Arch Coal reports wider loss, bonds slip; RadioShack debt stumbles as exec exits; Visant gains

By Stephanie N. Rotondo

Phoenix, April 22 - Distressed bonds were mixed on Tuesday as more players returned to their desks after a long holiday weekend.

Still, overall liquidity was muted.

"Dull day," said one market source.

Even Arch Coal Inc. bonds were little changed after the coal producer reported a bigger-than-expected quarterly loss and lowered its shipping forecast.

Meanwhile, RadioShack Corp. was on the weaker side. The company announced an executive departure on Tuesday and word on the street is that a previously announced store closure was running into obstacles.

Visant Holdings Corp. continued to be active, according to traders. The company's debt regained some of the ground lost in the previous session on news the Federal Trade Commission blocked the company's Jostens Inc. merger with American Achievement Group Holdings Corp.

In other distressed names, a trader said Caesars Entertainment Corp.'s bonds were "very active at the end of the day, particularly the 9% [notes due 2020].

"Something must be going on there," he speculated.

He said the issue traded up to 84 - a three-quarter-point gain day over day - by mid-afternoon, then a late-day print came in at 843/4.

He also saw the 11½% notes due 2017 rising a point to 93 and the 10% notes due 2018 putting on half a point to finish around 46.

Another trader said that NII Holdings Inc.'s 7 5/8% notes due 2021 "definitely kind of keeps creeping higher," seeing the bonds end "a smidge better" at 281/2.

A second trader deemed the debt up half a point, also at 281/2.

Arch posts wider loss

Arch Coal bonds were only slightly impacted after the company posted a bigger-than-expected loss for the first quarter.

A trader said the 7¼% notes due 2021 fell half a point to 751/2, while the 7% notes due 2019 lost almost 1½ points to end around 77 5/8.

"I didn't think they were down all that much," another trader said, seeing the 7¼% notes in a 75¼ to 75½ context.

For the quarter, net loss widened to $124.1 million, or 59 cents per share, from $70 million, or 33 cents per share, the year before.

Adjusted loss was 60 cents per share, which was better than the 42-cent-per-share loss expected by analysts polled by Thomson Reuters.

Revenue was fairly steady at $736 million. Analysts had predicted $717.7 million.

The company attributed the bigger loss to lower prices and weak demand for metallurgical coal.

Looking forward, Arch said it is expecting to focus on its Appalachian assets, which cost less to produce met coal. However, the company still slashed its 2014 cost outlook at the top end to $66 per ton from $67 per ton.

The low end held at $63 per ton.

Additionally, the company is forecasting that it will ship between 6.3 million and 7.3 million tons of met coal this year. That compared to previous guidance of 7.5 million to 8.5 million tons.

RadioShack exec resigns

RadioShack debt was slipping Tuesday as the company announced the resignation of Troy H. Risch, executive vice president of store operations.

Risch, a 19-year veteran from Target Corp., held the post for a little over a year. He was said to leave the position to explore other interests.

A trader said the 6¾% notes due 2019 dipped half a point to 36 5/8. Another trader said the bonds "continued to trade a little bit lower" at 36 bid, 37 offered.

Along with the executive departure, chatter has it that the Fort Worth, Texas-based electronics retailer's plans to shutter 1,100 stores has hit a snag.

According to the Wall Street Journal, the company needs to get approval of two major creditors in order to move forward with the closures. Thus far, the lenders have not gotten on board.

Visant rebounds

Visant's 10% notes due 2017 were clawing their way back up in Tuesday trading, after falling 7 to 8 points on Monday.

One trader said the bonds were up 1¾ points to 951/4. Another trader said the paper "rebounded another 1½ points" to close around 95.

Visant's debt dropped on Monday as investors reacted to news that its Jostens merger with American Achievement was being blocked by the FTC.

The $486 million merger was originally announced in November and had been expected to close in July, assuming all regulatory hoops were jumped through. But the FTC on Thursday said it was seeking a court order to block the merger, alleging that it would have hurt the class ring-buyers market.

"A combination of two of the three leading manufacturers would have led to higher prices and lower quality for the students and their parents who purchase these rings," Debora Feinstein, bureau of competition director, said in a news release.

Due to the FTC's ruling, the parties of the merger agreement have agreed to terminate the offer.

No termination fee will be paid.

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