NewPage, Verso decline as merger derailed; Nokia's new line fails to excite; Bon-Ton gets bump

By Stephanie N. Rotondo

Phoenix, Sept. 5 - The distressed debt market was deemed "better" by a trader on Wednesday, helped in part by fresh news that acted as a catalyst.

NewPage Corp. and Verso Paper Corp., for instance, were generally weaker on news Verso had given up its merger hopes. Verso said it was in the "best interests" of the company to look at other opportunities.

Meanwhile, Nokia Corp. bonds lost ground following the release of the company's new line of smartphones. Reports indicated that the new devices had little to "wow" investors and consumers alike.

On the upside, Bon-Ton Stores Inc.'s debt moved up after the retailer chief executive officer outlined the company's turnaround strategy at a national retail conference. A trader noted that the stock was also upgraded.

NewPage, Verso merger scuttled

NewPage and Verso bonds took a hit Wednesday, as Verso said it had halted merger talks with bankrupt NewPage.

A trader said Verso's 11¾% notes due 2019 were "really active," but down a deuce around 783/4. However, he called the 11 3/8% notes due 2016 up nearly a point at 653/4.

Another trader said NewPage's 113/8% first-lien notes due 2014 were "one of the more active ones," seeing the paper fall to 64 bid, 65 offered.

He said that compared to 67 bid, 68 offered previously.

In Verso's notes, the trader said the 11¾% notes were "about where they had been" at 78 bid, 79 offered. The 8¾% notes due 2019, though, hit a low of 42 before settling back in around "45-ish," still down from 46 bid, 47 offered on Tuesday.

A third trader noted that NewPage's 11 3/8% notes dropped as low as 61 before coming back to end around 64.

In July, Memphis-based Verso said it had approached Miamisburg, Ohio-based NewPage on a potential merger. If NewPage had gone along, stakeholders would have received $1.075 billion in new first-lien Verso notes, $150 million of Verso stock and $200 million in cash.

Verso had also said it would pay 100% of NewPage's debtor-in-possession facility.

The deal might have been doomed from the beginning, however, as management at NewPage was cool to the terms, saying that they presented "significant downside risks" to its stakeholders.

In a statement released Wednesday, Verso's CEO David Paterson said that it was "in the best interests of our company and its stakeholders to focus on the many other opportunities for Verso, including internal growth projects and other potential strategic alternatives."

NewPage had yet to issue an official statement.

Nokia drifts lower

Finnish wireless telecommunications equipment manufacturer Nokia saw its bonds stutter during the midweek session, after its new product unveiling failed to wow the masses.

One trader said both issues dropped a point, the 5 3/8% notes due 2019 to 84½ and the 6 5/8% notes due 2039 at 80.

Another trader said there was "a fair amount of activity" in the 2019 maturity. He called the bonds "a little lower," trading at 84½ at the end of the day.

That compared to an 85-86 context on Tuesday.

Nokia's stock (NYSE: NOK) meantime dove down 45 cents, or 15.9%, to $2.38.

The company launched its two new smartphones - the Lumia 920 and 820 - powered by Microsoft's latest operating system on Wednesday. The company disappointed investors and consumers by failing to provide an actual release date, as well as what carriers would be offering the devices. The release could come under pressure if it comes near the same times as Apple's new iPhone 5 or Google's new phones using its Android operating system.

Bon-Ton boosted

Investors reacted positively to comments made by Bon-Ton Stores' CEO Brendan Hoffman at retail industry conference, giving the company's bonds a boost.

A trader said the 10¼% notes due 2015 pushed up to the mid-90s, placing them in a 94-95 context.

"They presented at a conference today, I guess they had some positive things to say," he said.

The trader also noted that the company's stock had been upgraded.

Hoffman, who has held his post since February and previously helped turn around Lord & Taylor, told conference attendees that Bon-Ton has in the past marketed too heavily to younger shoppers. That deterred other loyal customers and new customers from coming in. As such, the York, Pa.-based company intends to market itself to a much broader audience.

Meanwhile, KeyBanc analyst Edward Yruma upgraded Bon-Ton's stock to "buy" from "hold." Yruma credited the change to the new CEO and his turnaround efforts.

"While the risk profile remains high given high balance sheet leverage, we believe [Bon-Ton] presents one of the most compelling upside opportunities in our space," Yruma wrote in a note to investors.

Clear Channel firms

Clear Channel Communications Inc.'s debt was on the rise Wednesday, but there was no fresh news out to prompt the move.

A trader saw the 11% notes due 2016 gain a point to 631/2, while the 10¾% notes due 2016 were up nearly that much, also at 631/2.

Another trader placed the 10¾% notes around 64 and the 9% notes due 2021 around 87.

Clear Channel is a San Antonio-based multimedia company.

ATP treads water

A trader said ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were unchanged at 23 bid, 24 offered.

Another trader said the debt was actively trading yet again, but also deemed the paper unchanged around 24.

ATP is a Houston-based offshore oil and gas exploration company.

Broad market mixed

Elsewhere in distressed land, Thompson Creek Metals Co. Inc.'s 7 3/8% notes due 2018 were seen up over a point at 791/2.

The trader also saw Axtel SA de CV's 9% notes due 2019 fall 1½ points to 59.

Another trader said Patriot Coal Corp.'s 8¼% notes due 2018 inched up to 45½ bid, 46 offered.

© 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.