Six Flags sees another plan, notes steady; Catalyst Paper's paper hanging in; GM bonds soften

By Stephanie N. Rotondo

Portland, Ore., Nov. 30 - It was back to business for the distressed debt market Monday, as players returned from a holiday weekend.

But the market was "kind of unchanged," according to a trader.

"Some stuff was a little softer, some stuff a little better," he said, adding that he was seeing "some improvement at the end of the day with the equities."

Another trader said there was "a little trading here and there," as the day was more about "people getting their head back into things."

Six Flags Inc.'s debt followed the day's trend and finished up largely steady, even as a third alternative reorganization plan was announced. The new plan - proposed by a hedge fund-led group of junior noteholders - gives the majority of new equity to senior class noteholders and lenders.

Meanwhile, Catalyst Paper Corp.'s bonds also maintained. In a morning report, Gimme Credit analyst Kim Noland pondered whether the company's recently announced tender offer would be successful and the benefits of said success.

And carmaker General Motors Corp.'s notes drifted lower, according to a trader.

But a lot of attention was being paid to Dubai World's Nakheel Development, as those bonds traded actively as the company said it was nearing a restructuring agreement with its banks. Still, the chatter did little to affect MGM Mirage, which partnered with Dubai World for its CityCenter project.

Six Flags submits new plan

Six Flags' bonds held their ground - mostly, anyway - as a group of bondholders led by St. Francis, Wis.-based Stark Investments submitted yet another alternative reorganization plan.

One trader saw a "fair amount of trading" in the 9¾% notes due 2013 at 20 bid, 20.5 offered. He called that unchanged on the day.

Another source saw the 9 5/8% notes due 2014 slipping a point to 19 bid, 20 offered, though he added most of the various issues trade around the $20.00 mark.

At another desk, the 9 5/8% notes were deemed marginally better at 19.5 bid.

On Sunday, a bondholder group holding more than $500 million of Six Flags' $870 million in bonds announced they file a plan of reorganization to compete with the currently accepted plan.

The group said their plan was submitted to the New York-based amusement park operator's board of directors on Nov. 25.

Under the new plan, lenders and a senior class of noteholders would receive a full recovery, either in cash or reinstatement of debt. The group proposing the plan stands to receive 81% of the new equity in the reorganized company, should it be the final plan.

The current plan gives noteholders less than 5% of the new stock.

In addition, the new plan proposes a $420 million rights offering to pay the lenders and senior class of debtholders off. There was no mention of recovery for stockholders.

Creditors have engaged in a war of the reorganization plans right from the beginning of Six Flags' bankruptcy. Originally, lenders including JPMorgan Chase & Co. were the winners, receiving the bulk of new equity in the reorganized company, in exchange for cutting debt.

That plan was then followed up with a plan supported by Avenue Capital Management, which owns the senior class of bonds. That plan allowed for senior lenders to be paid in full and senior noteholders to receive the bulk of the equity.

The Stark-led group comprises junior noteholders.

Catalyst Paper's paper hanging in

Catalyst Paper's bonds are holding in that mid-70s range, according to a trader, as the company's tender offer for its 8 5/8% notes due 2011 continues.

"They are kind of hanging in there," he said.

Another market source deemed the 8 5/8% notes unchanged around 74, while the 7 3/8% notes due 2014 finished at 59.25 bid, 60.25 offered, also unchanged.

The Richmond, B.C.-based papermaker announced Nov. 23 a debt-for-debt swap for the 8 5/8% notes. Those that participate in the exchange will receive $700 of new 10% notes due Dec. 15, 2016, along with 269 common shares.

Noteholders who tender by the Dec. 9 early tender deadline will also receive a $25 early tender premium.

If the deal is successful, Catalyst also intends to launch a C$100 million rights offering.

The swap expires Dec. 24.

Though there is still some question whether the offer will meet its minimum requirements, there seems to be little question about whether or not it would improve the company's position.

"Catalyst's offer includes some equity, which somewhat mitigates the 30% principal haircut," wrote Gimme Credit analyst Kim Noland in a note to clients. "But it isn't clear that the deal will attain the minimum tender condition."

However, "if the company's rights offering is completed, the company's cash position would improve substantially, approaching $200 million," Noland wrote.

GM bonds dip

A trader said General Motors' benchmark 8 3/8% notes due 2033 were off half a point to 20.5 bid, 21 offered, adding that most issues were down a bit.

The declines came as the formerly bankrupt automaker readied to debut its Chevrolet Volt in California as competitor to the popular Toyota Prius.

Another trader saw the bonds due 2033 "right around 21," which he called unchanged, though in "active" trading. He said the bonds were in a 20.5 bid, 21.5 offered range, but 21 was "where most of the trading was.

He saw GM domestic archrival Ford Motor Co.'s 7.45% bonds due 2031 unchanged at 85 bid, 86 offered.

Dubai World is nom du jour

A trader said that Dubai World's Nakheel Development was "the name of the day," and quoted its 3.1725% euro-denominated notes slated to come due on Dec. 14 as having slid to 58 bid, 60 offered, versus 110 bid last week before Wednesday's Dubai government announcement of a delay in debt payments, and from the lower-80s at the end of last week. The bonds got as low as 55 Monday, before coming off those lows to end at 58 bid, 60 offered.

He said there was "a lot of activity, a lot of quotes" in the bonds.

"When you say you are not paying debt, that's not good," he added.

He also saw the 2¾% euro-denominated notes due 2011 at 42.5 bid, 45 offered, versus the mid-80s pre-news last week and the mid-50s at the end of the week.

He meantime saw MGM Mirage's 8½% notes due 2010 "right near par" at 98.5 bid, 99.5 offered, but added that he "didn't see much trading in these things" in the wake of the Dubai developments "I don't know how active MGM was."

When asked his opinion of the Dubai news, one trader said there was a lot of focus on it, as news slowly trickled out over the course of the day. It was all about "what's really behind it, how big is it going to be and how long will it last," he said.

Though he added that MGM's bonds were unchanged to slightly off, he said there seemed to be little response from the casino regarding the fate of its CityCenter joint venture partner.

Paul Deckelman contributed to this article.

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