Distressed-bond market begins holiday early; bank debt traders already there

By Paul Deckelman and Sara Rosenberg

New York, Sept. 3 - Trading in distressed bonds was at a virtual standstill Friday, market participants said. Many shops that deal in the paper of troubled companies had, at best, skeleton staffs in, and they reported little change from the levels seen on those issues Thursday, the last full day of trading for the week (the debt markets closed at 2 p.m. ET on Friday ahead of the Labor Day holiday weekend break, which would also keep U.S. financial markets shuttered on Monday.)

Participants in the bank-debt market meantime reported little real trading among any kind of paper, let alone specifically in the paper of troubled issuers.

"It's brutal, man," one trader lamented, "nothing traded," while a second declared that "there was nothing going on [Friday]. It was all pretty much the same as [Thursday]."

For instance, traders saw Mississippi Chemical Corp.'s 7¼% notes due 2017 unchanged at 63 bid, despite the news that the bankrupt Yazoo City, Miss.-based chemicals maker had filed an amended plan of reorganization late Thursday with the U.S. Bankruptcy Court for the Southern District of Mississippi.

Subject to court approval, the company's amended plan implements the proposed transaction for the sale of the company's nitrogen operations to Terra Industries Inc., which was announced on Aug. 9. It also includes separate treatment of the company's ongoing phosphate business and the companies that formerly operated the company's potash business, and facilitates the separation of those businesses from Mississippi Chemical prior to the closing of the Terra transaction.

Mississippi Chemical, which sought Chapter 11 protection from its bondholders and other creditors on May 15, 2003, said it plans to file the related disclosure statements with the court by Sept. 10.

Also on the bankruptcy front, Kaiser Aluminum and Chemical Corp.'s 10 7/8% notes due 2006 were quoted at 98.25 bid, up from 97.5, while its 12¾% junior notes were seen having eased to 20.625 bid from 20.75 previously.

Another trader, however, quoted the company's 9 7/8% notes unchanged from Thursday's close at 97.75 bid, 98.75 offered, while the 123/4s stayed put around 20 bid, 21 offered.

The Houston-based aluminum maker's senior bondholders asked the bankruptcy court overseeing the company's reorganization to keep the holders of the junior bonds from achieving the same status as the senior notes in presenting their claims.

Kaiser also reported that in the quarter ended June 30 its revenues fell to $290.8 million from $367.6 million in the previous quarter, ended March 30, chiefly due to Kaiser having discontinued certain operations. However, its gross profit for the latest quarter was $20.3 million, up sequentially from $16.2 million in the earlier quarter. Kaiser's net income for the latest quarter was $24.2 million - versus a $64 million net loss in the first quarter.

Adelphia edges up

Traders saw Adelphia Communications Corp.'s 10 7/8% notes due 2010 at 92.25 bid, up slightly from 92 bid, and its 9 7/8% notes due 2007 likewise a quarter better at 91.

There was no fresh news seen out on the bankrupt Greenwood Village, Colo.-based cable operator, whose assets are expected to be offered up for auction later this month. Among the companies expected to emerge as possible buyers for the Adelphia assets are such cable industry giants as Comcast Corp., Time Warner and, possibly, Cox Communications. News reports recently indicated that some cable-industry pioneers, such as Jerald Kent, the co-founder of Charter Communications, might also enter the fray to bid on some selected assets, with the help of deep-pocketed equity partners they have lined up with.

Applied Extrusion Technologies Inc. - which plans to restructure via a prepackaged Chapter 11 process - said that it has amended its credit facility with General Electric Capital Corp., waiving any event-of-default arising under its current credit facility arising from the non-payment of interest on its senior notes through Oct. 1.

The 10¾% notes due 2011 of the New Castle, Del.-based maker of plastic film for packaging and other industrial applications were seen unchanged at 59.5 bid Friday.

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