Levi Strauss bonds continue to firm off lows; Leap leaps on M&A buzz

By Paul Deckelman and Sara Rosenberg

New York, March 4 - Levi Strauss & Co. bonds were firming smartly for a second straight session on Thursday, as the San Francisco-based blue jeans maker's debt continues to rebound from the lows it hit after Monday's announcement of lackluster 2003 results.

Elsewhere, Leap Wireless International Inc.'s bank debt was seen by market participants as having been, in the words of one trader, a "pretty big mover" over the course of the week; trading levels were seen higher by about five points from last week's quotes.

Levi's 7% notes due 2006 were quoted by one trader as having firmed about two points to about 72.5 bid, 73.5 offered, while its 11 5/8% notes due 2008 were likewise a deuce better at 74 bid, 75 offered, and its 12¼% notes due 2012 were better as well, at 73.25 bid, 74.25 offered.

A trader said that the 121/4s were "still moving up" a point or so, with the company's other notes improved in a similar context.

Distressed bond traders noted the dramatic fall this week of Bally Total Fitness Holding Corp. bonds, apparently motivated by the lack of any fourth-quarter results so far from the Chicago-based fitness-club operator, which has not yet announced when the long-awaited numbers will be forthcoming. Company officials did not return several calls from Prospect News on Thursday.

On trader said his shop wasn't handling Bally - yet - but it might be "coming our way," particularly if the 9 7/8% senior subordinated notes due 2007 continue to deteriorate; after having fallen about 10 points over two sessions, into the lower 70s, those bonds were "still falling a bit," a trader said, in quoting the notes offered at 71.5, down from Wednesday's finish at 72.75 bid, 73.745 offered.

However, Bally's 10½% senior notes due 2011, which had fallen about seven or eight points over the two sessions to around 85 bid were heard a point better at 86 bid, 87 offered.

Leap into 90s

In bank loan trading, San Diego-based wireless telecom operator Leap's paper continued to be quoted at firmer levels on Thursday; a trader said that "it's 90-plus on the bid side. Last week it was in the low to mid 80's. "

The trader cited continued "speculation on M&A and people think numbers will improve," he added in explanation of why the bank debt has seen a noticeable jump over the past couple of days.

Adelphia trades

Another recently familiar bank debt name, Adelphia Communications Corp., continued to trade around on Thursday, with the new Century loan quoted around 96 and the Old Century loan quoted around 97, according to a trader.

"It's more or less unchanged on the day. People are still figuring out what's going to happen with the plan of reorganization. It gets you out at par, but you don't really know when you're getting paid out, whether you'll be getting interest," the trader said.

Adelphia, a Greenwood Village, Colo.-based cable television company, and substantially all of its debtor subsidiaries filed for Chapter 11 on June 25, 2002. It was alleged that former chairman John Rigas, the company's founder, and other members of his family who occupied executive positions and sat on the board, diverted several billion dollars of Adelphia funds into other areas. Adelphia is pursuing legal action against the Rigas clan, its former auditors, Deloitte & Touche, and banks which it alleged had participating in the co-borrowing scheme with the Rigases. Interests in a litigation trust that would receive any proceeds from such an action would be given to some of the company's less well-positioned creditors.

The company's plan of emergence has been a hot topic of conversation, since it was revealed primarily due to the proposal that banks would be paid out of an escrow account that will be established while litigation on the Rigas situation is ongoing. In response to this notion, non-agent banks representing over $3 billion of debt have organized a group to oppose the plan, according to various market sources.

On the bond side, a trader said that Adelphia notes "felt heavy," which he attributed to "profit-taking in a thin market."

A market source saw Adelphia's 10 7/8% notes due 2010 off two points, at 96.5 bid, while its 10¼% notes due 2006 went to 95.5 bid from 97 previously.

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