Petroplus bonds lose up to 12 points as company claims insolvency; Bon-Ton rallies on new CEO

By Stephanie N. Rotondo

Portland, Ore., Jan. 24 - Distressed debt investors were taking another look at Petroplus Holdings AG on Tuesday, as the European oil refiner filed for insolvency.

Traders said the bonds opened the day weaker, headed into higher territory only to fall back down by the end of business. One trader called the bonds down 10 to 12 points on the day.

Meanwhile, Bon-Ton Stores Inc.'s recently beat-up notes were rallying. The gains came as the company announced it had hired a new chief executive officer.

In the technology space, Clearwire Corp. priced a new issue during the session and also released preliminary fourth-quarter result, which showed an uptick in the company's subscriber base. However, there wasn't much action going on in the name, aside from the new issue.

Sprint Nextel Corp., on the other hand, was trading busily and weaker. Sprint is an investor in Clearwire.

Petroplus falters amid insolvency

Zuq, Switzerland-based Petroplus saw its bonds decline as much as 12 points on the day after the company said it was going to file for insolvency.

The filing was predicated on a notice of acceleration regarding the company's revolving credit facility.

One trader saw the company's bonds - which are trading flat, or without accrued interest, and also in line with one another - began the day trading in the low-30s. Then the notes moved up to the mid-30s, only to fall back down.

"They are all under 30 now," he said.

Another trader said the paper began the day in the high-20s then moved up to the mid-30s. By the end of the day, however, he said the securities were "straddling 30," a 10-12 point decline.

Petroplus said the acceleration of the revolver constitutes a default under in senior and convertible note debentures. As such, the senior notes will also be accelerated.

The company intends to file for insolvency in Switzerland as soon as possible.

The downfall of the oil refiner began in late December, when lenders froze the company's access to credit lines. Without access to the funds, it could not purchase crude supplies and thus had to idle several of its refineries.

The company said last week it was considering selling at least two of its five refineries.

"We have worked hard to avoid this outcome, but were ultimately not able to come to an agreement with our lenders to resolve these issues given the very tight and difficult European credit and refining markets," Petroplus chief executive officer Jean-Paul Vettier said in a statement.

Bon-Ton pops as CEO hired

Bon-Ton's 10¼% notes due 2014 "popped," according to a trader, after the company named its new CEO.

The trader said the notes were trading around "55 and change" early on Tuesday, but closed up "about 3 points" to 58 bid, 59 offered.

Another trader called the issue up a deuce at 58, calling it one of the most actively traded issues of the day.

The York, Pa.-based retailer said Tuesday that it had hired Brendan L. Hoffman as its president and CEO, effective Feb. 7.

Hoffman previously worked at Lord & Taylor LLC and at Neiman Marcus Direct.

Clearwire prices new issue

Clearwire's bonds were on the quiet side, even as the company priced a new issue and released preliminary quarterly results.

One trader said the 12% notes due 2015 were unchanged at 95 bid, 96 offered. The new issue - a $300 million offering of 14¾% five-year notes - was trading higher at 102½ bid, 103¼ offered, he said.

Another trader called the new issue up 3 points around 103.

"They got the new deal done," he said. But with its "big fat coupon," the deal was "not good for [second-lien noteholders]. But it is a first-lien piece of paper. People seem to think it's covered."

However, "the high coupon points to the fact that there's a lot of risk involved."

The new deal did in fact bolster the Kirkland, Wash.-based company's cash position, giving it enough money to continue - and perhaps finish - its buildout of its new 4G wireless LTE network.

In its preliminary fourth-quarter results release, the money-losing internet technology company also had some positives. Sales were up to $362 million from $181 million the year before, beating estimates compiled by Bloomberg.

Also, Clearwire said it added about 900,000 wholesale subscribers, bringing that total up to 9.1 million.

But Clearwire investor Sprint Nextel did not benefit from the seemingly positive news.

A trader said the 6 7/8% notes due 2028 fell a point to 74, while the 6.90% notes due 2019 lost half a point, closing at 84.

The 5.95% notes due 2014 meantime dipped a half-point to 99.

Caesars holds, Hovnanian busy

Elsewhere in the distressed arena, a trader said Caesars Entertainment Corp.'s 10% notes due 2018 were "back to being active again." However, he called them "roughly unchanged" at 741/4.

He also saw Hovnanian Enterprises Inc.'s 10 5/8% notes due 2016 falling a point to 86.

Another market source called the homebuilder's bonds up nearly a point at 86½ bid.

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