Adelphia bank debt neutral, bonds up on amended plan; Tower, Intermet bonds up

By Paul Deckelman and Sara Rosenberg

New York, Feb. 4 - Adelphia Communications Corp.'s bank debt was trading around a bit in the morning hours of Friday's session but activity stopped as soon the company announced that it filed an amended plan of reorganization, since investors turned their focus towards reading and studying the latest proposal, according to a trader, who saw its paper "more or less unchanged" on the day.

He quoted the Century revolver at 98.625 bid, 99.125 offered, while the Century Old paper was quoted at 99.625 bid, par offered.

Adelphia's amended plan of reorganization and disclosure statement, which was filed with the U.S. Bankruptcy Court for the Southern District of New York, incorporates either a stand-alone reorganization or a sale of all or part of its assets.

Under the plan, holders of subsidiary bank claims are expected to achieve 100% recovery, including the $617.3 million at FrontierVision, $623 million at Parnassos, $1 billion at Century-TCI, $2.4 billion at Century, $1.265 billion at Olympus and $831.375 million at UCA.

While the bank debt was little changed on the news, Adelphia's bonds were being quoted at better levels, traders said, its 10¼% notes due 2011, for instance, moving up to 94 bid, 94.75 offered from Thursday closing levels around 92 bid, 93 offered.

"Better bids in better markets," was how one trader put it in pegging the bonds at 94 bid, 95 offered. He also saw Adelphia's 10¼% notes due 2006 having improved to 89 bid, 90 offered from 87 bid, 89 offered.

Adelphia unit Century Communications Corp.'s 8 7/8% notes due 2007 - which had been in retreat the previous two sessions on fears that holders' recoveries would be weaker than initially thought - bounced back with a vengeance on the news, seen up three points on the session at 110.

Greenwood Village, Colo.-based cable television operator Adelphia, in announcing the filing of its amended plan and the related disclosure statement, said that among other things, the amended plan "formally facilitates the sale process," by letting the company distribute proceeds from any sale of some or all of its assets to the company's creditors - while still preserving Adelphia's ability to emerge from Chapter 11 as an independent entity, if it so chooses.

Adelphia - which sought Chapter 11 protection from its junk bond holders and other creditors in June 2002 following the ouster of company founder John J. Rigas and members of his family from the company's senior management amid charges of financial chicanery - had originally envisioned reorganizing under the bankruptcy code and emerging as an independent, essentially debt-free company. But at the urging of bondholders and other creditors, the company announced last year that it would entertain bids for its assets, which were divided up into seven regional clusters, with high-value assets, such as the company's systems in South Florida or Southern California, combined with less-desirable systems in smaller, less lucrative markets.

That action process reached a milestone this past Monday, the deadline for receipt of the bids. Because of the intense interest in the sale, Adelphia said, it had extended the deadline to Jan. 31 from its original time, in the middle of the month.

With analysts and other observers having estimated the worth of the company's assets at some $17.5 billion, Adelphia - as expected - received a joint bid from the two largest U.S. cable operators, TimeWarner Cable and Comcast Corp, which was confirmed Friday by TimeWarner Chairman Dick Parsons. He told that company's earnings conference call: "The last year and a half I've been saying we like the cable business, we believe that we should grow our footprint if we can, on an intelligent and sensible basis, and we think there's an opportunity to do that in Adelphia," and said that his company had been working with Comcast on its offer. But he offered no specific details, citing pledges of confidentiality.

Normally rivals, the two cable giants teamed up for a joint bid believed to be in the $17 billion area for the whole company; should their bid be accepted by Adelphia and the judge overseeing its reorganization, they would divvy up the assets in a way that would be most compatible with their respective footprints, and would then sell or trade any remaining unwanted assets to second-tier operators or to interest financial investors.

Published reports, quoting knowledgeable sources, indicated that Adelphia had also received a second bid for the whole company, from leveraged buyout shops Kohlberg Kravis Roberts & Co. and Providence Equity Partners. Adelphia also received a number of other bids from other, smaller cable operators and from financial buyers for the seven individual clusters.

Actual details of who bid how much for what have not been released; Adelphia said Friday that it is in the process of reviewing the bids it received, will negotiate with the bidders, and expects to announce the results of the sale process sometime before the end of the first quarter. Adelphia could accept one of the two bids for the entire company, could accept one or more of the partial bids for its assets, or could decide not to accept any of the bids.

Adelphia further said that its amended plan also adds provisions designed to facilitate potential compromises of outstanding disputes between creditors, and governmental settlement demands in the context of a potential global settlement.

Tower, Intermet gain

Elsewhere, the bonds of bankrupt automotive components makers Tower Automotive Inc. and Intermet Corp. were seen better.

The 12% notes due 2013 of Tower's subsidiary, RJ Tower Corp., were seen having moved to 60.5 at the close, a trader said, from 58 bid previously, even as a federal bankruptcy court approved its "first-day motions" related to employee salaries and financing, allowing Tower to immediately access $125 million of its $725 million of debtor-in-possession funding that Novi, Mich.-based market of vehicular frames had obtained from J.P. Morgan.

Tower sought Chapter 11 protection in a mid-week filing with the U.S. Bankruptcy Court for the Southern District of New York. Before that filing, the company's bonds had tumbled into the 50s from the 80s after its Jan. 20 warning of impending liquidity problems.

Bonds of Troy Mich.-based automotive metal casting company Intermet, meantime were seen by several traders having jumped into the mid-60. One saw those bonds at 65.5 bid, 66.5 offered from 61 bid, 62 offered at the open; another saw an even bigger jump, to 66 bid, which he said was up from recent levels in the upper 50s.

There was no fresh news seen out on the company, which entered Chapter 11 last fall.

Trico higher

Outside of the auto sector, traders in distressed bonds saw Trico Marine Services Inc.'s 8 7/8% notes firm smartly to 78.5 bid from 73.25, although another trader saw a modest move to 77 bid, 78 offered, from 75.

There was no immediate news out on the Houma, La.-based provider of marine support vessels to the oil and gas industry. The company anticipates emerging from bankruptcy later this month.

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