Kodak denies bankruptcy rumors, debt rallies; investors cashing out of casinos; Hovnanian dips

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., Oct. 3 - Distressed debt followed the rest of the market downward Monday as the fourth quarter got off to a shaky start.

"It's ugly," a trader said. "Things continue to go down. The market is getting off to a bad start for the fourth quarter. People are still licking their wounds."

But while most credits were losing ground, Eastman Kodak Co. was attempting to regain ground lost the previous week after the company first said it had drawn down its revolving credit facility and then said that it had hired Jones Day to help with a restructuring.

The rest of the market was not faring as well, as evidenced by casinos. Caesars Entertainment Corp. was trading actively and lower, though not by all that much, comparatively speaking. MGM Resorts International Inc. was also down on the day.

"Nobody is saved from the executioner's blade," a trader said.

Hovnanian Enterprises Inc. was not spared the blade either, as the bonds fell at least a point or two and credit default swaps soared.

Kodak bonds rally

Eastman Kodak's 7¼% notes due 2013 gained as much as 15 points on the day as the Rochester, N.Y.-based company tried to assure investors that it was not planning an imminent Chapter 11 filing.

"They rebounded from Friday," a trader said, seeing the notes close around 40, up 14 to 15 points from the previous trading session.

He deemed the 9¾% notes due 2018 "kind of unchanged" at 73 bid, 76 offered.

A second source called the 7¼% notes 10 points better at 40 bid, while a third source said the issue "traded up some."

"They were all over the place," he said, seeing the bonds hit a high around 40.

"They probably settled in a little bit lower than that," he said.

However, he said the 9¾% notes were heavier at 73 bid, 75 offered, down from 76 bid, 78 offered.

On Friday, Kodak said it had hired Jones Day to help it in its restructuring efforts. Investors, already smarting from news out earlier in the week regarding a $160 million draw on its revolving credit facility, reacted by pushing the bonds even lower.

But come Monday, the company was adamantly claiming that a bankruptcy was not in the cards. A $14 million coupon payment on its convertible debt might have also helped matters.

No win for casinos

Recession concerns have not been helping casino credits recently and the downward spiral continued during Monday trading.

A trader said Caesars' 10% notes due 2018 were "very active," though there "wasn't a lot of [price] movement." He saw the issue closing around 573/4, though most of the day the bonds were trading in a 58½ bid, 59½ offered contest, he said.

At another desk, a market source deemed the paper down 1½ points to 57¾ bid, while MGM Resorts' 6 5/8% notes due 2015 lost a deuce, closing at 85 bid.

Yet another trader saw Caesars' debt trading around 57.

There was no fresh news out on the Las Vegas-based casino operators.

Hovnanian weakens more

Last week, Red Bank, N.J.-based homebuilder Hovnanian Enterprises announced a private exchange offer for some of its senior unsecured notes. Investors, however, did not react favorably to the news and the bonds fell off as a result.

That malaise continued into Monday trading as the company's CDS soared, making the odds of a default in the next five years about 91%.

One trader said the 10 5/8% notes due 2016 slipped to 73 bid, 74 offered, down from levels around 75 previously.

A second trader called the paper down 2 points at 74½ bid.

Cement, chemicals decline

A trader said Texas Industries Inc.'s 9¼% notes due 2020 were down 5 points at 741/2.

"All those cement guys" are getting hammered, a trader said, in part due to a dreadful housing market.

Also getting whacked recently is the chemicals arena.

"Chemicals are under a little pressure," a trader said.

Omnova Solutions Inc., for instance, was the "biggest down, price-wise," the trader said. He said the 7 7/8% notes due 2018 dropped to 70¼ from 80¾ bid, 81 offered on Friday.

There has been no fresh news out since the company released its earnings last week.

Another trader said Hexion Specialty Chemicals Inc.'s 8 7/8% notes due 2018 were down "a couple points," trading around 80.

And, Berry Plastics Corp.'s 9½% notes due 2018 were seen slipping to 83 from 86 bid, 88 offered late last week.

GenMar drifts lower

A trader said that General Maritime Corp. was "a name that was all over the lot," as the troubled New York-based tanker company's 12% notes due 2017 gyrated wildly.

He said that the bonds - which last week had been anchored in the 40s before ending the week around 38-40 - opened up trading around 30, and at one point, the bonds shot all the way up to 69 bid, only to come crashing back down to the lower 20s, ending at around the 23 level, down around 8 points from their early levels.

While there was a lot of trading going on, most of it was in relatively small pieces - only about $4 million or $5 million changed hands on a round-lot basis.

"I have no idea what's going on with them," he said, suggesting that the Trace high print of 69 - a trade of more than $1 million - may have been a fluke, "some kind of a mistake - or maybe some major news came out."

As it turned out, there was major news out on the company, very late in the day, as it announced that it has entered into amendments on its $550 million revolving credit facility, its $372 million term loan facility and another $200 million credit facility with affiliates of Oaktree Capital Management, LP.

General Maritime said that the amendments waive the covenant regarding required minimum balance in cash, cash equivalents and revolver availability under each of the credit facilities through Nov. 10, barring an event of default ahead of that date. It said that an amortization payment it made on Friday to the term loan facility would instead be allocated to pay down the revolver, allowing the company to later re-borrow that amount, subject to the satisfaction of certain conditions.

The company also said that it "continues to review its financing options and is currently considering various alternatives with respect to the restructuring of its capital structure. As a result, General Maritime has commenced discussions with its lenders and other creditors concerning a potential restructuring of its indebtedness. There can be no assurance that the company will be able to reach agreement with its lenders and other creditors on a consensual restructuring of its capital structure."

It chief financial officer, Jeffrey D. Pribor, declared, "Management continues to take proactive measures to increase the company's financial flexibility during a challenging market environment. We appreciate the ongoing support from our distinguished lending group and remain focused on pursuing opportunities to further strengthen our capital structure."

General Maritime's now nearly-valueless New York Stock Exchange-traded shares - which were trading at around $4.50 a year ago - fell on Monday by 6 cents, or 23.08%, to close at 20 cents, on volume of 2 million shares, slightly more than usual.

Springleaf heads down

A trader said that Springleaf Financial Corp.'s bonds "drifted a little lower," seeing the Evansville, Ind.-based consumer lender's 6.90% notes due 2017 "down a couple of points" at a 67-68 context.

He said it was "pretty active, decent volume."

The bonds of the former AIG unit - now controlled by Fortress Investments, which earlier changed its name from American General Finance - had been trading as high as the mid-80s a month ago, but then fell on liquidity concerns.

Earlier this year, the company was reported to have considered setting up a real-estate investment trust to buy some of its assets, in order to provide funds to pay off the $756 million in its debt that matures this year and the $2.04 billion that matures next year, but it subsequently shelved those plans.

Broad market heavy

Elsewhere in the distressed market, Sprint Nextel Corp.'s 8¾% notes due 2032 were "real heavy," according to a trader.

He said the debt opened around 86 and traded down to 83.

That compared with levels around 87 bid, 87½ offered on Friday.

Meanwhile, NewPage Corp.'s 11 3/8% first-lien notes due 2018 were "down a few most point today," a trader said, placing the issue around 70, down from early morning levels of 72½ bid, 73 offered.

© 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.