Collins & Aikman bonds down again; Mirant loans rise further

By Paul Deckelman and Sara Rosenberg

New York, March 1- Collins & Aikman Corp. bonds continued to get pushed lower Tuesday, although there was no fresh negative news out on the Troy, Mich.-based maker of plastic automotive interior and exterior components.

In bank debt dealings, Mirant Corp.'s paper continued to push higher, probably due more to market technicals than to any specific new news out about the bankrupt Atlanta-based energy company.

Collins & Aikman Products Co.'s paper was seen "down about a point to two points," a trader in distressed bonds said, with the company's 10¾% senior notes due 2011 seen at 93 bid, 95 offered, and its 12 7/8% subordinated notes due 2012 at 67 bid, 69 offered.

At another desk, market sources were quoting the junior bond down two points on the session, at 68 bid, while the 103/4s were at 93.25 bid, down 1½ points on the day.

Collins & Aikman bonds were seen continuing the slide that started last week when the company's hometown newspaper, the Detroit Free Press, said it would likely be negatively affected by the sharp run up in the price of various kinds of plastics, which, or course, are mostly derived from petroleum products, now at sky-high levels.

The paper noted that a number of other auto components makers who use petroleum-based plastics, such as Visteon Corp., had reported lower numbers, and quoted analysts who expressed skepticism over Collins & Aikman chief executive officer David Stockman's confident assertions that the plastic rise wouldn't hurt his company as badly as it had hurt the others.

Besides plastics prices, Collins & Aikman, like many other automotive suppliers, is negatively impacted by the overall fragile health of the automotive industry, particularly their bread-and-butter customers among Detroit's Big Three, and the U.S.-based "transplant" operations of foreign carmakers such as Nissan, Honda and Toyota.

On Tuesday, there was more bad news out on this front, as General Motors Corp. and Ford Motor Co. posted sales declines last month - 12.7% for industry leader GM and 3% for Number-2 Ford, whose sales have been skidding downward for nine straight months now.

The U.S. auto giants were laid low by higher prices and low temperatures, which discouraged buyers - although their Japanese rivals and Chrysler Corp. - the smallest of Detroit's Big Three, now owned by German-based auto conglomerate DaimlerChrysler - made impressive gains.

With their numbers on the slide, GM and Ford said sales of big trucks and SUVs, their most profitable sellers, were down sharply from a year ago due to consumer worries about high fuel prices.

GM and Ford have each said that they will produce fewer vehicles in the remainder of the first quarter and in the second quarter versus a year ago.

While Collins & Akiman's bonds continue to retreat as the auto industry gets battered around, a trader said, the same was not true - at least not Tuesday - for bankrupt Novi, Mich.-based automotive frame maker Tower Automotive, whose 12% notes due 2013 "haven't drifted lower like Collins & Aikman has," a trader said. He saw those bonds still hanging in at 62 bid, 63 offered.

Mirant loans up again

In bank debt action, Mirant's 2003 paper continued its run-up on Tuesday with the paper trading as high as 66 during the session and closing the day around 65.75 bid, 66.5 offered, according to a trader.

On Monday, the paper closed out the day at 64.5 bid, 65.5 offered, up about a point from Friday's closing levels (Monday's editions of Prospect News publications gave erroneous closing prices for the Mirant bank debt).

Tuesday's strengthening, as was the case on Monday, was attributed to market technicals, the trader explained.

Mirant's bonds were meantime seen to have "improved a little," a trader said, quoting its 2½% busted convertibles at 77 bid, 78 offered, probably up one or two points, while its 7.40% notes due 2004 were at 80 bid, 81.25 offered, and its 7.90% notes due 2009 were at 81 bid, 82 offered.

The company's Mirant Americas Generating Inc. (MAGI) 8½% bonds hovered at 108.5 bid, 109.5 offered, although the trader said "it seems like the converts moved more than the straight bonds did."

Owens Corning bank debt higher

Also up in Tuesday's session was Owens Corning's bank debt, with the paper quoted at 109 bid, 110 offered, a quarter to a half a point stronger on the day, according to a trader.

No particular news was seen as pushing the bankrupt Toledo, Ohio-based building materials company's paper up, the trader added.

Owens' bonds have recently hovered in the 65 area, while bankrupt Lancaster, Pa.-based floorcovering maker Armstrong World Industries - like Owens, driven into Chapter 11 by a flood of asbestos-related medical claim lawsuits - was at 70.5 bid.

Bonds and bank debt of the asbestos-challenged companies had run up handsomely right after the November elections, on the assumption that tightened Republican control of Congress would be more likely to produce a bill setting up an industry-funded claims-payment mechanism.

But the momentum has stalled, and the chairman of the Senate Judiciary Committee, Sen. Arlen Specter (R.-Pa.) warned Tuesday that the proposal for the $140 billion compensation fund will be put in the "deep freeze" unless lawmakers soon agree on the details.

Specter said in an opinion article published in The Washington Times newspaper that his draft bill, which would take asbestos injury claims out of court and pay them from the fund, is now at a critical stage. He warned that if mostly partisan feuding continues on the fund's size and other issues, the bill would be removed from the committee's agenda in the next few weeks.

"Prompt compromises will have to be forthcoming if this critical legislation is to become law or relegated to the deep freeze."

Curative Health off on earnings

A trader said that Curative Health's 10¾% notes due 2011 dropped four points to 84 bid, 86 offered, after the Hauppauge, N.Y.-based medical services provider reported worse-than-expected fourth quarter numbers.

Another trader warned that cutbacks in Medicare payments through the California health system "cut this company pretty deep." He said it faces a "long slow grind" during which it will have to "eke out" cost cuts and "grow its way out of its problems."

"I don't see a rosy scenario for them," he added.

On the upside, Winn-Dixie Stores Inc.'s 8 7/8% notes due 2008 were seen up 1½ points at 58 bid, 59 offered, although none had seen any fresh news out on the bankrupt Jacksonville, Fla.-based supermarket operator.

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