EaglePicher bonds up, but trade flat, on Chapter 11; Loral bonds better

By Paul Deckelman

New York, April 11 - Bonds of EaglePicher Holdings Inc. were being quoted up a good three to five points on Monday - but were seen trading flat, or without their accumulated interest - after the Phoenix-based diversified manufacturing company's Chapter 11 filing.

It was one of the few bright spots in an otherwise battered automotive sector, which has been reeling from all kinds of negative auto industry developments, and got another dose of bad news Friday when Ford Motor Co. cut its earnings forecast for this year and said it likely would not make its pre-tax profit goal next year.

Elsewhere, bonds of Loral Space & Communications gained some altitude after the New York-based satellite company announced that it was beginning construction on a unit slated for delivery and launch in 2007.

Trading in distressed bank loan paper was seen as extremely slow, with more than one participant opining that it was "the slowest day of the year so far."

Back among the bonds, automotive sector bonds were mostly on a downward skid, after Ford, the world's second-largest automaker and the single largest corporate debt issuer, warned that its full-year earnings will only come in at about $1.25 to $1.50 per share, down from the $1.75 to $1.95 per share previously expected. Ford also said it doesn't expect to reach its goal of $7 billion in pretax profits by 2006.

Even so, Eagle-Picher Industries' 9¾%notes due 2013 were quoted by a trader as having risen to 65 bid, 66 offered, from prior levels at 60 bid, 61 offered.

A market source at another desk saw them up a more modest two points at 64, while another market source saw those bonds up three points on the day at 64.5.

However, where the notes had previously been trading with their accrued interest, the notes are now trading flat, or without that interest, as is customary following a bankruptcy filing, so, a trader said, "in reality, they were pretty much unchanged," since loss of the accrued interest negates any nominal gains in a bond's price.

Standard & Poor's said later in the session that it had dropped its ratings on the company and on its Eagle Picher Inc. operating company down to D from CCC+ following the bankruptcy filing.

Ratings lowered include Eagle Picher Inc.'s corporate credit rating to D from CCC+ and senior unsecured debt to D from CCC- as well as EaglePicher Holdings Inc.'s corporate credit rating to D from CCC+, senior secured debt to D from CCC+ and preferred stock to D.

The ratings agency said Eagle Picher has faced very challenging operating conditions because of heavy exposure to the intensely competitive auto supplier market and high metals and energy costs. It noted that among the factors that pushed the company into bankruptcy were its extremely tight liquidity, with little cash and availability on its credit agreement.

S&P also said that the company had hired a restructuring specialist and was in the process of selling several units.

Tower gains

Elsewhere in the troubled auto sector, one of the few names seen higher Monday along with EaglePicher, was RJ Tower Corp., whose 12% notes due 2013 were up 2¼ points at 58.75, although there was no fresh positive news seen out on the bankrupt Novi, Mich.-based maker of automotive frames.

Another bankrupt name from that sector, Troy, Mich.-based automotive metal stamping company Intermet Corp., was down on the session, its 9¾% notes due 2009 down a point at 56 bid.

Among non-bankrupt names in the sector, Collins & Aikman Products Co. was seen little changed on the day, perhaps insulated from the Ford malaise by its own recent good news - that it got some covenant relief from its lenders on its senior secured credit facility and received a commitment for an additional $75 million term loan financing.

Collins & Aikman's 10¾% senior notes due 2011 were seen unchanged at 80, while its 12 7/8% subordinated notes due 2012 were likewise unchanged at 46. The company's 9¾% notes due 2010 were down ¼ point at 106.5.

Visteon Corp. - a former Ford unit whose fortunes rise and fall along with those of its onetime parent and still largest customer - was off on the bearish guidance, its 8¼% notes due 2010 off 3½ points to 90.25 bid, 91.25 offered from prior bid levels around 94.75. A trader also saw the Van Buren Township, Mich.-based automotive systems maker's 7% notes due 2014 fall to 80.25 bid, 81.25 offered, down from 84 previously.

Foamex International Inc.'s bonds were mixed, with the Linwood, Pa.-based foam rubber maker's 13½% notes slated to come due in August down ¾ point at 89.25, while its 8 5/8% subordinated notes due 2007 were up 1/8 point at 51.125, and its 10¼% senior notes due 2009 were half a point lower at 87.25.

Loral higher

Outside of the automotive realm, Loral's Orion 10% notes due 2009 were quoted by a market source up two points at 78 bid.

A trader in distressed bonds saw those notes a little differently, estimating them up three points to 76 bid, 78 offered, while the Loral Space & Communications 9½% notes due 2006 were seen up 2½ points at 26.5.

The company announced Monday that its Space Systems/Loral unit had completed design reviews of TerreStar Networks, Inc.'s planned geostationary satellite, TerreStar-1, and entered into the construction phase of the Mobile Satellite Services (MSS) program.

The company gave no information on the finances involved.

It said that the satellite is scheduled for delivery in 2007. Space Systems/Loral's contract with TerreStar also includes an option for construction of a second satellite, TerreStar-2.

Salton rises

Elsewhere, a trader saw Salton Inc.'s bonds up, although there was no fresh positive news seen on the Lake Forest, Ill.-based small appliance maker - which faces a $9 million interest payment at the end of the week on its 12¼% notes due 2008. Salton has said it expects to make that payment.

Those bonds were seen up perhaps a point at 62.5 bid, 63.5 offered, while its 10¾% notes slated to mature in December were at 75.5 bid, 76.5 offered.

Aside from that, a trader said that there was "nothing happening" in the bonds of Owens-Corning, which had gained some strength last week on renewed investor hopes that Congress will overcome distractions and obstacles to pass a bill setting up a $140 billion asbestos claims funds in order to stem the tide of asbestos-related lawsuits that drove Owens-Corning and dozens of other companies bankrupt in the early part of the decade.

The Toledo, Ohio-based insulation maker's 7½% notes due 2005 were down half a point at 65 bid, 66 offered.

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