Edison paper declines on weak numbers; Bon-Ton gets boost as sales improve; James River rises

By Stephanie N. Rotondo

Portland, Ore., March 1 - There were good-sized swings on both side of the spectrum of the distressed debt universe Thursday, as poor earnings pushed Edison International Inc.'s bonds down as much as 6 points, but decent same-store sales results from Bon-Ton Stores Inc. yielded a 4-point boost.

Edison, the Rosemead, Calif.-based power producer, said late Wednesday that it had swung to a loss for the year due to an impairment charge. The company also noted that lower energy prices were playing a role.

Meanwhile, Bon-Ton's modest sales increase for February - which the company attributed in part to Valentine's Day - was encouraging to investors.

In other earnings and earnings-related news, James River Coal Corp. reported stronger quarterly results. The results gave the company's debt a modest bump.

Edison weakens post-numbers

Edison International reported fourth-quarter and full-year results late Wednesday and, come Thursday, the bonds were not reacting favorably.

One trader said the 7% notes due 2017 dropped 4 to 5 points, ending around 63.

Another trader said paper was down anywhere from 2 to 6 points, the 7% notes at 631/4, the 7 5/8% notes due 2027 at 58, the 7¾% notes due 2016 at 69 and the 7½% notes due 2013 around 88.

For the fourth quarter of 2001, Edison posted a basic loss of $2.57 per share, versus profit of 51 cents per share the year before. Core earnings were 75 cents per share, compared to 58 cents per share in 2010.

The higher core earnings were attributed to better revenues at the company's Southern California Edison division.

For the year, basic losses came to 11 cents per share. The year before, the company reported earnings of $3.84 per share.

Core earnings for the year declined 7% to $3.22 per share.

"For 2011, Edison International posted core earnings above its earnings guidance range and above Street consensus, although we reported a full-year loss due to impairment charges at our competitive generation subsidiary, EMG," said Ted Craver, chairman and chief executive officer, in the earnings release.

"Given the challenging power market conditions facing EMG, we have taken important steps at EMG to preserve and enhance liquidity."

Bon-Ton debt gains

York, Pa.-based retailer Bon-Ton Stores reported a modest increase in same-store sales for the month of February, which gave the company's bonds a 4-point boost.

"They weren't bad," a trader said of the sales report.

The 10¼% notes due 2014 were seen trading around 69, up anywhere from 4 to 4½ points on the day.

For the four weeks ending Feb. 25, Bon-Ton reported a 0.7% increase in same-store sales. Total sales came to $199.4 million, up nearly 1% year over year.

The company also ended the month with $453 million available under its credit facility.

James River bonds rise

James River Coal released its quarterly and full-year earnings Thursday and despite a swing to a loss, the bonds gained slightly.

A trader called the 7 7/8% notes due 2019 a point better around 69.

For the quarter, the Richmond Va.-based coal producer reported a loss of $28.5 million, or 82 cents per share. That compared to income of $25.9 million, or 93 cents per share, the year before.

The loss was attributed to an income tax expense adjustment of 77 cents per share for reducing the book value of deferred assets.

Revenues from coal sales, however, doubled to $321.8 million and coal shipments increased 60% to 3.3 million tons.

For the year, net loss was $39.1 million, or $1.19 per share. Revenues were $1.18 billion.

Peter T. Socha, chairman and CEO of the company, said in a statement that 2011 was a "year of transformation."

"In the financial area, we strengthened our balance sheet by refinancing all of our funded debt and substantially improving our liquidity position," he said. "While we are cautious and realistic about the current soft market conditions, we are also optimistic that James River will be well positioned for improving markets in the future."

As of Dec. 31, the company had $236.9 million of available liquidity, including $29.5 million of restricted cash.

Kodak plans asset sale

Traders gave mixed reports on Eastman Kodak Co.'s bonds, as the company entered into an agreement to sell certain assets of its Kodak Gallery on-line photo services business for $23.8 million.

One trader saw the 7¼% notes due 2013 rising slightly to end around 28. Another trader also placed the issue around the 28 mark, but deemed that slightly lower.

Kodak has entered into a sale agreement with Shutterfly, an internet-based social media and personal publishing service. The agreement will serve as the stalking horse bid for the assets, which will be sold at auction under the U.S. Bankruptcy Code.

Since filing for bankruptcy, Kodak has sought to pare down its business in an attempt to return to profitability. In a statement announcing the deal, the company said that the accord was "consistent with our objective of focusing Kodak on a core set of businesses in which we can most profitably leverage our technology and brand strengths, and provides a well-proven mechanism for ensuring that Kodak receives maximum value from these assets."

Kodak will seek court approval on the sale and subsequent auction this month and hopes to complete the sale within the Spring.

Kodak is based in Rochester, N.Y.

Dex loan up on amendment

Dex One Corp.'s term loans were stronger in trading on Thursday with news of an amendment request that would allow for the repurchase of loans below par within the next two years, according to traders.

One trader had the Dex West term loan quoted at 59½ bid, 61½ offered, up from 57½ bid, 59½ offered, the Dex East term loan quoted at 50½ bid, 52½ offered, up from 49 bid, 51 offered, and the R.H. Donnelley Inc. term loan quoted at 39½ bid, 41½ offered, up from 38½ bid, 40½ offered.

And, a second trader had Dex West at 59 bid, 62 offered, up from 56 bid, 60 offered, and Dex East at 50 bid, 52 offered, up from 49 bid, 51 offered.

The amendment is expected to close in mid-March, and the company intends to begin repurchasing the debt shortly thereafter.

Completion of the amendment is subject to approval by a majority of lenders.

Also on Thursday, Dex One revealed fourth quarter numbers that included net income of $5.5 million, or $0.11 per share, compared to a net loss of $20.2 million, or $0.41 per share in the prior year.

Net revenue for the quarter was $352 million, versus $357.6 million in the fourth quarter of 2010.

And, quarterly adjusted EBITDA was $150.4 million, compared to $165 million in the previous year.

The company also disclosed full-year 2012 guidance of net revenue in the range of $1.225 billion to $1.3 billion, adjusted EBITDA in the range of $500 million to $575 million and free cash flow in the range of $300 million to $375 million.

Dex One is a Cary, N.C.-based marketing solutions provider.

Broad market firms

Also in the distressed realm, a trader said Clearwire Corp.'s 12% notes due 2017 "continue to move up."

He pegged the paper at 87 bid, 88 offered.

The trader also saw Clear Channel Communications Inc.'s debt trading actively, though he noted it was mostly the company's new two-part deal that was garnering all the attention.

Still, he said the bonds were "probably a little better," the 10¾% notes due 2016 at 82 and the 11% notes due 2016 at 80.

Sara Rosenberg contributed to this article

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