Werner debt continues higher after call; Adelphia up; Parmalat sinks back

By Paul Deckelman and Sara Rosenberg

New York, Jan. 9 - Werner Holding Co.'s bonds and bank debt moved up a couple of rungs Friday, in the aftermath of the ladder-maker's conference call with its bondholders.

Werner's bank debt headed higher by about two to three points to 95 bid, 96 offered, according to a trader, who placed the bank debt at 92 bid, 94 offered at opening.

"It's follow-through from [Thursday]," the trader said, explaining that the run-up was still a reaction from Thursday morning's conference call Werner held with its bondholders.

The company was updating them on what the Greenville, Pa.-based company has been doing since its announcement several weeks ago that it would no longer sell its lines of metal and fiberglass extension ladders and step-ladders through Home Depot - an outlet which in the past had accounted for up to 31% of Werner's total sales.

"There are not a lot of sellers," the trader added.

On Thursday, the bank debt had been quoted all over the place with levels being cited anywhere from 90 bid to 93.5 bid, depending on which trader was asked.

According to one trader, the paper was seen at 90 bid, 92 offered, softer on the day, while a second trader placed the paper at 93.5 bid, 95.5 offered, up from an opening level of 92 bid, 93 offered. A third trader pegged the paper at 92 bid, 93 offered, up from an opening level of 91 bid, 93 offered.

During the bondholder conference call company officials said they are analyzing an operational restructuring to reduce costs to align with reduced sales volume that will result from the termination of their supply contract with Home Depot. To meet this goal, the company is looking to reduce manufacturing and distribution capacity and cut the overhead expense structure in the near term.

Werner's 10% notes due 2007, which had firmed about five points on Wednesday in anticipation of the conference call and another five points on Thursday following the call, to end around 67 bid, "moved up a little more," a distressed debt trader said, quoting them around 68 bid, 70 offered.

Adelphia's Century gains

Elsewhere, the bonds of Century Communications, a unit of the bankrupt Adelphia Communications Corp., were quoted up as much as five points on the session, at 103.5 bid, although parent Adelphia's own bonds were heard unchanged to slightly easier, its 10¼% notes due 2006 dipping to 97 bid, off half a point, while its 10¼% notes due 2011 were at 96.5. Adelphia's 9 7/8% notes due 2007 were down about two points on the session at 93.5.

Still, market players noted the strength shown by the bonds of the restructuring Denver-based cable TV operator on expectations that it would emerge from Chapter 11 soon with bondholders made whole - and that it then might be a takeover target as the cable industry consolidates.

On the foreign front, as quickly as they had appeared, claims that as much as €7 billion of Parmalat Finanziaria SpA's missing money may have been found evaporated on Friday as lawyers for a group of bondholders attempted to distance themselves from the story, pointing fingers at one of their number whom they said had shown a draft court filing to journalists without any authorization from his colleagues.

News of the apparently found funds had caused Parmalat's distressed bonds to briefly shoot as high as 27 bid on Thursday from prior bid levels in the 20-22 neighborhood, although those bonds had come back down to earth after the failed Italian dairy products giant itself denied that there was any such money squirreled away somewhere and closer examination showed holes in the found-money story.

On Friday, Parmalat's dollar-denominated 6 5/8% notes due 2008 and its various euro-denominated issues "bounced around a little," a trader said, quoting them around 22 bid, 24 offered - even as the "found money" scenario seemed to evaporate like, well, so much spilled milk.

It was the latest strange twist in a saga that is getting stranger by the day, as prosecutors widen their nets to possibly include bankers and accountants who worked with Parmalat - and who may have known about its shaky finances before the house of cards came tumbling down last month.

More Parmalat mysteries

Reuters reported that in Milan, five lawyers representing the Parmalat Creditors Committee moved to squelch earlier assertions that they had claimed that an investigator had traced a major part of the estimated €10 billion missing from Parmalat's coffers to a Bank of America account supposedly controlled by ousted company chairman Calisto Tanzi, who is currently under arrest and being grilled by Italian authorities about his role in the collapse of the company he founded over 40 years ago.

The attorneys said in a statement that another lawyer working with the bondholder's committee, Carlo Zauli, gave a copy of his draft version of a legal filing - which said the money had been traced - to a journalist on Wednesday without their knowledge. Two of the lawyers whose names appeared on the document with Zauli's said they had never signed any such papers. The filing had not been officially submitted to any court.

Zauli himself, meantime, was not talking, although on Thursday he had acknowledged that there was no documented proof to back up the five-page filing, which argued that the discovery of the funds meant Parmalat's current insolvency status should be reversed.

While the sideshow over whether the missing money had actually been found continued, prosecutors, having already interrogated Tanzi and other former executives of the company, turned their attention to the role Parmalat's banks may have played in the debacle.

Investigators raided Bank of America's offices in Milan on Friday, looking for documents and other evidence of the U.S. banking giant's relationship with Parmalat. The company's collapse was triggered last month when B of A denounced as a fake a document that purported to guarantee that nearly €4 billion was in an account maintained by a Parmalat off-shore subsidiary.

And magistrates have also been quizzing representatives of Germany's biggest bank, Deutsche Bank AG, over its role in underwriting a bond sale by Parmalat in September, three months before the company imploded. Also under scrutiny about what they may have known about Parmalat's situation - and when they knew it - are two international accounting firms that worked for the dairy products company, Deloitte & Touche Tohmatsu International and Grant Thornton.

Enron latest

Back on the domestic distressed scene, Enron Corp.'s bonds were being quoted around 24 bid, 25 offered, after the failed Houston-based energy trading giant was given five more months to conduct a vote on its reorganization plan. That would push a deadline on the issue through the end of May.

Judge Arthur Gonzalez, of the U.S. Bankruptcy Court in New York, said in his ruling this past week that the delay would give Enron extra time to settle with more of its roughly 2,400 creditors who still might be opposed to the reorganization plan, which envisions paying creditors off on an average basis of around 20 cents on the dollar.

Subsequently Gonzalez approved Enron's disclosure statement, allowing balloting of creditors to go ahead (see story elsewhere in this issue).

Magellan Health Services bonds were being quoted bid at levels from 85 to 88, "up from the low 70s just a couple of days ago," a market source said, following the Columbia, Md.-based provider of behavioral managed care services' emergence from Chapter 11 this past Monday.

A distressed-debt trader quoted RCN Corp.'s bonds as having moved up several points during the week, to levels around 52 bid, 53 offered.

And he saw bankrupt chemical manufacturer Solutia Inc.'s senior notes at 95 bid and its subordinated bonds quoted about 46 bid, 48 offered, noting that they "had started the week in the low 40s, and were several points better on the week."

"Everything that's down," he quipped, "is up."

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