Revlon bonds up as company plans equity swap; Adelphia still firming

By Paul Deckelman and Sara Rosenberg

New York, Feb. 12 - News that Revlon Inc. is planning to exchange equity for much of its outstanding bond debt caused those bonds to jump move than 25 points in Thursday's dealings. The debt-for-equity swap is the centerpiece of its effort to clean up its balance sheet by getting rid of $930 million of debt - about half of its total debt burden - within the next two years. Most of the debt reduction, however, should be completed by the end of next month.

Elsewhere, Adelphia Communications Inc. bonds continued to firm a trader said, "on expectations that an improved reorganization plan will come out." The Denver -based cable TV operator's bank debt was also somewhat firmer.

Revlon was clearly the major mover of the session after the New York-based cosmetics maker announced plans for its exchange offer, which will include buybacks for some of its 8 1/8% and 9% senior notes due 2006 and 8 5/8% senior subordinated notes due 2007 (see report elsewhere in this issue).

Market participants saw the 8 1/8% notes and 9% notes zooming to as high as 102 bid, 104 offered from prior levels at 75, while the 8 5/8% notes climbed to 94 bid, 96 offered from prior levels at 57.

The swap offer contains a cash component option as well as equity - but traders noted that the bonds were trading far above the cash take-out level. One said, "nobody cares about the cash offer," since the terms of the exchange make the stock-for-debt swap a much more lucrative option.

Even so, he opined, rather than wait for their stock at the conclusion of the offer around the end of March, he suggested that if noteholders were smart, "they'll get their money right now - cash out of these bonds now that they are at par and be satisfied to get out whole."

He noted that Revlon is controlled by Ronald Perelman, who has built a reputation of not always doing what is in his bondholder's best interest and suggested caution on their part.

Adelphia gains

Elsewhere, Adelphia "was up another couple of points," a trader said, quoting its higher claim bonds at around the 106 level and its lower-claim debt at 103.5 bid, 104.

At another desk, Adelphia's 10¼% notes due 2011 were heard to have moved up to 107.5 bid from 106 previously, while its 10 7/8% notes due 2010 were two points up, at 103.

Adelphia unit Century Communications 8 7/8% notes due 2007 were two points better at 110 bid.

On the bank debt side, Century's term loan debt traded slightly higher, with a couple of trades taking place in the low 98's, according to a trader. The paper was seen trading in the high 97's earlier in the week.

"It's more or less unchanged. Maybe it's up about a quarter of a point," the trader said.

On Wednesday, Adelphia had received court approval to pay Deutsche Bank Securities, Inc. $150,000 under a work letter for $8 billion in exit financing comprised of both bond and bank debt.

The company has also recently obtained a bridge order to extend its exclusivity periods and now has until April 17 to submit a plan and until June 19 to solicit votes.

Winn-Dixie, Trump rise

Another upsider was Winn-Dixie Stores Inc.'s 8 7/8% notes due 2008, which moved up to 86.5 bid, 87 offered from prior levels around 82; a trader suggested that the Jacksonville, Fla.-based supermarket operator's bonds had simple "gotten too cheap," and people moved in and took them back up.

Trump Atlantic City Associates' 11¼% notes due 2006 and Trump Holdings & Funding's 11 5/8% notes due 2010 were both better, as parent Trump Hotels & Casino Resorts Inc. announced that it had entered into an agreement with DLJ Merchant Banking Partners III, a Credit Suisse First Boston affiliate, which will give the debt-laden casino company a sizable equity infusion, which will allow it to restructure its debt and substantially deleverage.

The Trump A.C. 11¼% first mortgage bonds jumped to 84 bid from 79, while the Holdings & Funding 11 5/8s pushed up to 102 bid from 98 earlier.

However, both Standard & Poor's and Moody's Investors Service cut the Atlantic City gaming operator's ratings, since the de-leveraging envisions buying notes back from their holders at a sizable discount.

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