Decent financials help Cheniere, Calpine bonds; Ply-Gem boosted by numbers; casinos close mixed

By Stephanie N. Rotondo

Portland, Ore., Aug. 11 - In the world of energy, both Cheniere Energy Inc. and Calpine Corp. posted quarterly results Monday - and the financials seemed to help out their debt.

Cheniere/Sabine Pass reported a wider loss for the second quarter, largely due to restructuring costs. However, the company also said that it had received a capital infusion. In reaction, the bonds ended the day about 3 points better.

Meanwhile, Calpine turned last quarter's net loss into net income this quarter. The formerly bankrupt company's term loan inched its way higher in response.

In other earnings news, Ply-Gem Industries Inc. also released its results Monday. The company showed a decrease in sales, attributed to continued struggles in the housing market. Still, the company has taken measures to ensure it has adequate liquidity - which may have been the thing that caused a couple-point gain in the bonds.

Atlantic City published its casino revenues for July. The gaming center once again saw its win ratio slide. But the sector was largely mixed. Among the Shore's casinos, Trump Entertainment Resorts Inc.'s bonds dipped, Harrah's Entertainment LLC's debt was unchanged and Tropicana Entertainment LLC closed slightly better.

Financials help Cheniere, Calpine

Cheniere Energy, also known as Sabine Pass LNG, saw its bonds hike up as much as 3 points after the company released its earnings statement.

A trader said the 7½% notes due 2016 were "up a bit" post-numbers. He saw the notes trading around 83 prior to the release, then head up 2.5 to 3 points to 85.5 bid, 86 offered after the results.

Another trader said the bonds - and the stock - "soared on an equity infusion," quoting the 7½% notes at 84.5 bid, 85.5 offered and the 2¼% subordinated notes due 2012 around 30. The stock gained more than 50%, closing at $4.40.

At another desk, a trader pegged the 7½% notes at 85, up 3 points.

For the second quarter of 2008, Cheniere posted a net loss of $132.3 million versus a net loss of $41.1 million in 2007. Excluding restructuring items, net loss came in at $53.7 million.

In a prepared statement, the Houston-based natural gas supplier also said it had secured $250 million of convertible security financing. The proceeds from the infusion will be used to pay off a $95 million bridge loan obtained in May as well as to fund general corporate purposes.

In other energy related news, Calpine's term loan gained some ground after the company posted "pretty good" earnings for the second quarter and the first half of this year, a trader said.

The term loan was quoted at 92¾ bid, 93¼ offered, up from Friday's levels of 92¼ bid, 92¾ offered, the trader said.

For the second quarter, the San Jose, Calif.-based company reported net income of $197 million, or 41 cents per share, compared to a net loss of $500 million, or $1.04 per share, in the same period last year.

Operating revenues for the quarter were $2.83 billion, up 37% from $2.06 billion in 2007, primarily as a result of an increase in the company's average realized electric price.

Consolidated commodity margin for the quarter was $785 million, up 47% from $535 million in the second quarter of 2007.

And, adjusted EBITDA for the quarter was $474 million, up 45% from $326 million in the prior-year period.

"I am encouraged by our ability to demonstrate continued progress during the second quarter, as we remain focused on excellence in our core operations," said Zamir Rauf, interim chief financial officer, in a news release.

"For the second quarter in a row, we have delivered considerable improvements in Commodity Margin and Adjusted EBITDA over the prior-year period. I am confident that the Calpine team will continue to deliver clean and reliable energy to our customers over the course of 2008, while at the same time delivering value to our shareholders," Rauf added in the release.

For the six months ended June 30, the company had a net loss of $17 million, or 4 cents per share, compared to a net loss of $959 million, or $2.00 per share, in the comparable period in 2007.

Operating revenues for the six months were $4.78 billion, up 28% from $3.72 billion last year.

Consolidated commodity margin for the six-month period was $1.27 billion, up 33% from $957 million in the first six months of 2007.

And, adjusted EBITDA for the six months was $768 million, up 33% from $576 million in the same period last year.

Earnings boost Ply-Gem bonds

Cary, N.C.-based Ply-Gem reported its results for the second quarter of 2008. Traders reported that the company's bonds moved up a couple points on the numbers.

A distressed trader pegged the 9% notes due 2012 at 52 bid, 52.5 offered, up from around 50 on Friday. Another source placed that issue at 52 bid, 54 offered, while another saw the 11¾% notes due 2013 around 91.

For the quarter, Ply-Gem's net sales decreased 12.6% to $341.3 million from the year before. Adjusted EBITDA fell to $40.4 million from $65.6 million in 2007. Net loss came in at $1.6 million, compared to net income of $84.4 million.

The company attributed its financial decline to turmoil in the housing market. However, in a prepared statement, Ply-Gem's top executive said that the company was able to offset some of the negative impact by increasing its market share and reducing expenses.

Furthermore, with the new bond issue - the 11¾% notes due 2013 - and an asset-based revolving credit facility, Shawn K. Poe, chief financial officer, said there is enough liquidity "to manage our business through this current cycle and emerge as one of the true winners in the building products industry."

Ply-Gem manufactures exterior building products.

Casinos mixed on data

Anyone who believes that the "house always wins" has not been to Atlantic City lately.

The gaming center on the Jersey Shore saw revenues decrease yet again in July. But in the bonds, casinos were largely mixed on the day.

Trump Entertainment's 8½% notes due 2015 slipped half a point to around 46.5, while Harrah's Entertainment's 10¾% notes due 2016 were deemed unchanged at 79.5 bid, 81 offered. Tropicana Entertainment's 9 5/8% notes due 2014 inched higher to around 31 versus Friday's levels of 29 bid, 30 offered.

In the rest of the sector, Station Casinos' 6 7/8% notes due 2016 were called "a little better" at 47 from 45. Isle of Capri Casinos' 7% notes due 2014 gained half a point to 70.5 bid, while Boyd Gaming was likewise better at 89.5 bid.

For the month, Atlantic City's Casino Control Commission saw revenue from its 11 casinos drop 6.6% to $437.7 million. Slot machine revenue fell 7.2%, and table revenue dipped 5.1%.

Broad market tidbits

In an 8-K filed with the Securities and Exchange Commission, Portola Packaging Inc. said it had distributed its disclosure statement on Aug. 4. The statement is part of the company's plan to file a pre-packaged bankruptcy.

A trader saw the rarely quoted 8¼% notes due 2012 at 12 bid, down from 15 bid last week. However, he said the bonds have not traded in weeks.

Meanwhile, Primus Telecommunications Group Inc.'s 8% notes due 2014 have "found their bottom," the trader said, pegging the debt at 35 bid, 37 offered.

Elsewhere, a trader said General Motors Corp. and GMAC LLC paper were among the most active issues of the day. He quoted GM's 8 3/8% notes due 2033 at 63.5 bid, 64.5 offered and GMAC's 5.8% notes due 2009 at 97.5 bid, 98.5 offered.

A trader saw Idearc Inc.'s 8% notes due 2016 at 42, which he called up a point.

Among distressed LBOs, Swift Transportation Co. Inc.'s 12½% notes due 2017 were seen a point better at 40 bid, while Claire's Stores Inc.'s 9¼% notes due 2015 were unchanged at 42.

Sara Rosenberg and Paul Deckelman contributed to this article.

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