Horizon paper bouncing around; Dan River bonds firmer

By Paul Deckelman and Sara Rosenberg

New York, June 17 - Horizon Natural Resources' bank debt was quoted all over the place Thursday, depending on which trader was asked, with the Ashland, Ky.-based coal producer's paper being propped up by an increased bid for the company seen earlier in the week.

Bond traders saw the bonds of Dan River Inc. several points higher, but there was no fresh news out about the bankrupt Danville, Va.-based textile maker.

A trader saw the company's 12¾% notes due 2009 "up a couple of points" to end at 22 bid. But he acknowledged that "I have no idea why" the bonds had risen.

Dan River, like a number of other large American textile makers, found itself driven into bankruptcy by a flood of lower-priced imports coming into the country and grabbing much of its market. It filed a voluntary petition to restructure under Chapter 11 with the U.S. Bankruptcy Court for the Northern District of Georgia on March 31. On May 28, the court gave its final approval to a $145 million debtor-in-possession facility provided by a group of lenders led by Deutsche Bank Trust Co. Americas.

Horizon Natural Resources' loan was bouncing around, market participants said, with people seeing bids anywhere from 51 to 53 and seeing offers anywhere from 54 to 58.

More specifically, one trader placed the bank debt at 53 bid, 58 offered, a second trader placed the bank debt at 52 bid, 54 offered and a third trader placed the debt at 51 bid.

On Wednesday, that paper had been quoted at 50 bid, 52 offered.

The Kentucky coal operator's bank debt has been steadily on the rise since last week, with the biggest jump following an increased bid for the company that was announced early in the week.

The W.L. Ross-led group of holders of a majority of Horizon Natural Resources' second-lien notes raised their bid for the company on Monday to $277.35 million from $240 million.

After that, Deutsche Bank, the unsecured creditors committee and other creditors withdrew their earlier objections and supported the designation of the Ross group as the preferred bidder. The group is controlled by New York financier Wilbur L. Ross, who over the past several years has cobbled together an impressive empire of coal and steel assets purchased out of bankruptcy from such formerly well known failed companies as Bethlehem Steel Corp., Weirton Steel and LTV Corp.

On Tuesday, the bidding procedures for the company's assets were approved by the U.S. Bankruptcy Court for the Eastern District of Kentucky, with the auction tentatively set for Aug. 17.

Leap ends run up

Among other bank debt names, Leap Wireless International Inc.'s debt took a breather - finally - with the San Diego-based telecommunications operator's paper quoted unchanged at 126 bid, 127 offered to possibly slightly higher at 126.25 bid, 127.25 offered, according to traders.

The traders said that the paper has been rallying on strong valuations - with debtholders anticipating good returns when they are given most of the restructured company's equity - and the expectation of good monthly numbers.

RCN rises again

Elsewhere among telecommunications names, a trader in distressed bonds said that RCN Corp. bonds were moving up "yet again," quoting the bankrupt Princeton, N.J.-based telecom operator's bonds, such as its 9.80% notes due 2008, as having firmed to 60 bid. That was up about a point on the session but well up from levels around 52 bid, 54 offered at the beginning of the week, although he did not see any news out on the company.

Pegasus bonds higher

A market observer saw Pegasus Satellite Communications Inc.'s bonds mostly a bit higher, although there was no fresh news out on the Bala Cynwyd, Pa.-based satellite television programming distributor, which sought Chapter 11 protection in a filing earlier this month with the federal Bankruptcy Court in Portland, Me., as part of its ongoing legal struggle with DirecTV Group Inc.

Pegasus - for the moment - distributes DirecTV's programming to its 1.1 million mostly rural customers, although it alleges that the satellite programming industry leader is conspiring with the National Rural Telecommunications Cooperative - a TV programming distribution industry trade group of which Pegasus had been the largest member - in an attempt to steal Pegasus' customers and "destroy" the Pennsylvania operator - charges that DirecTV and NRTC vehemently deny.

On Thursday, Pegasus' 12¾% notes due 2006 were seen having pushed up to 46.5 bid from prior levels at 45, as did its 9¾% notes due 2006. Pegasus' 9 5/8% notes due 2005 were a point better at 47 and its 12½% notes due 2007 were likewise more than a point better at 48. But the company's badly battered junior bonds - its 13½% notes due 2007 and 12¾% notes due 2007 - continued to languish at 11.25 bid and 5 bid, respectively.

United rises in trading

A trader saw UAL Corp.'s bonds "a little bit better bid," at 9.5, versus their recent levels at 8 bid, 10 offered, but he said there was "not much activity" in the bonds of the bankrupt Elk Grove Village, Ill.-based parent of the Number-2 U.S. airline carrier.

The bonds may have been given a little boost by investor hopes that a federal panel would approve UAL's request for some $1.6 billion in loan guarantees, seen as crucial to its turnaround efforts. But late Thursday, well after the markets had closed for the day, word came from Washington that the Air Transportation Stabilization Board had turned down its request for a second time.

"A majority of the board determined that a guaranteed loan to United is not a necessary part of maintaining a safe, efficient and viable commercial aviation system in the United States," the board said in a statement.

Two of the board's members voted against United's application - Treasury undersecretary for domestic finance Brian Roseboro and Federal Reserve Board member Edward Gramlich. The third ATSB member, Transportation Department undersecretary Jeffrey Shane, voted to defer a decision for one week.

The Treasury and Transportation departments did say that United could resubmit an application.

United had been seeking the $1.6 billion loan guarantee to back a $2 billion private loan package.

United - which sought Chapter 11 protection in December 2002, after the board had turned down its original request for a $1.8 billion loan guarantee - did not immediately issue a response to the late-Thursday decision.

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