 5 points during the trading day.

Calpine dips slightly

Power producer Calpine is continuing to see its paper catch fire. A trader said the name was most active in the morning.

The trader said he saw the San Jose, Calif.-based company's convertibles "up with the common, then down with the common. The equity closed down 5 cents, or 1.33%, to $3.70, while the trader pegged the convertibles at 111.5 bid, 112.5 offered, trading as high as 114.5 on the day.

The company's debt dipped slightly, though it is still seeing decent volume. The trader also saw the 8½% notes due 2011 at 120 bid, 121 offered, while the 8½% notes due 2008 closed at 119 bid, 120 offered.

Calpine agreed to sell its interest in a natural gas-fueled electrical generating plant in Eunice, La., for $60 million to its project partner Cleco Corp.

The sale is subject to an auction because the company agreed to waive its right of first refusal.

If outbid, Cleco will retain its 50% interest and the buyer must pay Cleco $85 million because of distributions that are owed in connection with the project.

However, if Cleco is the buyer, it will have an $85 million unsecured claim against Calpine in connection with long-term tolling agreements for output from the 1,160-megawatt plant.

Solutia bonds boosted

Solutia's bonds were called up by about a point across the board by a distressed trader on the news that an ad hoc committee of noteholders had reached an agreement with Monsanto Co. - Solutia's former parent - on a Chapter 11 plan for the company.

A market source quoted the 11¼% notes due 2009 at the 102 level.

He attributed the move to a Bloomberg report that noteholders will ask the bankruptcy court overseeing Solutia's case to terminate the company's exclusive right to file a reorganization plan.

As reported in Monday's issue of the Prospect News Distressed Debt Daily, the bondholders have asked to be allowed to file their own plan, arguing that Solutia "should not be permitted to stand in the way of a confirmable plan providing for a comprehensive settlement of litigation that will otherwise mire these cases in expense and delay for years."

As reported Tuesday, the company has asked the court to deny the request and instead grant a further 90 days of exclusivity when it considers the issue at a May 1 hearing.

Sea Containers up

Sea Containers continues to improve, as its bonds gained as much as 5 points during the trading day.

One distressed trader pegged the 7 7/8% notes due 2008 at 89.5 bid, 90.5 offered. He said that was up about 5 points from Monday's close at 85.5.

At another desk, a trader saw the bonds at 87.5 bid, 89.5 offered, which he called up about 1.5 points form the morning's open.

"Sea Containers is a name people keep bringing up," the trader said. "There's something out there that's definitely getting people interested."

Broad market mixed

Fedders Corp.'s bonds were less active during Tuesday trading, but a trader noted that the preferred paper saw "big volume," closing up about 30 cents.

"So maybe people are getting into the capital structure of the game," he said, adding that the paper had been quiet for a while but was now starting to see some activity.

The trader said the 9 7/8% notes due 2014 last traded at 45.875, and the preferreds were seen at $4.50 strong bid.

Meanwhile, Doral Financial Corp.'s floating-rate notes, which rarely trade, moved up slightly, according to the trader. He said the notes closed at 94.5 bid, 95.5 offered.

The trader also said that Northwest Airlines Corp.'s 10% notes due 2009 lost altitude, coming in at least a point to 85.5 bid.

Technical Olympic unchanged

New data that showed existing home sales dropping, as well as the median home price, did little to move Technical Olympic USA Inc.'s bonds during trading.

A trader called the 7½% notes due 2011 unchanged at 75 bid, 76 offered, while the 10 3/8% notes due 2012 were "maybe off a point" at 79 bid, 80 offered.

When asked if the new housing data had any effect on the bonds, the trader said, "It is already built in."

What is the issue, according to the trader, is where its Transeastern joint venture's debt will fall, should the homebuilder incur its debt.

"There are no problems with the seniors," he said. "The issue is the senior subordinated notes and where the Transeastern debt will fall."

Ginn Clubs bank debt lower

Ginn Clubs & Resorts' first- and second-lien bank debt headed lower on Tuesday as the company is requesting extensions of 2006 financials for the first quarter and appraisals for the first quarter, according to a trader.

The first-lien term loan closed the day at 96½ bid, 97½ offered, down about a half a point to a point, the trader said.

Meanwhile, the second-lien term loan closed the day at 84 bid, 86 offered after being bid as low as 81 during market hours, the trader continued. On Monday, the second-lien term loan was being quoted at 88 bid, 90 offered.

Ginn Clubs is a Celebration, Fla.-based resort development and management firm.

Sara Rosenberg contributed to this article.

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