Adelphia seen better bid in quiet pre-holiday trading; airlines little changed

By Paul Deckelman and Sara Rosenberg

New York, Sept. 2 - Adelphia Communications Corp. notes "seemed a little better bid," a trader said Thursday - although he could offer little in the way of concrete levels on the bonds of the bankrupt Greenwood Village, Colo.-based cable operator amid generally very quiet trading leading up to the Labor Day holiday break.

Elsewhere, traders saw little activity in the normally volatile bonds of the problem-plagued airline sector.

And trading of distressed bank debt was virtually non-existent, market participants said.

The trader said that Adelphia's bonds seemed to have firmed a bit on the news earlier in the week that several possible new suitors may have emerged and might be heard from when the company's basket of cable-TV assets are put up for auction later this month.

News reports said that among those who might step forward to make a bid from some of Adelphia's assets are such cable industry pioneers as William Bresnan, who ran the biggest U.S. cable operator in the early 1970s and who is now the president of the eponymous cabler Bresnan Communications. Also mentioned in this context were Jerald Kent, the co-founder of Charter Communications, and Steven Simmons.

Up till now, their names had not figured in the speculation over who would divvy up Adelphia's far-flung assets, which include valuable and potentially lucrative clusters of subscribers in Southern California, as well as operations in less sought for markets.

According to the news reports, all of the heretofore unheralded potential Adelphia suitors are working with deep-pocketed equity partners, and any one or more of them might make a bid for some Adelphia assets that might complement their current holdings.

Such bids would be in addition to bids expected from such huge operators as Comcast, Time Warner Cable and, possibly, Cox Communications.

Media reports have suggested that one or more of these mega-cablers might team up to jointly buy the Adelphia assets and then swap anything they didn't want themselves to other companies that might be able to expand their own footprints that way.

Adelphia bonds have recently traded in the lower 90s. For example, its 10¼% notes due 2011 have hovered around the 94-95 bid range, while its 9 3/8% notes due 2009 have straddled 90, as have its 9 7/8% notes due 2007.

Adelphia's Century Communications Corp. unit's 8 7/8% notes due 2007, considered to be closer to the company's assets, trade about 10 points in front of the parent's 9 7/8s.

Elsewhere, "I was bored to tears," said one distressed-bond trader, while another lamented that Thursday was "another quiet day - just one of the longest string that I can remember in 10 years of doing this."

Winn-Dixie holds at lower levels

The second trader saw Winn-Dixie Inc.'s 8 7/8% notes due 2008 - which on Tuesday had fallen about five points to around the 87-88 level, in line with a giant stock plunge driven by renewed media and analyst speculation that the company was headed for bankruptcy, eventually, and which stayed around that same level Wednesday despite a rebound in the shares - as going nowhere fast.

"They were weaker," he said of the Jacksonville, Fla.-based supermarket operator's bonds - "but not today, just over the last few sessions."

Other factors said to be weighing the company's bonds down include the fears that the coming Hurricane Frances might wreak havoc in Winn-Dixie's home turf in Florida, Georgia and the Carolinas, and news that the company and several present and former executives had been named as defendants in several class-action suits filed in the Florida federal courts by stockholders dismayed by the sharp slide the company's shares had taken ever since it reported an unexpected profit decline early in the year.

Winn-Dixie - beset by strong competition in its traditional markets from the giant Wal-Mart Stores Inc. retailing juggernaut - recently announced plans to close 156 of its more than 1,000 locations, mostly in the U.S. Southeast, and to focus on core market areas where it is better positioned. It is also testing out new marketing and customer service strategies among its 92 stores in the Miami area, which Winn-Dixie has dubbed its "lead market."

Airlines unmoved

The trader said there was little activity Thursday among airline bonds which he thought might be "a little stronger, with oil prices down." Although crude oil prices - a leading indicator of prices for distillates such as jet fuel - rose for a second straight day, with light crude for October delivery settling at $44.06, a gain of six cents on the New York Mercantile Exchange, the prices are still well below the near-$50 a barrel levels seen back in mid-August.

The most troubled operator not currently in bankruptcy, Delta Air Lines Inc., continues to hover around the levels it reached recently, with its benchmark 7.70% notes due 2005 seen at 48 bid and its 8.30% bonds due 2029 at 28 bid.

The bonds of bankrupt United Airlines were being quoted at 6 bid, 6.5 offered, little changed on the session.

Trading generally was seen very light ahead of the upcoming Labor Day holiday break, which will see a 2 p.m. ET market close Friday and a full market closure Monday.

"Maybe all hell will break loose when people come back Tuesday," a trader said, "and there will be a pent-up surge of demand."

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