Salton bonds get slugged; Adelphia gains; Mirant bank debt active, but mostly unchanged

By Paul Deckelman and Sara Rosenberg

New York, March 29 - Salton Inc. bonds and shares were "getting pounded" Tuesday, in the words of one trader, despite a lack of fresh news out about the troubled Lake Forest, Ill.-based maker of the "George Foreman" brand hamburger grills and other small appliances.

Adelphia Communications Corp. notes, on the other hand, were seen going the other way in response to a news report that Cablevision Systems Corp. might join one of the two main bidding syndicates vying to buy Adelphia's assets out of bankruptcy - and that this could result in a still higher bid for those assets.

In the bank loan market, Mirant Corp.'s 2003 and 2004 bank debt saw "a little bit of activity" in the morning hours, a trader said, although it finished up pretty much unchanged.

Salton's 10¾% notes scheduled to come due on Dec. 15 were seen by one trader in distressed bonds to have fallen to 74 bid, 76 offered at the close, well down from prior levels around 79 bid, 81 offered. He also saw the company's 12¾% notes due 2008 dip to 58 bid, 60 offered from 60 bid, 62 offered previously.

At another desk, a trader saw the 103/4s fall to a wide 74 bid, 78 offered from 78 bid, 80 offered, while the 123/4s, which had been "hanging in" around 62 bid, 64 offered, fell to 60 bid, 62 offered last week, before continuing to slide to 58 bid, 60 offered.

Salton's New York Stock Exchange-traded shares plunged 47 cents (18.73%) to $2.04. Volume of 482,000 was triple the usual activity level.

Seeking an explanation for the sharp fall, the second trader noted that he had heard that "the rumor is that it's 50-50" whether the company is able to make a scheduled $9 million interest payment on the 123/4s that is supposed to be made on April 15. The company said on its conference call last month that it would be able to make that payment but some of the analysts on the call were skeptical, to say the least, noting that Salton had less cash on hand than the amount of the payment.

Even if it dodges a bullet and somehow manages to scrape together the funds needed to pay the 12¾% coupon, Salton must still wrestle with the problem of how to come up with $125 million it means to pay off the 103/4s.

Mirant loans trade

Elsewhere, Mirant's '03 and '04 loan paper, after having traded busily around, closed out the day at unchanged levels of 72.5 bid, 73.5 offered, a trader said - right to where that paper had dipped on Monday on news that the bankrupt Atlanta-based power generating company had filed an amended disclosure statement and plan of reorganization.

A second trader had the Mirant paper quoted at 72.75 bid, 73.25 offered throughout Tuesday's session and at the close of Monday's session.

Before it filed the amended plan, Mirant's bank debt was being quoted at 73.25 bid, 74 offered.

The amended plan of reorganization gives 100% recovery to secured claims, 100% recovery to "California Party Secured Claims" for settlement of claims relating to the Golden State's energy crisis in 2000-2001, and 60% recovery to unsecured claims through the issuance of shares of the reorganized company's Mirant common stock.

Mirant's bonds meantime also were seen lower, in tandem with the bank debt. The Mirant corporate 7.4% notes that were to have come due in 2004 were seen down 1 1/8 point to 78 bid, while its 7.90% notes due 2009 lost 1¼ point to close at 79.

Its Mirant Americas Generation Inc. (MAGI) 7.2% notes due 2008 and 7 5/8% notes due 2006 were both down a quarter point at 112.75. And the bonds of Mirant's Mid-Atlantic Generating subsidiary were also mostly down, its 10.06% notes due 2028 half a point lower at 119.5, while its 9 1/8% notes due 2017 were a point down at 112.

However, Mid-Atlantic's 8 5/8% notes due 2012 were being quoted at 106 bid, unchanged on the day.

Atkins trades

In other bank-debt dealings, there was some activity seen in Atkins Nutritionals Inc.'s second-lien bank debt, with the paper trading around the 18-19 area, a trader said. These levels were also pretty much unchanged on the day.

Prior to a private lender call that was held close to two weeks ago by the Ronkonkoma, N.Y.-based provider of food, nutritional and information products for controlled carbohydrate lifestyles, the second-lien paper was quoted in the high 60s - but it proceeded to spiral downwards, till it bottomed out around the 18 level early last week.

Calpine Corp.'s second-lien term loan traded all the way up to 86.5 bid, 87.25 offered during the morning hours of Tuesday's session from previous closing levels of 86 bid, 86.75 offered, according to a trader.

However, by the end of the day, the San Jose, Calif.-based power company's paper came back in the afternoon to basically close out at unchanged levels, a second trader added.

"It was probably just market technicals," the trader explained.

Delta bonds gain

Back among bond investors, Delta Air Lines Inc.'s bonds were seen trading higher, apparently helped by the news that the troubled Atlanta-based carrier hopes to save as much as $240 million over five years by outsourcing some of its maintenance work.

A trader saw the benchmark 7.70% notes due 2005 gain altitude all the way up to 80 bid, 82 offered from prior levels around 74 bid, 76 offered, while its 7.90% notes due 2009 improved two points to 40 bid, 42 offered.

A market source at another desk saw the 7.70s at that same 80 level, up five points, the 7.90s a point better at 40, and its 8.30% notes due 2029 a point higher at 33 bid.

Delta's NYSE-traded shares rose 12 cents (3.02%) to $4.10, although volume of 2.7 million was below average.

Delta's convertible notes initially rose, traders said, but then retreated, with its 8% notes settling in at 40 bid, 41 offered. Delta's 2 7/8% notes closed at 40.25 bid, 41.25 offered. The traders cited rumors of a new deal - not entirely out of the question, given the fact that Delta announced Monday that it filed a shelf registration with the Securities and Exchange Commission to periodically sell up to $500 million in common and preferred stock, debt securities, warrants and other securities.

Delta said it will use proceeds from the offering for general corporate purposes.

Delta said in a filing with the Securities and Exchange Commission that it plans to hire two suppliers for heavy maintenance work, resulting in a 34% cost reduction.

Miami-based Avborne will work on Delta's MD-88 and MD-90 fleet types while Vancouver-based Air Canada Technical Services will work on the 757 and 767 fleets.

The company said in its filing that the moves announced Tuesday will contribute to its previously announced elimination of 1,600 to 2,000 jobs in its technical operations division.

Collins & Aikman steady

On the automotive front, Collins & Aikman Products Co.'s recently battered bonds were seen little changed on the session, with a trader quoting the Troy, Mich.-based automotive components maker's 10¾% senior notes due 2011 at 81.5 bid, 83.5 offered, while its 12 7/8% subordinated notes due 2012 were at 44 bid, 46 offered, "pretty much where they had been."

The big loser in the beleaguered sector was Intermet Corp., whose 9¾% notes due 2009 were quoted at 58 bid, down some 7.375 points.

A trader remarked that the bonds were "on a roller coaster" in falling to 56 bid, 58 offered from prior levels around 63 bid, 65 offered.

Adelphia stronger on bid hopes

On the upside, Adelphia Communications' bonds were seen up solidly, with one trader pegging the company's 10¼% notes due 2011 at 91 bid, 93 offered at their opening. He saw them then push as high as 95 bid, 96 offered at around mid-day, before coming off that peak to close at 93 bid, 95 offered.

He saw Adelphia's 10¼% notes due 2006 firm to 88 bid, 90 offered from 86 bid, 88 offered, but did not see those bonds peak anywhere and come back down like the other 10¼% issue.

Another market source saw the 2011 101/4s up two points on the day, at 94, and the 2006 101/4s up a point at 88. He also saw Adelphia's other issues "pretty much up three or four points," with its defaulted 8 1/8% notes due 2003 three points better at 86, its 8 3/8% notes due 2008 up 3½ points to 87, its zero-coupon notes due 2008 up four points to 59.5, and its 7 7/8% notes due 2009 3 1/8 points better at 84.

Yet another source saw Adelphia's 9 7/8% notes due 2007 up 1½ points, to around the 87 level.

The New York Times reported on Tuesday that Bethpage, N.Y.-based cable operator Cablevision is "in advanced talks" to join a bidding syndicate consisting of Kohlberg Kravis Roberts & Co. and Providence Equity Partners. That group was one of two - the other being a combination of TimeWarner Inc. and Comcast Corp. - to submit bids to buy all of Adelphia at a recent bankruptcy auction for the Greenwood Village, Colo.-based cabler's assets.

KKR and Providence submitted an all-cash bid worth about $15 billion for Adelphia - but the Times quoted executives involved in the process as saying that they would submit a "substantially higher" offer if Cablevision decided to join them.

If that higher bid is successful - TimeWarner and Comcast are reported to have bid more than $17 billion for the company, although their bid was all-stock - Cablevision envisions a merger of the two cable companies to create a national operator, with 8.4 million subscribers. The two equity firms would end up with a significant stake in the resulting publicly traded combined entity.

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