Coupon payment boosts Fedders bonds; Rumor helps Remy

By Stephanie N. Rotondo

Portland, Ore., March 23 - Fedders Corp. saw gains in its bonds Friday after news emerged that the company had paid its long-awaited coupon payment.

The company closed on its new $90 million credit facility on March 20, leaving market players wondering when - and if - the missed coupon payment would be funded.

Earnings are expected to be released soon, according to a Fedders employee. The company is hosting a bondholders' conference call Monday morning.

Separately, Rumors of an equity infusion saw Remy International Inc.'s bonds surge as much as 6 points on the day, a trader said. The rumor, though not confirmed with the company, seems certain, according to one trader.

Meanwhile, Tembec Inc.'s bonds continued their downward spiral. The bonds have seen day after day of small losses, though no one seems to know exactly why.

Traders also cannot explain why Bally Total Fitness Holding Co.'s bonds got better as the week closed. One speculated the gain could be damage control.

Elsewhere, "terrible" third-quarter results resulted in a day of losses for ASAT Holdings Ltd. A trader said the bonds lost about 4 points during Friday trades, a day after the earnings news came out.

Earnings are expected to come out on Hines Horticulture Inc. on Wednesday, which one market participant hopes "will stir some stuff up." He noted that the nursery supplier traded very little during the day.

Fedders stronger

Fedders' 9 7/8% notes due 2014 have gained at least 4 points over the week, with the company's new refinancing deal funding the overdue coupon payment that came due at the beginning of this month.

Kent Hansen, executive vice president-administration and secretary of the board, confirmed the coupon payment, adding that the payment was paid as soon as the refinancing deal closed.

"Our intention was as we got this refinancing done, we expected to pay it and we did," he said.

Traders saw the bonds trading in the mid-50s at the beginning of the week. A trader said the notes "traded all over the place but generally at 62" at the close of the week. Another market participant pegged the notes at 62.75.

Hansen would not comment on the plans of the Liberty Corner, N.J.-based company as earnings had not yet come out. The company delayed filing its 10-K due to the refinancing deal.

But another Fedders employee said earnings should be seen soon. The company is also holding a conference call for bondholders at 10 a.m. ET Monday. The employee said the meeting is a quarterly event to update bondholders. She said earnings should be seen shortly after that call, though no official date has been set.

A trader, however, is wondering what will be said during the conference call.

"The belief is they're trying to make the bondholders happy," he said. "Keep everyone warm and fuzzy."

He added that the refinancing deal and coupon payment has comforted investors and market players.

Rumor helps Remy bonds

Remy "had a good surge" in its bonds, according to one trader. He saw the 8 5/8% notes due 2007 up 6 points on the day to close at 85. He said the notes had gained about 8 points over the week.

At another desk, a trader pegged the notes at 85 bid, 86 offered, up from the previous day's close of 78 bid, 79 offered. He noted that the bonds opened at 81.

Both traders cited a rumor as being the impetus for the bond's improvement.

The first trader said there has been talk of an equity infusion since last week, but as time has passed "the certainty has become a lot more clear."

The second trader said he heard the company is looking into a rights offering "backstopped by its subordinated creditors."

The company had previously seen losses on top of losses as rumors surfaced that the company was looking for debtor-in-possession financing.

Tembec softens

Tembec's bonds continued to weaken, adding to a week of losses the forest products company has seen in its bonds.

"Day by day, they keep going a little bit lower," a market participant said.

He pegged the 8½% notes due 2011 down a point at 65 offered. He said the notes had lost a point each day over the last three days.

At another desk, a trader called the notes at 64 bid, 65 offered.

The traders were not able to account for the losses, but the bonds could be reacting to a stronger Canadian dollar, which hurts the company's exports of its lumber products.

Bally better

It was uncertain why, but a trader speculated it could be "damage control" that helped boost Bally's bonds. He slotted the 9 7/8% notes due 2007 at 84.5.

The Chicago-based fitness operator saw massive losses last week as it delayed filing its 10-K and warned that bankruptcy could be in the company's future. The 9 7/8% notes lost about 20 points on the news, bottoming out in the mid-60s to low-70s.

ASAT weakens

Poor third-quarter results prompted a loss of 4 points in semiconductor maker ASAT's bonds.

A trader, who said the numbers were "terrible," pegged the company's 9¼% senior notes due 2011 at 86 bid, 90 offered.

"Yesterday they read the numbers; today they're trying to trade the bonds," he said.

The company posted a net revenue of $41.5 million for the third quarter of 2007, compared with net revenue of $41.0 million in the previous quarter. The company showed a net loss of $7.6 million, including charges of approximately $405,000 for relocation and facilities expenses and $763,000 in reorganization costs for the completion of the move of the company's manufacturing operations to China.

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