Adelphia bonds seen better; distressed loans firm in light trading

By Paul Deckelman and Sara Rosenberg

New York, March 17 - Adelphia Communications Corp. bonds were quoted higher Wednesday, even as a new dispute broke out regarding the bankrupt Greenwood Village, Colo.-based cable operator's proposed reorganization plan.

In the market for bank debt of distressed companies, meantime, the overall tone of the market seemed to improve from Tuesday, although trading continued to remain relatively light.

"People were feeling a little cheery. The market found a bid, but it hasn't been that active," a trader said.

On Tuesday, the market had been categorized as feeling heavy. One market source speculated that the tone was created in part by there being a lot of portfolios shown around the market, which in turn took up institutional investors' time, leaving them with little left to focus on trading. However, the trader remarked that he had not heard of any such portfolios, but rather thought that new issues coming out soon could be diverting investor attention.

One place where the improved tone was pretty evident was Calpine Generating Co. LLC's term loans, with both tranches of the San Jose, Calif.-based power generating company subsidiary's new paper quoted higher on the day.

The $835 million five-year first lien term loan/note was quoted at 100.125 bid, 100.5 offered, versus Tuesday's levels of 99.75 bid, par offered, according to a trader. Basically, the tranche rebounded to the levels at which it broke Monday, after Friday's par pricing - 100.25 bid, 100.5 offered.

Meanwhile, the $740 million six-year second lien floating-rate loan/note, which also priced Friday, though at a discount to par, was quoted at 97.625 bid, 98.125 offered, versus Tuesday's levels of 96 bid, 96.5 offered. The loan/note broke Monday at 97 bid, 98 offered, the trader added.

"It's a par credit. But when it was issued it was sold to a lot of different types of investors. Distressed desks may be more active in trading it than they would normally be with a regular par name because they deal with some of that clientele, like hedge funds," the trader said.

Adephia notes up 2

Back among the bond investors, "it was a little quiet" Wednesday, a trader said, although the thing he thought most notable about the market was a rise of about two points in Adelphia Communications notes.

He saw what could be considered the higher claim paper, such as the company's 10¼% notes due 2011 and 9 3/8% notes due 2009, at 99 bid, par offered, while its lower claim paper was at 96.5 bid, 97 offered.

He didn't see any major new developments in the company's situation, "just bickering back and forth about the first plan that's out there. You have some creditors saying that the company is worth closer to $20 billion if you auctioned it off, not $18 billion.

"They're just jockeying back and forth, so the paper was up a little bit."

Adelphia is hoping to emerge later this year from Chapter 11, which it entered in 2002 after revelations of massive off-balance sheet borrowing by various members of the controlling Rigas family, which led to the ouster from power of company founder and clan patriarch John Rigas and his various relatives who had served in management positions. Rigas and several other ex-Adelphia officials were later indicted and are currently on trial in New York, with Adelphia moving Wednesday to prevent the Rigases from tapping the assets of cable companies they own that are managed by Adelphia to provide the funds for their securities fraud trial defense.

Adelphia's reorganization plan, released Feb. 26, values the company at somewhere around $17 to $18 billion - a figure that creditor groups scheduled to get little return contend is too low. They would like to see the company, or its component parts, put up for sale, feeling that a greater return might be realized this way.

Shareholders, slated to get nothing, and a group of senior lenders slated to be paid out of an escrow fund, have already objected; now a third major group of creditors is weighing in against the plan, which could mean further delays in the company's timetable.

A bondholders group of funds including Blackstone Group and Highfields Capital told a U.S. bankruptcy court earlier in the week that the No. 5 U.S. cable television company should be sold to generate more proceeds for creditors.

U.S. Bankruptcy Judge Robert Gerber is scheduled to formally hear objections to the plan at an April 26 hearing in New York.

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