Asbestos names lower; Adelphia steady as break-up fee approved

By Paul Deckelman and Sara Rosenberg

New York, April 20 - Asbestos names took a turn for the worse on Wednesday, with Owens Corning's bank debt shedding about a point on the day and Armstrong World Industries Inc. falling off by about three points on concern over claims-mechanism legislation being introduced in the Senate.

Bonds of the two bankrupt asbestos-challenged concerns were also seen on the downside.

Elsewhere, bonds of Adelphia Communications Corp. were seen little changed, even as a bankruptcy judge okayed the company's planned breakup fee that would have to be paid to Time Warner and Comcast Corp, should their planned merger not go through.

Owen Corning's bank debt was quoted at 113.5 bid, 114.5 offered, down from previous levels around 115 bid, 116 offered, while Armstrong's bank debt was quoted at 82 bid, 84 offered compared to previous levels around 85 bid, 88 offered, according to a trader.

On the bond side of the ledger, a trader in distressed securities said both of the asbestos names were down a point, with Armstrong's bonds having fallen to 83 bid, 85 offered from prior levels at 86 bid, 88 offered, before coming a little off their lows and ending at 84 bid, 86 offered.

He saw Owens Corning's bonds retreat as low as 79 bid, before coming back to close at 82 bid, unchanged on the day.

A market source at another desk saw the Owens bonds down a point to 83, while the Armstrong debt fell 23/4.

On Tuesday, the Toledo, Ohio-based insulation maker's bank debt had been stronger on the day by about a point and Armstrong's bank debt was up about two points as the Senate Judiciary Committee met, getting peoples' hopes up that something will get done on legislation.

"Senator Specter introduced a bill yesterday - but it didn't look like he had the full support of Republicans," the trader said in explanation of why the asbestos bank debt weakened on Wednesday.

News came out long after the close Tuesday that Judiciary Committee chairman Sen. Arlen Specter, R-Pa., had formally introduced his asbestos bill. The proposal would set up a $140 billion compensation fund.

The aim of the bill is to create a fund from which people who were medically harmed by their exposure to asbestos can be paid, thus removing such claims from the nation's court system.

Specter acknowledged that not everyone supports his bill, but said he aims to resolve the differences and get the bill voted out of committee on April 28.

Among the other bankrupt asbestos names, Chicago-based building products maker USG Corp.'s 8½% notes due 2005 and 9¼% notes that would have matured in 2001 were seen unchanged at 131 bid, and 133 bid, respectively.

Southfield, Mich.-based auto parts maker Federal-Mogul Corp.'s notes were up 1/8 to 27.125.

Adelphia little moved

Elsewhere, Adelphia's notes were seen little changed, its 11 7/8% notes due 2007 seen up a quarter-point at 136.25. However, a trader saw the bankrupt Greenwood Village, Colo.-based cable operator's 7 7/8% notes due 2009 up 1 point at 86 bid.

New York federal bankruptcy judge Robert Gerber on Wednesday approved the company's motion establishing a break-up fee in the event the deal with Time Warner and Comcast fails to go through. The fee would be 2.5% of the planned purchase price of around $18 billion, or around $450 million.

It's seen as a tactic to make it more difficult for rival cabler Cablevision Systems Inc. to acquire Adelphia, since the break up fee would have to be paid, adding to the overall cost of the acquisition.

Bethpage, NY.-based Cablevision this week raised its proposed bid for Adelphia to $17.1 billion from prior levels around $16.5 billion. Adelphia had already signed a preliminary agreement with Time Warner and Comcast, and has indicated that it expects to complete that deal.

AMR, Continental hold levels

In the airline sector, news of sizable losses for both AMR Corp. and Continental Airlines Inc. did not seem to dent the bonds of either company; AMR's 9% notes due 2012 were seen up a half point to 76.5 bid, 77.5 offered, while Continental's 8% notes coming due later this year were unchanged at 98 bid, 99 offered.

A trader said however that Delta Air Lines Inc.'s bonds and those of Northwest Airlines Corp. were each down a point, ahead of the anticipated release Thursday of each of their quarterly earnings.

Delta's 8.30% notes due 2029 were seen at 27.5 bid, 28.5 offered, while Northwest's 8 7/8% notes due 2006 dipped to 80.5 bid, 81.5 offered.

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