WSJ: "Bon-Ton in Talks With Debt Holders Ahead of Likely Bankruptcy Filing" $BONT

Story:

The company is working on signing a forbearance agreement with its bondholders through the end of January, the people added. There is the possibility the forbearance agreement could be extended beyond late January... A bankruptcy filing is expected as soon as February...

Bon-Ton Misses Interest Payment, Enters Grace Period $BONT

Filing:

"The Bon-Ton Department Stores, Inc., a wholly owned subsidiary of The Bon-Ton Stores, Inc., has elected to exercise the 30-day grace period under the terms of the indenture governing its 8.00% Second Lien Senior Secured Notes due 2021 to extend the timeframe for making the cash interest payment due on December 15, 2017. The amount of the interest payment is approximately $14 million. The lenders under the Company’s Second Amended Revolving Credit Facility have confirmed that the exercise of the 30-day grace period will not impact the Company’s ability to continue to borrow under that facility."

The 8% bond has fallen to 25 cents; YTM of 64%. This is another one that went from the Distressed Debt Watch to the bankruptcy waiting room very quickly.

The seven companies on the DDW have a combined market cap of about $1.1 billion, or about as much as the 30th most popular cryptocurrency ("Verge").

Which would you rather own?

Distressed Debt Watch

• Exco Resources (XCO, EDGAR) bond due Sept 2018 trading at 10 cents, YTM over 650%. 
• Cobalt International Energy (CIE, EDGAR) bond due Dec 2019 trading at 11 cents, YTM ~160%.
• Iconix Brand Group (ICON, EDGAR) bond due March 2018 trading at 85 cents, YTM of 63%.
• Bon Ton Stores (BONT, EDGAR) bond due June 2021 trading at 30 cents, YTM over 50%.
• Egalet Corp (EGLT, EDGAR) bond due April 2020 trading at 45 cents, YTM over 45%.
• GNC Holdings (GNC, EDGAR) bond due August 2020 trading at 59 cents, YTM of 22%.
• Frontier Communications (FTR, EDGAR) bond due April 2022 trading at 75 cents, YTM of 17%.

Distressed Debt Watch

• Cobalt International Energy (CIE, EDGAR) bond due Dec 2019 trading at 8 cents, YTM over 180%. Latest news: "The Company has elected not to make the interest payment of approximately $12.3 million due on November 15, 2017 with respect to its outstanding 3.125% Convertible Senior Notes due 2024 (the “2024 Notes”). The indenture governing the 2024 Notes permits the Company a 30-day grace period to make the interest payment. If the Company fails to make the interest payment within the grace period an event of default will result, and the trustee or noteholders holding at least 25% in the aggregate outstanding principal amount of 2024 Notes may elect to accelerate the 2024 Notes causing them to be immediately due and payable." [Going Concern Warning]
• Exco Resources (XCO, EDGAR) bond due Sept 2018 trading at 12 cents, YTM almost 600%. [Going Concern Warning]
• Bon Ton Stores (BONT, EDGAR) bond due June 2021 trading at 30 cents, YTM over 50%.
• Egalet Corp (EGLT, EDGAR) bond due April 2020 trading at 45 cents, YTM over 45%.
• Frontier Communications (FTR, EDGAR) bond due April 2022 trading at 75 cents, YTM of 17%.
• Iconix Brand Group (ICON, EDGAR) bond due March 2018 trading at 84 cents, YTM of 61%.
• GNC Holdings (GNC, EDGAR) bond due August 2020 trading at 59 cents, YTM of 22%.

Distressed Bond Watch

XCO Sept 2018 maturity - 240% ytm.
CIE Dec 2019 - 153% ytm.
EGLT 2020 - 40% ytm.
BONT 2021 - 43% ytm.

Have a Donut

	Maturity	YTM	CY	Mcap
XCO	2018	167%	23%	$29
CIE	2019	85%	10%	$50
REXX	2020	41%	20%	$22
BONT	2021	38%	20%	$11
HOS	2021	32%	12%	$115

The Bon-Ton Stores, Inc. (BONT)

Jenna Loren Giannelli, Citigroup Inc, Research Division - Director and High Yield Credit Retail Analyst
Okay. And then just one final one. I know you affirmed the guidance for the debt repayment of $20 million to $30 million this year. Are you anticipating that to just be sort of regular way debt repayment, or would you anticipate the possibility of maybe buying back -- bonds back in the open market, given your liquidity position?

Nancy A. Walsh, The Bon-Ton Stores, Inc. - CFO and EVP
At this point, we are not contemplating any repurchase of the debt. I think we really need to focus on the business and make sure we maintain our liquidity to support the business. But we continue to evaluate other, say, lease-back transactions and things that might add additional cash for us. But at this point, this is really coming out of the operations.

BONT has an 8% note due June 2021 that is trading in the low 40s - a yield to maturity of ~37%.