Owens Corning bonds jump as stock soars; Enron up as it emerges from Chapter 11

By Paul Deckelman

New York, Nov. 18 - Owens Corning bonds were seen up three points on the session Thursday, although there was no fresh positive news out concerning the bankrupt Toledo, Ohio-based insulation maker. The rise in its bonds was matched by a jump in its shares.

Enron Corp. bonds were also up on the day, as the once-mighty Houston-based energy trading company emerged from Chapter 11, three long years after its thunderous collapse.

Owens Corning's 9 3/8% notes due 2012, and its other bonds, trading at the same level, were seen having soared to 67.5 bid from Wednesday's close at 64.5, "a really big move," in the words of one market source.

Another source also saw that same three point jump in the bonds.

The previous session the company's bank debt had shown a small gain, closing at 81.5 bid, 82.5 offered Wednesday.

Owens Corning's shares were meanwhile up 48 cents Thursday (20.78%) to $2.79 in over-the-counter bulletin board trading of 4.5 million shares, about five times the usual daily turnover.

There was no immediate news seen out about the company that would justify such a rise. The bonds and shares of asbestos-challenged companies such as Owens Corning and including such names as Chicago-based building materials company USG Corp., Columbia, Md.-based chemical company W.R. Grace, Lancaster, Pa.-based floorcovering maker Armstrong World Industries Inc. and Southfield, Mich.-based auto parts producer Federal-Mogul Corp. have all recently been solidly firmer.

In Thursday's dealings, a trader saw USG's 8½% notes due 2005 as having pushed up to 129 bid from 127 previously, but he noted that there were no offers around, so it was difficult to truly gauge the bonds' levels.

Armstrong's bonds, such as its 6½% notes due 2005, were seen half a point better at 70.5. Federal Mogul's notes were meanwhile seen marooned around 30.5 bid, where they have recently been.

The reason that has been given by financial market participants for the recent run up in the asbestos bonds has been has been the Nov. 2 election results, which were seen increasing the chances for getting a bill passed that would establish a claims payout mechanism for people alleging health problems from exposure to asbestos, and that would also head off future court actions and cap the companies' liability. All of the companies mentioned were driven into Chapter 11 earlier in the decade under a flood of asbestos claims lawsuits. Dozens of additional companies nationwide were also forced to seek bankruptcy protection.

But the elections - which saw Republicans solidify their control of both houses of Congress, and oust Senate Democratic leader Tom Daschle (D.-S.D.) in the process, were more than two weeks ago and there have been no new Capitol Hill developments since then.

Owens Corning, meanwhile, has recently been making progress on its plans to emerge from bankruptcy. In October of last year, the company filed its proposed reorganization plan with the U.S. Bankruptcy Court in Wilmington, Del. This past June, Owens Corning said that it had reached an agreement in principle with the official committee of asbestos claimants, the legal representative for the class of future asbestos claimants, and the official representatives of the company's pre-petition bondholders and trade creditors, meaning that the company has now gained support for its plan from all of its major creditor groups with the exception of debtholders under its $1.8 billion pre-petition bank credit facility, who continue to oppose the plan, which has not yet been approved by the court.

The current plan, as modified to reflect the agreement in principle reached in July, provides for payment of 38.5% of the face amount of all unsecured creditors' claims, in the form of new common stock and notes of the restructured company, and cash.

Enron emerges

While Owens Corning continues to wend its way through the bankruptcy process, Enron seems to have come to the end of its reorganization journey, with the company's bankruptcy plan having become effective.

Enron's 6.95% notes due 2028 were seen having moved up to 30.25 bid from prior levels at 29, while its 8.31% Osprey bonds that were to have matured in 2003 firmed to 42 bid from 39.75.

Enron canceled its nearly worthless stock Thursday, and said that it had completed the sale of its largest remaining assets. Enron sold its $2.11 billion interest in Transwestern Pipeline Co., Citrus Corp. and Northern Plains Natural Gas Co. to CCE Holdings LLC, a joint venture of Southern Union Co. and GE Commercial Finance Energy Financial Services. The pending $1.25 billion sale of Portland General Electric to buyout firm Texas Pacific Group is expected to close soon, which will leave only a collection of other, lesser assets, to be sold as Enron liquidates.

Delta lower

Delta Air Lines Inc.'s recently high-flying bonds have dropped a little in altitude following the big run-up they took after the troubled Atlanta-based carrier's pilots agreed to $1 billion of pay cuts the company was seeking.

Its benchmark 7.70% notes due 2005 dipped to 84 bid, 86 offered from 86.5 bid, 88 offered previously, while its 8.30% notes due 2029 ended at 42 bid, 43 offered, down a point on the day.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.