Dura bonds rebound; Goodyear gyrates on credit facility draw; West Corp. price talk emerges

By Paul Deckelman

New York, Oct. 13 - Dura Automotive Systems Inc.'s battered senior bonds recovered some of their lost ground on Friday, pushing up to the high 20s after having nosedived by a dozen points or more on Thursday down to levels in the low to mid 20s. But it still was by no means clear whether the troubled Rochester Hills, Mich.-based auto components maker would make a coupon payment on those bonds on Sunday.

Also in the automotive realm, bonds of Goodyear Tire & Rubber Co. were seen bouncing around as market denizens digested the news that the Akron, Ohio-based tiremaking giant had tapped its credit facilities for nearly $1 billion of cash to tide the company over the rough spots arising from the ongoing strike by hourly workers.

Little was meantime seen happening in the new-deal arena, aside from price talk emerging on two prospective deals - West Corp.'s two-part $1.1 billion mega-deal and Hungarian telecommunications operator Invitel Holdings NV's euro-denominated floating-rate notes.

West talk, covenant changes

High yield syndicate sources said that West Corp.'s $650 million of eight-year senior notes is expected to yield in a range of 9¼% to 9½%, while the $450 million of 10-year senior subordinated notes is being talked in the 11¼% area.

The books on the deal will close on Monday, the sources said, with pricing expected late Monday or early Tuesday via joint bookrunners Deutsche Bank Securities, Lehman Brothers and Banc of America Securities LLC.

The sources also said that there were a number of changes in the provisions of the deal's covenants.

West, an Omaha, Neb.-based provider of outsourced communications solutions, is selling the notes in conjunction with a new $2.3 billion credit facility. Proceeds will be used to help fund its leveraged buyout by Thomas Lee Partners and Quadrangle Group LLC.

Invitel issues talk

Meantime, Invitel Holdings released price talk on its planned offering of €125 million of 61/2-year floating-rate PIK notes. Those bonds are expected to price at 99 with a coupon of Euribor plus 825 basis points.

Books are expected to close on the deal at noon, London time, on Monday, with pricing likely shortly afterwards.

High yield primaryside sources said the Rule 144A/Regulation S deal is being brought to market via bookrunner Credit Suisse.

The bonds will include a provision for the coupon to step up by 200 bps after three years if Invitel's operating company leverage remains above 2.5 times earnings.

Invitel, Hungary's second-largest fixed-line telecom company, plans to use the anticipated €118 million of net proceeds from the bond deal to repurchase shares from its two major shareholders, Mid Europa Parteners' EEIF - Emerging Europe Infrastructure Funds - and GMT Communications Partners, which bought the company, then known as Magyar Telecom, from Vivendi Telecom Hungary in 2003.

Dura pulls out of dive

Back in the secondary market, Dura's Dura Operating Corp. 8 5/8% senior notes due 2012 were seen to have turned higher Friday, even as Dura's third-largest shareholder, Societe Generale, bailed out, uncertainty continued about the bond interest payment, and bankruptcy scenarios continued to be discussed by investors and analysts.

But there was no fundamental reason for an upturn; one trader dismissed the rebound as the proverbial "dead cat bounce." He said that the bonds on Thursday "went straight down to the low to mid 20s," finishing at around 25 bid, 26 offered, "and then they bounced back [Friday], jumped up" to close around 29 bid, 30 offered.

"The seniors looked better, but the juniors looked lower," another trader said, quoting the 8 5/8s at 29.75 bid, 30.25 offered, up from around 26 on Thursday, but seeing Dura's 9% senior subordinated notes due 2009 losing a chunk of what little remaining value they still have, as they fell to 1¾ bid, 2¾ offered from Thursday levels around 2 bid, 2.625 offered.

He said that investors are "apprehensive" about what's next for Dura, noting that the company is obligated to pay $17.25 million in interest on its $400 million of 8 5/8s - and that payment was coming due on Sunday. The company - which is in the process of restructuring its operations - has declined to say whether the payment would be made, or whether it would be skipped and the 30-day grace period in which a default could be cured be invoked.

Even if cash-strapped Dura - its sales of automotive components hurt this year by escalating production cutbacks among Detroit's "Big Three" carmakers, its major customer base - were to scrape together the money to make the interest payment, it faces yet another coupon interest payment on Nov. 1 of about $24 million on its 9% notes.

The trader noted that Societe Generale - which up till now had owned 1.19 million Dura shares, making it the third-largest stockholder - said in a filing with the Securities and Exchange Commission that it had sold its entire position in the company, a further cause for irritation or concern by equity investors.

Other autos hang back

A trader said that other automotive names are steering clear of the coming car crash that is Dura, with little bond price movement seen, even in the wake of Dura's volatility.

For instance, even as he was seeing the Dura 8 5/8s up 4 points on the session at 29.5 bid, 30.5 offered, he saw General Motors Corp.'s benchmark 8 3/8% notes due 2033 down ¼ point at 87.75 bid, 88.75 offered, while the giant carmaker's General Motors Acceptance Corp. financial unit's 8% notes due 2031 were also ¼ point lower, at 105 bid, 105.5 offered. GM arch-rival Ford Motor Co.'s 7.45% notes due 2031 were ¼ point lower, at 77.75 bid, 78.75 offered, while Ford Motor Credit Co.'s 7% notes due 2013 were unchanged at 92.5 bid, 93 offered.

Among Dura's peers in the parts supplier sector, bankrupt Delphi Corp.'s 6½% notes due 2009 were up 3/8 point at 97 bid, 98 offered, while the Troy, Mich.-based former GM parts unit's 7 1/8% notes due 2029 were unchanged at 91 bid, 92 offered.

Among parts suppliers which were not forced into bankruptcy by the industry downturn, Visteon Corp.'s 8¼% notes due 2010 were unchanged at 95.5 bid, 96 offered, while the Van Buren Township, Mich.-based former Ford parts unit's 7% notes due 2014 were unchanged at 87.5 bid, 88 offered.

Goodyear rolls around

Automotive-linked Goodyear Tire's bonds were seen all over the map, even as news hit the tape that the largest United States tiremaker had tapped its credit facilities for nearly $1 billion, building up liquidity, the company said, in the event that the current strike against the company by 12,000 hourly workers in the United States and Canada drags on. Goodyear itself termed this "unlikely."

A trader saw Goodyear's 9% notes due 2015 fall "near the end of the day," citing news of the credit facility drawdown. He pegged those notes down a point at par bid, 101 offered.

A market source elsewhere, however, saw Goodyear's most widely followed issue, its 7.857% notes due 2011, bouncing crazily around from lows in the 94 area to highs above 99. At the end of the day, the bonds were seen at 98.25, well up from Thursday's 96 finish.

Goodyear said that the big borrowing left the credit facility nearly fully drawn.

UnumProvident up on takeover talk

A trader noted activity in the shares of UnumProvident Corp., driven by takeover speculation surrounding the Chattanooga, Tenn.-based group insurer.

At another desk, the company's 7 3/8% notes due 2032 were seen up nearly 3 points around the 105 level. Its 6.85% notes due 2015 were up nearly 2 points at 103.375.

The company's New York Stock Exchange-traded shares jumped $1.73 (over 8%) to $21.61, with most of the gains coming late in the afternoon.

Canadian insurer Sun Life Financial Inc. has been tabbed as a potential buyer for UnumProvident. Executives of both companies spent much of Friday declining to comment on the buyout buzz.

AMC up as unit files for IPO

The trader also saw AMC Entertainment Inc.'s bonds mostly better, with the Kansas City, Mo.-based theater chain operator's 8 % notes due 2014 up 1¾ points at 94.75 bid, 95.75 offered, while its zero-coupon bonds were up by about that same amount.

He cited the news that National CineMedia Inc. - AMC's joint venture with Regal Entertainment Group and Cinemark USA - filed for an initial public offering. National CineMedia said it will distribute proceeds to AMC and its other two owners.

Overall, the trader said, "the market seemed OK," although he said that bonds were trading these days at "incredibly tight levels.

"It's not even junk anymore," he said. "It's Investment-Grade Junior. The high-yield market is no more."

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