Winn-Dixie changes CFOs; Ispat Inland debt up on repayment news

By Paul Deckelman and Sara Rosenberg

New York, March 8 - Winn-Dixie Stores Inc. bonds were heard to be mostly little changed, even on the news that the underperforming Jacksonville, Fla.-based supermarket operator is bringing in a new CFO; meantime, Ispat Inland Inc.'s bank debt moved higher on repayment news.

Winn-Dixie announced that Richard McCook had resigned as chief financial officer; he is to be replaced by Bennett Nussbaum, most recently CFO at Burger King Corp.

Winn-Dixie's 8 7/8% notes due 2008 were at 83.5 bid, 85.5 offered; its 7.803% notes due 2017 were at 78 bid, 80 offered, and its 8.181% notes due 2024 were at 74 bid, 76 offered; a trader characterized the paper as a little bit lower, although he noted that in the latter two issues "there were a lot of shorts in this paper already" that had to be covered.

The store chain clearly could use a change; its bonds, formerly trading above par, were beaten down to the high 70s a few weeks ago after Winn-Dixie reported an unexpected quarterly loss, and announced plans to tighten its belt and try to improve operations.

The choice of Nussbaum, who has also held financial positions at PepsiCo, was hailed by one analyst in a research note as "a good sign the company will take a more methodical approach to restructuring rather a series of spending initiatives and closures. At the same time new management might consider the strategic use of bankruptcy in its rationalization plans."

At another desk, the 8 7/8% notes were unchanged at 85.

Among bank debt investors, Ispat Inland's paper "was trading around 96, 97 this morning and then it traded up to 97.5-, 98.5. Now it's probably 98.5- 99.5 It's up five or six points over the last couple of days," the trader said.

He explained that the East Chicago, Ind. steelmaker's paper rallied on news that UBS would be bringing a new $800 million senior secured notes offering to the market, with proceeds earmarked for bank debt repayment. The bond deal is expected to consists of a six-year fixed-rate tranche and a 10-year floating-rate tranche, with the roadshow anticipated to begin on Wednesday.

"There's a little bit of deal risk [reflected] in the bank debt, but not as bad as Calpine," the trader said. "There's about a point to a point and a half of deal risk. I think most people think it would get done."

Leap Wireless still strong

Also on the bank debt front, Leap Wireless International Inc.'s loans continued to feel strong with one trader quoting the paper at 92.5 bid, 93.75 offered and a second trader saying that the debt reached as high as 92.5 bid, 93.5 offered during the day. On Friday morning the paper went out at 91 bid, 92 offered and closed the week at 92 plus levels.

The San Diego wireless communications carrier's paper started to rally mid-last week after management held its first conference call with lenders last Tuesday evening, according to the first trader.

He went on to explain that since the company's bank debt will be converted into equity, when compared to other publicly traded companies, it appears as if bank lenders re getting a pretty good deal, which is why the paper has been significantly strengthening over the past week.

"People think they are creating the equity cheap in here," the trader said.

Federal-Mogul Corp.'s term loan A, term loan B and revolver bank debt were all quoted around 91 bid, 92 offered on Monday, basically unchanged from Friday's levels, according to a trader. On Friday, the paper was said to be higher by about three-quarters following the company's filing of its disclosure statement.

Under Federal-Mogul's first amended reorganization plan and amended disclosure statement, the Southfield, Mich. auto parts manufacturer will get a secured term loan agreement of $1.305 billion and issue $300 million of junior payment-in-kind notes with an 11-year maturity to repay nearly $2 billion in claims by pre-petition bank lenders. About $328 million will be either refinanced as part of the exit facilities or will become a senior tranche of a new$1.3 billion secured credit facility.

Holders of note claims and personal injury claims on account of asbestos exposure will receive the common stock of the reorganized company.

A hearing on the disclosure statement is scheduled for April 13-14.

Bond traders meanwhile said that Federal-Mogul's junk bonds "haven't moved much" and remained tethered to around the 26 bid level.

Levi-Strauss & Co. bonds, which last week had firmed back up to around the 75-76 bid area from levels as low as 67-68 which they hit after the release of disappointing earnings, were seen little changed Monday from those Friday levels.

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