Buffets bonds plummet; Dura seniors weaker; Primus Telecom posts 'good' numbers

By Stephanie N. Rotondo

Portland, Ore., Nov. 5 - Monday's session was called quiet by several traders, though at least one name in distressed land provided some activity.

Buffets Holdings Inc., the operator of such restaurants as Old Country Buffet and Hometown Buffet, posted a wider loss for its first quarter of 2007, despite a significant increase in sales. The poor numbers resulted in the bonds "getting rocked," dropping almost 20 points on the day.

Over in the autosphere, Dura Automotive Systems Inc. continues to fight its subordinated debt holders, and its senior bonds continue to slide. A trader speculated that the losses the bonds have garnered over the last few sessions could be attributed to senior holders losing faith in the battle. Still, he said it was more likely due to problems in the sector at large.

Investors were probably waiting to see what Primus Telecommunications Group Inc.'s third-quarter financials had to say before stirring them up - which was likely the reason the bonds were rather quiet during the trading day. In the previous session, the bonds had dipped slightly, causing one trader to scratch his head. He said that numbers were not expected to be bad - and in fact turned out to be as expected - so he could not account for the previous slip.

But as quiet as traders said Monday was, some remained hopeful that the week had more to bring.

"The weekend was great," a trader quipped. "Feels like it hasn't ended. There is nothing going on."

"It will pick up," assured another trader.

Buffet bonds 'rocked'

Buffets bonds were on "quite a roller coaster," a trader said, as the debt dipped almost 20 points on poor quarterly numbers.

"Talk about getting rocked," he said.

The trader said the 12½% notes due 2014 started the day off at 64 bid, 66 offered. Then the bonds slipped into the 50s and down into the 40s. The debt then moved up slightly to "hover" around 50, before closing down again at 45 bid, 47 offered. The trader said the low quote of the day was 41 bid, 45 offered.

Another trader pegged the notes at 46 bid, 47 offered. The trader said the bonds closed Friday's session at 64 bid, 66 offered.

"Numbers came out and apparently no one like-y," he said.

Another trader called Buffets "the name in the news" and said its notes plummeted from around the 65 level to 43 bid, 45 offered.

Another trader called then down 15 points at 45 bid, 47 offered on "bad numbers and a bad conference call after that."

The Eagan, Minn.-based restaurant operator posted a net loss of $5.3 million for its first quarter of 2007, compared to a net loss of $1.1 million for the same quarter the previous fiscal year. The company attributed the wider loss to higher interest expenses and restaurant costs, as well as costs associated with its merger with Ryan's Restaurant Group in November 2006.

Still, the merger also resulted in higher sales. Net sales grew by 76% to $376.5 million from $213.9 million the year before.

The company said it is also looking to unload some of its assets, namely Tahoe Joe's Famous Steakhouse restaurants. A sale is expected within the next fiscal year.

In its conference call Monday, Buffets' chief financial officer said that the company is looking to amend or get a waiver on its credit facility covenants. Keith Wall said if amendments or waivers were not obtained, it was likely to breach the current covenants, based on its current high leverage.

Dura seniors weaker

In the automotive sector, Dura Automotive Systems' senior debt continued to take a hit as the company and holders of the senior paper engaged in battle with the subordinated debt holders.

A trader said the 8 5/8% senior notes due 2012 were offered at 36.5, after closing last week around 39. Another trader quoted the senior issue also at 36.5, while the 9% subordinated notes due 2009 held their ground at 1.25 bid, 1.5 offered.

At another desk, the senior paper was deemed 2 points lower at 35 bid, 37 offered, while another trader saw the bonds down 1 point at 36 bid, 37 offered.

The Rochester Hills, Mich.-based company asked the bankruptcy court overseeing its case to disallow the subordinated holder's counsel to participate in the current proceedings until the legal team had filed a representation disclosure statement. The subordinated holders are fighting the company's reorganization plan, which leaves them with no recovery.

"[The company] is nitpicking to get the x-clause complaint dismissed," a trader said. Dura is trying to push through its current plan, which includes a rights offering backed by Pacificor LLC.

But as the senior debt continues to slide, the trader speculated that perhaps some of the senior bondholders were looking more closely at the subordinated group's arguments - and possibly seeing some merit.

Still, the trader opined that the reason for the slip was due to the general tone of the sector.

"In my personal opinion, I think it has more to do with trading in sympathy to Delphi [Corp.], and the U.S. auto business is crap," he said. Delphi has said it is having troubles finding exit financing - something Dura is also looking to obtain.

Primus numbers 'good'

Primus Telecommunications released its third-quarter results just after the bond market closed Monday, and the numbers were "good," a trader said.

"They were as expected," a trader said.

But the bonds were relatively quiet leading up to the financial release. The trader said the 8% notes due 2014 were offered at 65, giving a wide quote of 62 bid, 65 offered. He added that the bonds traded at 61.5 bid, 63 offered, but in small pieces.

Another trader said the 7% notes due 2009 were bid at 81, "with no right side." He also saw a 60 bid on the 8% notes.

The first trader noted that the company said it had purchased back some of its 12¾% notes due 2009, adding "that's always good."

The trader added that, as the numbers came out late, he expected the bonds to see some activity in the next session.

Another trader said the 8% notes rose 1 point to 62 bid, 63 offered on "pretty good" earnings.

Primus posted a net income of $6 million for the third quarter of 2007 on $225 million in revenue. That compares to a net income of $12 million on $227 million in revenue in the prior quarter.

Tembec steady

A trader said Tembec Inc.'s bonds have been "languishing" at their current levels for some time. He quoted the 8½% notes due 2011 at 40.25 bid, 41.5 offered and the 8 5/8% notes due 2009 at 49 bid, 50 offered.

"They have been stuck there now for a couple of days," he said.

Another trader said the forest products company's debt was "quoted a lot" but barely traded.

Broad market lower

Spectrum Brands Inc.'s 11¼% notes due 2013 lost a point to end at 83 bid, 84 offered, while its 7 3/8% notes due 2015 were off 1.5 points at 71 bid, 72 offered.

Neff Corp.'s 10% notes due 2015 were down 1 point at 68 bid, 70 offered.

Sea Containers Ltd.'s bonds were down 2 points, with the 10¾% notes that were to have come due in 2006 at 69.5 bid, 71.5 offered.

Paul Deckelman contributed to this article.

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