Exide, Adelphia continue to gain; Parmalat bonds seen easier

By Paul Deckelman and Sara Rosenberg

New York, Jan. 6 - Bonds of Exide Technologies Inc. continued to climb Tuesday, sparked by a recent bankruptcy court ruling seen as favorable to noteholder efforts to increase their recovery; meantime, speculation about the coming emergence from bankruptcy of Adelphia Communications Corp. helped that company's bonds to continue their recent rise. On the downside, Parmalat Finanziaria SpA's bonds were being quoted down a bit from recent levels.

Exide's 10% notes "ended the year [2003, last Wednesday] at 2; they were 16 [Monday] and now they're 22 bid, 24 offered, "a distressed-debt trader said. "Everybody loves this judge."

He was referring to Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Del., whose New Year's Eve ruling refused to confirm the company's plan of reorganization, instead declaring that Exide has a higher enterprise value than that proposed in the plan, and therefore, greater value should be available for distribution to the Princeton, N.J.-based storage battery maker's unsecured creditors.

The plan rejected by the judge had put the company's enterprise value at $950 million to $1.05 billion, but the judge said the company's value was somewhere in a range of $1.4 billion to $1.6 billion, more in line with the estimates by the company's creditors of $1.48 billion to $1.71 billion.

Following the ruling, Exide said that will seek to renew negotiations with its creditors on revising the terms of its plan. The parties are supposed to report back to the judge on the status of such negotiations or before Jan. 22.

Also in the courts, Enron Corp. cleared an important hurdle Tuesday in its efforts to extricate itself from bankruptcy, where the onetime energy trading powerhouse has been mired since late in 2001. Judge Arthur Gonzalez of the U.S. Bankruptcy Court in New York approved a preliminary disclosure statement, although final confirmation of the 1,400 page document was held off, pending another hearing on Thursday. During a day long court session Tuesday, Gonzalez addressed creditor objections to the plan one by one. Once the judge approves the final disclosure statement - outlining how the once-mighty Houston-based company collapsed so shockingly in 2001 and how it plans to resume doing business after its exit from bankruptcy - Enron's roughly 2,400 creditors can vote on the plan, which, generally speaking, envisions paying off most creditors at around 20 cents on the dollar. Enron's interim chief executive, restructuring expert Stephen Cooper, held out the hope that the company could emerge from Chapter 11 by the late in the year.

A trader estimated that Enron's corporate bonds continued to languish around 23.5 bid, 24.5 offered, while the bonds of its CLN unit were at 32 bid, 33 offered, and those of its Yosemite subsidiary were at 30 bid, 31 offered, all around recent levels; paradoxically, however, he said that the Enron news "helped some of the [other] lower-grade credits a little bit, quoting MCI Inc.'s notes above 82 bid, the first time I've seen them above 81 for a while."

Another trader also saw the MCI bonds at 82, up about half a point, and estimated the old bonds of its corporate parent, WorldCom Inc., a point better at 36.

Those bonds, he said, had gained some strength from investor perception that an emergence from Chapter 11 might be near, and with most of the company's existing debt to be exchanged for stock, the current hot stock market makes that a more attractive proposition.

"It's probably more the fact that they're going to come out [of bankruptcy] sooner rather than later, and that's what's propelling most of this stuff," he said. "Because the sooner they come out, the more people get equity or whatever they're going to get, and it's a pretty good stock market right now. That's what's propelling WorldCom and Intermedias [another bond-issuing WorldCom unit] and all that."

He saw the same dynamics behind the rise over the past several sessions of Adelphia Communications paper, which was "up again today." He saw the Denver-based cable operator's bonds up about four to five points on the session, to the mid 90s, while its convertible bonds were even better, up nearly 10 points to around the 54 bid. 56 offered level from the mid-40s previously.

A bank debt trader meantime quoted the loan of Adelphia's FrontierVision subsidiary at 98.75 bid, well up from previous levels of 97 bid, 98 offered prior to the holiday break. The trader saw Adelphia unit TCI's paper up about half a point at 97.5 bid, 98.5 offered and its Century paper at 94 bid, 95 offered, basically unchanged from Monday's levels. The Olympus term loan A traded at 94.5 on Tuesday, versus a previous trading level of 93.75, according to a second trader.

However, the Century bank debt was not as active as the FrontierVision and TCI paper in the secondary on Tuesday, the first bank debt trader added.

When asked whether the activity in Adelphia had anything to do with a recent article discussing the possibility of the company being a takeover target in 2004, the first trader explained that the buzz was probably not much of a factor; rather "people are looking to deploy cash."

Elsewhere on the bank debt front, names generally felt stronger as investors continue to look for a place to put their cash to good use, according to market sources. Besides the Adelphia subsidiaries, some of the more notable names of the day included Reliant Resources Inc. and Mission Holdings, a trader said.

Reliant Resources' bank debt traded just north of 99 from Monday's trading levels around 98 to 98.25, according to a trader, who placed the name as "one of the biggest movers" over the course of the day.

Mission Holdings' bank debt was quoted at 94.5 bid, 95 offered, up from quotes of 93 bid, 94 offered prior to the holiday break, according to a trader who said the rise was primarily due to market technicals. "The bonds are trading over par now," the trader added.

But not every distressed name has been benefiting from the junk market's overall recent strength; a trader said all of Levi Strauss & Co. Inc. bonds continued to be quoted at offer levels down around 65.5, "off a couple of points." At another desk, the San Francisco-based blue jeans maker's 12¼% notes due 2012 were seen down a point at 65 bid.

WestPoint Stevens Inc.'s 7 7/8% notes due 2008 continue to erode, slipping a point below the psychologically potent 10 level to end at 9 cents on the dollar.

And Italian dairy products maker Parmalat's bonds were quoted down around a point in the 22 bid, 23 offered area; the company was reported to have temporarily shelved plans to sell its Archway cookies business in the U.S. and other assets while the recently installed management team tries to get a handle on how big a problem it faces in trying to turn around the company, said to be the victim of an Enron-scale financial fraud. Prosecutors continued to question former executives and others who did business with the embattled company, while the Securities and Exchange Commission said it may expand its fraud lawsuit against the company.

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