Sears, Bon-Ton rally; Sprint paper gains as LightSquared investment delayed; Petroplus drops

By Stephanie N. Rotondo and Paul Deckelman

Portland, Ore., Jan. 6 - Distressed debt remained on firmer footing during Friday trading, though overall activity was a bit muted.

"There's cash out there waiting to be put to work," a trader said.

Sears Holding Corp. remained a dominant credit. After holding steady for most of the week, the bonds actually managed to gain a bit of ground. Bon-Ton Stores Inc. was also slightly better, after getting hammered in the previous session on the back of poor sales and lowered guidance.

Meanwhile, Sprint Nextel Corp.'s "whole structure was kind of active," a trader said. The bonds moved up modestly after the company said it was putting its LightSquared investment on hold.

Petroplus Holdings AG was the day's biggest loser, according to traders, after the company announced that its access to credit lines was suspended.

Sears, Bon-Ton rebound

Retailers continued to be on the active side Friday, and Sears held on to its dominant position within the industry, in terms of volume traded.

A trader said Sears' 6 5/8% notes due 2018 traded up nearly a point to 76¾ bid, 77 offered. Another trader said the issue was "maybe a little better" at 76½ bid, 77 offered.

Standard & Poor's downgraded Sears' rating to CCC+ from B on Friday, citing the belief that EBITDA will be negative in 2012 and that liquidity would be strained through 2013 "absent a turnaround or substantial asset sales to fund operating losses."

Elsewhere in the world of retail, Bon-Ton Stores' 10¼% notes due 2014 were also on the rise, rebounding from the previous day when the debt lost over 3 points.

A trader called the notes up half a point at 60 bid, 61 offered. Another source also placed the debt in the 61 ZIP code.

Bon-Ton had been battered on Thursday after the company reported dismal same-store sales and also lowered its fiscal guidance.

For the month of December, the York, Pa.-based retailer saw same-store sales fall 0.7%. Total sales dropped to $505.2 million from $510.8 million the year before.

For the year, same-store sales were down 2.8%, with total sales slipping 3.2% to $2.71 billion.

The company attributed the lighter sales to milder temperatures.

Bon-Ton also revised its guidance, with EBITDA expectations now at $170 million to $175 million, down from $190 million to $210 million.

Loss per share was also revised to a range of $1.30 to $1.00.

Sprint bonds move up

A trader said Sprint Nextel's "whole structure was active" and stronger on Friday, following news the company had decided to put its LightSquared investment on hold.

The trader saw the 6% notes due 2016 changing hands around 861/2, up from an 851/2-86 context on Thursday. He said the 6.9% notes due 2019 were up nearly a point at 861/2.

Another market source called the 6% notes up three-quarters of a point at 86½ bid.

At a Citigroup Inc. conference in San Francisco, Sprint top executive, Dan Hesse, said Sprint's planned investment in the company would be sidelined while it sought operating licenses from regulators.

Petroplus gets frozen

A trader said that Petroplus Holdings's bonds were all in a 40 to 44 range on Friday, after having fallen anywhere from 5 to 8 points on Thursday after the Zug, Switzerland-based independent petroleum products refiner and wholesaler said that its lenders had suspended access to all of the credit lines under its revolving credit facilities, and the company announced shutdowns of several of its refining facilities.

He said that he "did not see them on the big actives list," and quoted the company's 6¾% notes due 2014 trading in a 42-44 context, while its 9 3/8% notes due 2019 and 7% notes due 2017 were trading between 40 and 42.

Petroplus' convertible 4% notes due 2015 were trading around 37-39.

While adding that "I don't recall seeing much size trading in that name," he characterized the trading levels as being "up off the bottom from yesterday [Thursday], by a couple of points - that's what it looks like."

On Thursday, he had quoted the 6 3/4s as having fallen 7 points to end at 42-45, while the 9 3/8s had dropped 5 or 6 points to end at 39-42. He had also seen its 7% paper down 7 or 8 points on the day at 40-42, and had called the converts unchanged on the day at 37-39.

Another trader on Friday was seeing the converts at 37-39, and said, "It's the only one I saw today."

He noted, "They're a pretty sizable refiner in Europe. I'm not sure what went wrong there, because they used to be a pretty good credit," although he allowed that he "had not looked at it for a long time."

He noted that the company's stock, which trades in Europe, was down around 20 cents on Friday to the $1.20 level. In contrast, he said, those shares had traded around $12, "so they've fallen off a cliff a couple of times."

On Thursday, traders said that the company's bonds "got hit hard after the banks pulled their credit line," as one put it.

Another trader said that activity in the name on Thursday "came after 4 [p.m. ET]" as the junk market was winding down for the day.

A market source, seeing the 9 3/8s having tumbled to 39-42, said that those bonds had last previously traded around the 63 bid level, in early December.

Petroplus said that access to all credit lines under its revolving credit facility had been suspended and access to pledged bank accounts with the revolver lenders had been restricted, pending the outcome of continuing negotiations with the lenders.

The company said that it will hold another meeting in the coming days with the lenders in an effort to secure necessary funding and liquidity arrangements to let it meet its current and future financial obligations.

It further said that the talks involve reviewing strategic options and securing other sources of liquidity.

The company additionally announced some facility closures in the wake of the financial problems, including its Petit Couronne refinery in France, its Antwerp facility in Belgium and its Cressier refinery, which is expected to run down crude oil stocks in the second half of January.

© 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.