Calpine bank debt gyrates, bonds lower; RCN gets more time from lenders

By Paul Deckelman and Sara Rosenberg

New York, May 4 - Calpine Generating Company LLC's second lien and first lien term loans were heard by bank debt traders to have bounced around during Tuesday's session before ending essentially little changed. The San Jose, Calif.-based independent power producer's bonds were meanwhile heard lower for a second consecutive session.

In the bank-debt market, both tranches of Calpine Generating's paper were heard to have headed lower during the course of the day - only to rebound to basically unchanged levels, according to traders, who attributed the volatility to news of an asset sale by Duke Energy.

One trader quoted Calpine's second-lien term loan at 93 bid, 94 offered by the end of the day.

Meanwhile, the first-lien term loan was trading around 99.75 to par by the end of the day, according to a second trader. The paper dropped by about half a point and then rebounded to end unchanged to up about an eighth, the trader added.

The bank debt traders cited the impact of the news that Duke, a Charlotte, N.C. -based diversified energy company, had entered into an agreement to sell its merchant generation assets in the southeast U.S. for $475 million to KGen Partners LLC. Total proceeds from the transaction, including the sales proceeds and about $500 million in tax benefits, will be approximately $1 billion.

In the bond-trading pits, there was a general feeling that there was, in the words of one trader, "more weakness in Calpine" on the heels of Monday's slide and ahead of Thursday's scheduled quarterly earnings release.

He saw Calpine's 8½% notes due 2008 as having fallen to 65.5 bid, 66.5 offered from prior levels at 68 bid, 68.75 offered, while the 2005 notes dropped as low as 90 bid, 90.5 offered from prior levels, although he saw them ending up a point off their lows but still down a point on the session at 91 bid.

"They've gotten beaten up a little bit," he observed.

However, at another desk, the Calpine 81/2s were seen actually slightly better on the day, at 67.75 bid.

RCN mixed

Elsewhere, RCN Corp. bonds were mixed on the news that the Princeton, N.J.-based telecommunications and broadband company has extended forbearance agreements with its lenders to May 17 from the scheduled May 3 expiration.

RCN, which began missing interest payments on portions of its debt in January and which has been in talks with its bondholders and bankers on the possibility of a consensual restructuring through Chapter 11, reiterated its commitment to file for bankruptcy as soon as all of the details are worked out.

RCN's 10% notes due 2007 were seen a point higher at 52 bid while its 9.80% notes due 2008 likewise moved up a point to 52.5. The company's 11% notes due 2008 were half a point lower at 51 bid, while its 11 1/8% notes due 2007 and 10 1/8% notes due 2010 were at 52 bid and 52.5 bid, respectively, both unchanged.

American Restaurant unmoved

Also unchanged, a trader said, were American Restaurant Group's 11½% notes due 2006 at 45 bid; the company, which operates the Stuart Anderson's Black Angus restaurant chain, said that it had missed the interest payment it was supposed to have made on the notes on Monday, instead invoking the standard 30-day grace period in which to make the payment.

The company also said that it has hired Jefferies & Co. Inc. to act as its financial advisor to explore capital restructuring and to assist with discussions with the 11½% noteholders.

Another trader quoted the bonds at 45.25, but flat, or trading without the accrued interest.

At another desk, a third trader quoted the bonds at 44 bid, although he did see some trade as high as 47 earlier in the day.

The trader saw Trico Marine Services Inc.'s bonds at 45.5 bid, 46.5 offered, and opined that Levi Strauss & Co.'s bonds were "a little weaker, with the San Francisco-based blue jeans maker's 12¼% notes due 2012 off a point at 89 bid and its 11 5/8% notes due 2008 at 90 bid, 92 offered.

He saw Florida supermarket operator Winn-Dixie Stores Inc.'s 8 7/8% notes at 90.5 bid, 92.5 offered, and its 7.80% and 8.181% pass-through securities at 85 bid, 87 offered, and 80 bid, 82 offered, as the bonds - which had eased on Monday in apparent reaction to the store chain's earnings data on Friday - apparently came off their lows.

Also off its lows, a trader said, was Air Canada's dollar-denominated 10¾% notes; he saw the insolvent Canadian air carrier's bonds open at 34 bid, 36 offered, fall to 31 bid, 33 offered during the session, before ending at 33 bid.

Another trader saw the bonds offered at 35 but had seen no bid.

The company received a Canadian judge's OK to start searching for an equity partner - but the jurist reserved judgment on whether to allow Air Canada to proceed with a C$850 million ($620 million) restructuring deal with Deutsche Bank.

However, Ontario Superior Court Judge James Farley promised a decision "sooner rather than later."

© 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.