Dan River falls further; Adelphia still flying off desks; WestPoint Stevens continues slide

By Carlise Newman

Chicago, Oct. 20 - Dan River Inc.'s bonds continued their plunge from the past few days - though at a somewhat slower rate - with a downgrade from Standard & Poor's Friday adding to the initial concern created by news of covenant violations last Wednesday.

Dan River Inc.'s 12¾% notes due 2009 were down another 3 points Monday, a trader said. He saw the notes at 30 bid, 33 offered. The bonds fell 30 points Wednesday and then a further five and seven points on Thursday and Friday respectively.

"That's just a little dip compared to last week. If not for the downgrade they probably would have been unchanged," he said.

S&P lowered its long-term corporate credit rating on Dan River to B- from B+ and its senior unsecured debt rating to CCC from B-. The ratings were also placed on CreditWatch with negative implications.

"The downgrade and CreditWatch placement follow the company's recent 8-K filings, which presented weaker than expected operating performance for the third quarter ended Sept. 27, 2003, and anticipated continued weakness in the fourth quarter," said S&P analyst David Kang, also citing the amendments.

The Danville, Va. designer, manufacturer and marketer of products for the home fashions and apparel fabrics markets amended its senior secured credit facility, waiving the maximum leverage ratio covenant violation that existed at the end of the third quarter and revising requirements during the fiscal fourth quarter, including the minimum levels of excess availability under the revolver and monthly operating EBITDA, according to a filing with the Securities and Exchange Commission.

Adelphia Communications Corp. was still popular among distressed debt desks.

Adelphia's 9 3/8% due 2009 were seen up "about 3 points" to 88 bid, 90 offered from 85½ bid, 86½ offered.

But WestPoint Stevens Inc. paper continued to lose ground on the news from Friday that it would seek to negotiate a new reorganization plan in its bankruptcy case.

WestPoint said it will not implement the previously announced agreement in principle with holders of its outstanding unsecured debt. Instead, the company will negotiate new terms for a chapter 11 plan of reorganization with all its major creditor constituencies

WestPoint's 7 7/8% notes due 2008 were down 3 points to 10 bid, 12 offered, one trader said.

On Friday, after WestPoint's news was released, the notes fell 2 points to around 13 bid.

WestPoint also said it is seeking to extend its exclusivity period to file a reorganization plan until March 31, 2004. A hearing to consider the motion is set for Oct. 22.

Elsewhere, Ubiquitel Inc. bonds experienced a mild rally after the company announced it had sold some towers in central California.

The Conshohocken, Pa.-based Sprint affiliate completed a sale and leaseback transaction on Oct. 15 with GoldenState Towers LLC for substantially all of the wireless communications tower sites that the company had agreed to sell in June for $10.95 million in cash and the lease-back of space on those sites.

Ubiquitel's bonds were seen at 45 bid, about 5 points higher than when they had last been seen trading about a week ago.

"We don't have our hands in that one usually. But today the bonds shot ahead and we saw it pass the desk late morning in the mid-40s," a trader said.

Meanwhile, WorldCom Inc. paper heated up Monday.

"Getting ready for the week," one trader said. "They'll rev up even more tomorrow."

Last week the bankrupt telephone company said its net income and revenues declined in August from July, blaming lower long-distance calls volume network-wide and higher reorganization expenses.

WorldCom's bonds were up one point to 38 bid, one trader said.

Boosted by the proximity of WorldCom's emergence from bankruptcy, the bonds have moved a total of about 8 points last week after being stuck at levels in the high 20s and low 30s for months. The paper rose steadily 1 to 2 points each session.

And in other news, Loral Space & Communications saw several of its bond issues shoot higher, "in anticipation of choosing a bidder for its satellites," one trader said. The auction was held Monday.

One trader quoted the 9½% notes due 2006 at 52½ bid, up from 38 previously. Another had them at 49 bid 51 offered, with the 10% 2006 at 83½ bid, 85½ offered at day's end. Another trader said they firmed as high as 89 from prior levels in the low 80s, before dropping back late in the session to 85½ bid, 87½ offered.

And yet another saw the 10s at 83½ bid, 85 offered for most of the day, up from 79 bid, 81 offered - but then dropping back after 5 p.m. ET to 77 bid, 79 offered.

After the market close, Loral said that Intelsat, Ltd. was the highest bidder in an auction held today for Loral's North American telecommunications satellites for $1.1 billion. The other bidder at the auction was EchoStar Communications Corp.

Intelsat's bid is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York. The court will consider Loral's motion to approve the sale to Intelsat at a hearing scheduled for Oct. 22.

Loral intends to reorganize around its remaining fleet of five satellites and its satellite manufacturing operations, allowing the company to go forward as a viable enterprise with opportunities for future growth.

Fleming Cos. Inc. bonds were "up just a little" at 17½ bid, 18½ offered, although there was no news out on the company.

And Global Crossing went to 9.125 from 8.75-9.25 on Friday, a trader said, noting that the bonds had been doing better lately on increased confidence.

(Paul Deckelman contributed to this report)

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