Collins & Aikman bonds again lower; Atkins bank debt in decline

By Paul Deckelman and Sara Rosenberg

New York, March 22 - Collins & Aikman Products Co.'s bonds continued to lose ground Tuesday, with the Troy, Mich.-based automotive components provider's notes and those of other sector peers getting hit in the wake of funding uncertainty for major customer General Motors Corp.

In bank debt dealings, Atkins Nutritionals Inc.'s second-lien paper was seen to have definitely fallen off on Tuesday - but by how much is unclear, with quotes from various dealers all over the place.

Collins & Aikman - whose bonds have been sliding ever since the company first said last week that it would delay by two days reporting its fourth-quarter and full-year 2004 results by two days, and then announcing that it had filed for a 15-day extension from the Securities and Exchange Commission - were again seen on the slide on Tuesday.

A trader saw the company's two tranches of bonds both down a point on the day, its 12 7/8% subordinated notes due 2012 easing to 42 bid, 44 offered, while its 10¾% senior notes due 2011 dipping to 80.5 bid, 81.5 offered - after having firmed at one point earlier in the session to 83 bid, 84 offered.

Another trader saw the 103/4s "continue to weaken," pegging them down a point on the day at 79 bid, 81 offered, while seeing the junior bonds "kind of unchanged" at 43.5 bid, 44.5 offered.

Yet another trader characterized Collins & Aikman as "sloppy but basically unchanged," while a fourth saw the 12 7/8s trading as low as 41.5 bid, 43.5 offered early in the day before closing at 42 bid, 44 offered, still off a point on the session.

However, a source at another desk took a decidedly contrarian view, estimating the junior bonds to actually be up a point on the day, at 44 bid.

Other troubled automotive names included bankrupt Novi, Mich.-based vehicle frame maker RJ Tower Corp., whose 12% notes due 2013 were seen continuing to languish around 53 bid, 54 offered.

A trader saw Delphi Corp. bonds "all over the place," with its 6.55% notes due 2006 "maybe half a point weaker," at 97.25 bid, 98 offered, while its 7 1/8% notes due 2029 popped up to 79.5 bid, 81 offered from prior levels at 78 bid, 79 offered, initially buoyed by the Troy, Mich.-based automotive electrical systems maker's announcement that it will sell its auto battery division to Johnson Controls Inc. for $212.5 million.

However, he said the rise "petered out as stocks got whacked" later in the session in the wake of the bearish announcement by the Federal Reserve Open Market Committee about interest rates and inflation - although not Delphi, whose shares still posted a modest gain on its news. He saw the bonds close at around the same 78-79 context at which they had begun the day.

Collins & Aikman and the other automotive supplier sector names have recently been staggering on the mounting troubles of the U.S. auto industry, and got more troubling news Tuesday on a report that their largest customer, General Motors Corp., might be losing its $2 billion trade payables financing facility provided by GE Capital. That sent GM's own bonds gyrating at lower levels, and pushed the supplier sector lower. However, later in the day, GE and GM clarified the situation - that GE had previously decided to get out of the trade payables funding business, and that GE's own GMAC Commercial Funding arm will provide the funding, which ensures that companies like Collins, Tower, Delphi and many others get paid quickly for the parts they sell to the giant automaker.

Atkins second-lien debt down

In bank debt dealings, Atkins Nutritional's second-lien paper was drifting around lower - somewhere.

"Some guys are quoting it around 18. One desk is quoting it at 18 cents on the dollar. It was in the 20s the last two days or so," a trader said.

No new information has come out on the Ronkonkoma, N.Y.-based provider of food, nutritional and information products for controlled carbohydrate lifestyles - leaving most loan market players speculating that the fall in second-lien levels is still follow-through from last week's private lender call.

Although information about what was said in the call is unavailable, it was obviously bad news, as the market reacted immediately by dropping the first-lien debt by more than 10 points and dropping the second-lien bank debt close to 20 points, and the bank debt spent the rest of the week going lower and lower.

Atkins' first-lien bank debt remained relatively unchanged on Tuesday with levels of 64 bid, 70 offered, the trader added.

Mirant loans down again

Meanwhile, Mirant Corp. continued to drop lower on Tuesday with the overall market as levels on the 2003 and 2004 bank debt dipping to 73.75 bid, 74.5 offered from 74 bid, 75.5 offered on Monday, according to a trader.

On Friday, the bankrupt Atlanta-based energy company's paper ended the day around 75 bid, 76 offered. The paper was down about a point on Friday's session also because of market heaviness.

Salton bonds drop

Back among the bonds, Salton Inc.'s bonds "have been getting kicked around," a trader said, quoting its 10¾% notes due 2005 as having dropped a point to 80.5 bid, 81.5 offered. He said that the market is "starting to question their ability to refinance those, obviously."

On its most recent conference call early last month, executives of the Lake Forest, Ill.-based maker of the George Foreman brand hamburger grills and other small appliances said that it was working at trying to line up financing before those bonds mature on Dec. 15 - but were forced to admit under skeptical and at times almost hostile questioning from analysts that it has no firm plans in place for repaying those $125 million of bonds.

Salton's 12¼% notes due 2008 were likewise a point lower at 60.5 bid, 62.5 offered.

A trader in distressed notes saw aaiPharma Inc.'s 11% notes due 2010 drop two points to 54 bid, 56 offered, although there was no further negative news from the Wilmington, N.C. -based pharmaceuticals maker, which recently announced that it would delay filing its financial results with the SEC and warned a Chapter 11 filing was "highly likely."

And he saw airline paper mostly cheaper, despite news that the major carriers had again reversed course and had decided to go ahead with a planned $10 per trip increase on most fares, a move seen as positive for the strained liquidity of such companies as Delta Air Lines Inc., whose 7.70% notes due 2005 were seen at 68 bid, 70 offered, well down from recent levels around 72 bid, 74 offered.

Industry leader AMR Corp.'s 9% notes due 2012 slipped a point to 73 bid, 75 offered, while its 9% notes due 2016 were also down a point to 72 bid, 74 offered.

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