Caesars up on amend-and-extend, IPO news; Springleaf falters, branches to close; ResCap falls

By Stephanie N. Rotondo

Portland, Ore., Feb. 1 - Caesars Entertainment Corp. was a big trader in the distressed debt market on Thursday, as the company announced plans to amend and extend a credit facility and also lauded pricing for a planned initial public offering.

"They are back to the top of the list," a trader said, seeing "nearly" $40 million of the 10% notes due 2018 change hands.

Meanwhile, Springleaf Finance Corp. was on the decline, reversing its previous slow-grind higher, a trader remarked. The company announced Thursday that it was closing branches and that it had hired advisors to help restore its financial health.

Residential Capital LLC was also weaker following the release of its parent company's fourth-quarter results. Comments made by management regarding the future of the money-losing mortgage unit also helped to pressure the debt.

In the retail arena, Burlington Coat Factory Warehouse Corp. saw its bonds rising on its fourth-quarter sales report. Bon-Ton Stores Inc. was meantime little fazed by the release of January and fiscal year same-store sales results.

Caesars trades active, firmer

Caesars' bonds were surging in terms of volume on Thursday, after the Las Vegas-based casino operator said it was seeking to extend the maturity of its term loans.

The company also announced that it had commenced proceedings for an IPO. Caesars had planned to launch an IPO in 2010, but decided against it when market conditions deteriorated.

A trader said "nearly" $40 million of the 10% notes due 2018 changed hands, gaining half a point to 78 bid, 781/2. He noted that paper traded as high as 80 before easing back.

He also saw the 10¾% notes due 2016 improving 4 points to 851/2.

Another market source pegged the 10% notes at 78½ bid, up half a point.

Caesars' Caesars Entertainment Operating Co. unit hopes to get lender approval to extend the maturity of almost $4 billion in term loans to January 2018 from January 2015. Additionally, the unit wants to amend the terms of the loans in order to increase the interest rate.

The unit also intends to launch a new issue, the proceeds of which will be used to pay down existing debt.

Caesars also said that it had begun the process for a previously delayed IPO. The company intends to sell 1.81 million common shares at a price between $8 and $10 per share.

Springleaf taking a hit

Evansville, Ind.-based Springleaf Finance - formerly known as American General Finance - saw its bonds taking a hefty hit on Thursday, after the company announced branch closures and the hiring of advisors.

"The bonds were all hit across the board," a trader said. He noted that the debt had previously been slowly creeping higher.

The 5 3/8% notes due 2012 fell 2 to 2½ points to 943/4, while the 6.9% notes due 2017 dipped 3 points to 751/2.

"They all opened real lower," the trader said. On the open, issues were immediately trading down 5 to 7 points, he said.

"Even euro-denominated issues were quoted down 4 to 5 points," he said, though there wasn't much activity in those issues.

Another trader said Springleaf "got dragged down on their news," seeing the 6.9% notes fall to 74½ bid, 75 offered.

"That's definitely down a few [points]," he said.

The financial services provider has been undergoing a strategic review of its operations. Based on its findings, it has decided to shutter about 60 branches in "14 states we do not have a significant presence and in southern Florida," the company said in an 8-K filed with the Securities and Exchange Commission.

The branch closings are expected to result in a pre-tax charge of $6 million in the first quarter of 2012. Up to 210 employees would be laid off immediately and another 190 jobs remain in limbo.

"The closings are the result of our efforts to return to profitability," Springleaf said in the regulatory filing. "We continue to review our branch footprint with the objective of improving the efficiency of our operations."

The company also noted that it had hired Alvarez & Marsal North America, LLC and Houlihan Lokey Capital, Inc. "to assist us with identifying ways to streamline our operations and reduce costs, and to provide financial advisory services."

ResCap loses ground

Residential Capital's 9 5/8% notes due 2015 also took a downturn after its parent company, Ally Financial Inc., reported fourth-quarter results.

The results were battered due to a charge related to ResCap and its foreclosure issues.

One trader called the notes down 2 ½ points at 81. Another trader said the bonds lost a couple points, ending in the low-80s.

Ally swung to a $250 million net loss for the quarter due to a $270 million charge related to ResCap.

During Ally's conference call, management also gave comments regarding ResCap that called its future into question. The company said that bankruptcy remained an option for the unit.

ResCap is a Minneapolis-based mortgage lender.

Burlington, Bon-Ton sales fall

A trader said Burlington Coat Factory's 10% notes due 2019 were "up a couple points after numbers."

He pegged the issue around 98.

For the quarter, the Burlington, N.J.-based retailer reported net sales of $1.23 billion, up from $1.18 billion the year before. Same store sales fell 1.7%.

For the year, sales were $3.85 billion, up from $3.67 billion in 2011.

York, Pa.-based retailer Bon-Ton also reported same-store sales for the fourth quarter and the year. But the news did little to movie its debt, a trader said.

He called the 10¼% notes due 2014 "pretty much unchanged" at 63 bid, 64 offered.

For the month of January, same store sales dropped 3.55 and total sales fell 3.2% to $174.4 million.

In the fourth quarter, store sales declined 2.6%, with total sales declining 2.7% to $983.2 million.

For fiscal 2011, same store sales fell 2.8% and total sales dropped 3.2% to $2.89 billion.

Strength in distressed

Elsewhere in the distressed space, ATP Oil & Gas Corp.'s 11 5/8% notes due 2015 were "definitely bouncing around," a trader said. "They've been pretty volatile."

He quoted the notes at 62 bid, 63 offered.

Another trader said that Lehman Brothers Holdings Inc.'s debt "continues to be stronger," trading at 28 bid, 28¼ offered.

Dynegy Holdings LLC debt was also higher, the 8 3/8% notes due 2016 at 63 and the 7½% notes due 2015 at 621/2.

MF Global Holdings Ltd. was another gaining credit, the trader said. The 6¼% notes due 2014 closed around 34.

© 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.