Claire's slides on numbers; DAE Aviation rises on asset sale; Tropicana bid inches up

By Sara Rosenberg

New York, Dec. 14 - Claire's Stores Inc.'s term loan B bounced around on Friday on the heels of the company's release of lower-than-expected fiscal third-quarter financial results, and DAE Aviation Holdings Inc.' term loans were stronger as investors are expecting a paydown from an asset sale.

In other trading news, Tropicana Entertainment LLC's first-lien term loan saw its bidside creep higher on continued hopes of a potential repayment.

Claire's term loan B was weaker during trading hours as investors were disappointed by the company's numbers for the fiscal third quarter 2008 ended Nov. 3 that reflected a softening retail environment, according to a trader.

Early on in the day, the term loan B was trading in the 85s and then, after the company held its conference call to discuss the financial results, the loan traded as low as 831/2, the trader said.

However, some better buyers started to step in at the lower levels, pushing the paper up to the 84½ bid, 85 offered context by late afternoon, the trader remarked.

Despite the slight rebound, levels on the term loan B still ended the session lower on a day-over-day basis as the paper had closed out on Thursday at 86 bid, 87 offered, the trader added.

For the fiscal third quarter, the company reported net sales of $357.4 million, a 2.8% increase over the third quarter of fiscal 2007. The increase was primarily attributable to the growth in the company's new store base, particularly in Europe, and foreign currency translation gains, offset by a slight decrease in same-store sales.

Fiscal third quarter consolidated same-store sales declined 0.7%. In North America, same-store sales decreased 1% versus last year's third fiscal quarter. European same-store sales were essentially flat with last year's third fiscal quarter, at negative 0.1%.

Also in the quarter, adjusted EBITDA was $60.5 million, compared with $68.5 million last year; cash provided by operating activities was approximately $24.4 million, compared with $56.6 million last year; and capital expenditures were $23.8 million versus $30.1 million last year.

For the first nine months of fiscal 2008, net sales were $1.0635 billion, up 5.4% from $1.0087 billion in the comparable period last year.

Consolidated same-store sales for the first nine months of fiscal 2008 decreased 0.4%.

Adjusted EBITDA during the nine-month period was $185.5 million, compared with $196.6 million in the first nine months of fiscal 2007.

Claire's is a Pembroke Pines, Fla.-based specialty retailer of value-priced jewelry and accessories for girls and young women.

DAE Aviation rises

DAE Aviation's term loan debt gained some ground on Friday because lenders are expecting a paydown from proceeds raised through the pending sale of Landmark Aviation assets, according to a trader.

The company's asset-sale term loan was quoted at 99 7/8 bid, par offered, up from 99½ bid, 99 7/8 offered, and the term loan B was quoted at 99½ bid, par offered, up from 98 5/8 bid, 99¼ offered, the trader said.

On Thursday night, Dubai Aerospace Enterprise announced that it is selling the fixed-base operator (FBO) business, including the related charter, aircraft sales and maintenance parts assets, of Landmark Aviation to GTCR Golder Rauner LLC and Encore FBO, LLC.

The Landmark and Encore fixed-base operator networks will join to form a single organization comprised of 42 fixed-base operators across North America and Western Europe and will offer fueling and maintenance services for general aviation aircraft.

The combined entity will continue to operate under the Landmark Aviation brand.

As was previously reported, Barclays Capital is providing the financing for the transaction.

Tropicana bid better

Tropicana Entertainment's first-lien term loan bid was better during the session, still on follow through from news of a potential repayment, according to a trader.

The first-lien term loan ended the day at 97½ bid, 98 offered, up on the bidside from 97 bid, the trader said. The offer was unchanged.

On Thursday morning, Tropicana Entertainment announced that the New Jersey Casino Control Commission denied the gaming license renewal application at its Tropicana Casino and Resort in Atlantic City and that the commission ordered that the property be transferred immediately to a trustee until a sale can be arranged.

Proceeds from the Atlantic City sale will be used to repay debt under the company's credit facility.

The trustee is required to complete the sale of the Tropicana Atlantic City within 120 days of the transfer of the property to his control, although this period of time may be extended by the commission.

Tropicana Entertainment plans to appeal the commission's determination through the New Jersey appellate court system.

If the appeal is unsuccessful by Dec. 19, the company will be in default under its credit facility, and if lenders accelerate the bank debt, then there will also be a default under the company's senior subordinated notes and under the term loan of subsidiary Tropicana Las Vegas Resort & Casino LLC.

Tropicana Entertainment plans to continue its efforts to work with the lenders under its credit facility to prevent an acceleration from occurring.

If the lenders do accelerate the debt, the company could be forced to seek alternatives, including, without limitation, bankruptcy protection.

As a result of this news, on Friday, Moody's Investors Service downgraded Tropicana Entertainment's corporate family rating to Caa1 from B2 and Tropicana Las Vegas Resort & Casino's corporate family rating to B3 from B2.

On Thursday, Standard & Poor's lowered its corporate credit ratings on Tropicana Entertainment and Tropicana Las Vegas Resort & Casino to CCC from B and placed the ratings on CreditWatch with developing implications.

Tropicana Entertainment is a Fort Mitchell, Ky.-based gaming entertainment provider.

Leap holds firm on numbers

Leap Wireless International Inc.'s term loan held steady on Friday on the back of the release of third-quarter 2007 financials, according to a trader.

The term loan was quoted at 98½ bid, 99 offered, unchanged from previous levels, the trader said.

For the third quarter, service revenues were $354.5 million, an increase of 47% from last year, driven by a 42% increase in weighted-average customers and an increase of $1.64 in average monthly service revenue per user.

Operating income for the third quarter was $9.4 million, compared with operating income of $7.1 million for the third quarter of 2006, and adjusted operating income before depreciation and amortization was $95.7 million, up 87% from $51.2 million last year.

The company ended the period with 2.71 million customers, an increase of 37.8% from the third quarter of 2006, and reported net customer additions for the quarter of 36,500.

Net loss for the third quarter was $43.3 million, or $0.64 per diluted share, compared with a net loss of $0.8 million, or $0.01 per diluted share, for the corresponding period last year. The increase in net loss is primarily attributable to an increase in net interest expense because of more long-term debt and a change in the company's tax accounting method for amortizing certain wireless licenses. Together, the increases in net interest and tax expense as a result of the change in tax accounting method contributed $0.55 to the net loss per diluted share.

Capital expenditures during the quarter were approximately $107.3 million, including $11.5 million in related capitalized interest, bringing total capital expenditures for the nine months ended Sept. 30 to $345.2 million.

As of Sept. 30, total unrestricted cash, cash equivalents and short-term investments were $655.7 million.

Leap also released its outlook for the fourth quarter and full-year 2007.

For the fourth quarter, the company expects net customer additions to be between 70,000 and 130,000 and adjusted operating income before depreciation and amortization to be between $105 million and $115 million.

For the full year, adjusted operating income before depreciation and amortization is expected to be between $385 million and $395 million, and capital expenditures are expected to be $300 million to $320 million for the existing business and the company expects to invest $205 million to $225 million in capital expenditures to support its major new initiatives.

The company also said that it expects adjusted operating income before depreciation and amortization to grow at a compound annual growth rate of 30% to 40% from 2007 through 2010.

Leap is a San Diego-based provider of wireless services.

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