Automotive sector weakness continues; Mirant bank debt down again

By Paul Deckelman and Sara Rosenberg

New York, March 23 - Bonds of the beleaguered automotive supplier sector continued to weaken Wednesday, with the group's recent favorite punching bag, Collins & Aikman Products Inc., once again seen lower.

In bank debt dealings, Mirant Corp.'s 2003 and 2004 paper was seen down more than a point on the session, and down nearly three points since the start of the week.

Trading in distressed bonds was seen relatively restrained, with not much real activity going on in the last full session of the week, ahead of the early close (2 p.m. ET) on Thursday and Friday's full market shutdown for the Good Friday/Easter holiday.

That having been said, traders were still seeing Collins & Aikman's notes lower, just as they have been all week. One quoted the Troy, Mich.-based automotive components maker's 10¾% senior notes due 2011 two points lower at 79 bid, 81 offered, while its badly battered 12 7/8% notes due 2012 were perhaps a point on the downside at 42 bid, 44 offered.

Another trader pegged the Collins & Aikman senior notes at 80 bid, 81 offered, down a point, while the juniors were off two points at his desk, at 41.75 bid, 42.75 offered.

Another market source saw those 12 7/8s down about 1¼ points, to 42.75.

Among other automotive names recently skidding deeply into distressed territory, a trader saw bankrupt Novi, Mich.-based vehicle frame maker RJ Tower Corp.'s 12% Notes due 2013 "in the same 53-55 area" that the bonds have recently occupied, while bankrupt Troy, Mich.-based automotive metal stamping contractor Intermet Corp.'s 9¾% notes due 2009 continued to hold in the 64-66 area.

He did see Fomex International LP's 9 7/8% notes due 2007 drop to 49 bid, 51 offered from prior levels around 51 bid, 53 offered, while the 10¾% notes due 2009 of the Linwood, Pa.-based manufacturer of foam rubber products for automotive and other industrial uses were unchanged at 84 bid, 86 offered.

At another desk, Foamex's 9 7/8s were pegged at 50.5 bid and its 13½% notes due 2005 were at 87.5 bid, both down 1½ points on the day. The 103/4s were actually seen up a point at 84.5.

Federal-Mogul bonds down

The first trader said that Federal-Mogul Corp.'s notes, after having been stationary "for the longest time" in a 30 bid, 32 context, fell to 27 bid, 29 offered, although he saw no negative news out on the bankrupt Southfield, Mich.-based auto parts supplier, which was driven into Chapter 11 several years ago under a flood of asbestos-related lawsuits.

The trader meantime saw no movement in the bonds of other bankrupt asbestos-challenged companies such as Toledo, Ohio-based insulation maker Owens Corning, steady at 66 bid, 68 offered, and those of Lancaster, Pa.-based floorcovering maker Armstrong World Industries Inc., which hung in at 70 bid, 72 offered.

aaiPharma falls

Troubled Wilmington, N.C.-based pharmaceuticals maker aaiPharma Inc.'s 11% notes due 2010 were seen two points lower at 54 bid, 56 offered, although there has been no follow-up news to last week's revelation that the company probably won't be able to pay the interest due on those bonds on April 1 and may have to consider a bankruptcy reorganization soon.

Mirant loans lower

In the bank debt realm, Mirant's '03 and '04 paper slid down to 72.5 bid, 73.5 offered from Tuesday's closing levels of 73.75 bid, 74.5 offered, according to a trader, bringing the debt's total loss since the open on Monday to about 2¾ points.

The bankrupt Atlanta-based energy company's MAGI paper also fell off on Wednesday, dropping to 106.5 bid, 107.5 offered, with trades taking place around 107 throughout the session - about half a point lower than the paper was trading on Tuesday, the trader said.

"If you look at the equities of NRG or something they're all down, so these things have come in," the trader explained.

Mirant's bonds were "basically unchanged," a trader said, with its 7.4% notes that were to have come due last year at 79 bid, 81 offered, while its 2½% busted convertibles were at 74 bid, 76 offered.

Loral down on revised plan

Seventy-four bid, 76 offered was also the level to which Loral space & Communications Ltd.'s 10% Orion notes due 2006 were seen have fallen, from 78 bid, 80 offered earlier, the trader continued, while the New York-based space satellite company's 9½% notes due 2006 were a point easier at 24 bid, 26 offered.

On Tuesday, the company filed a revised bankruptcy reorganization plan, coming to terms with trade creditors. Under the revised provisions, those unsecured creditors and bondholders would receive ownership of the re-organized Loral, post-bankruptcy.

The unsecured creditors would get about 80% of common stock in the new company, as well as their share of $200 million in preferred stock from a Loral satellite services unit to be formed upon the company's emergence from Chapter 11. They could also subscribe to purchase a pro-rata share of $120 million in new senior secured notes of the satellite services unit.

The bondholders would meantime receive about 20% of common stock in the new company.

However, the new plan still offers existing shareholders and preferred shareholders exactly what the old plan did - nothing.

© 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.