Winn-Dixie bonds up as job cuts detailed; Adelphia bank debt firms

By Paul Deckelman and Sara Rosenberg

New York , June 21 - Winn-Dixie Stores, Inc.'s bonds were seen at least two points higher on the day Tuesday as the bankrupt Jacksonville, Fla.-based supermarket chains unveiled plans for massive job cuts and store closings as it tries to trim itself down to a sustainable shape so it can emerge from Chapter 11.

In the bank debt market, Adelphia Communications Corp.'s paper felt firm Tuesday, although levels were pretty much unchanged in trading, according to trader.

He quoted the bankrupt Greenwood Village, Colo.-based cable company's Century Old bank debt at 98.75 bid, 99.25 offered, and the Century New bank debt at 98.5 bid, 99 offered.

Adelphi's bonds were also better, said a junk trader, quoting its 10¼% notes due 2011 up half a point at 89.75 bid, 90.25 offered, while its 9 7/8% notes due 2007 were also seen up half a point at 86 bid.

He chalked up the rise to "valuation," in the wake of Monday's announcement by the majority owners of Cablevision Systems Corp. of their intention of taking the Bethpage, N.Y. -based cable operator and sports franchise owner private and spinning off the non-cable assets in a $7.9 billion deal.

"Whenever you see any kind of merger activity in the cable industry, it gives a bid to the weaker guys, like Adelphia and Charter [Communications Inc.].

He saw Charter's 8 5/8% notes due 2010 having risen half a point to 75 bid, 76 offered, and the debt-laden St. Louis-based cabler's 8 5/8% notes due 2011 likewise at 75 bid, up from 73.5 bid, 74.5 offered last week.

"Charter was up half a point, a point across the board on CVC's valuation of its subscribers" in connection with the proposed going-private leveraged buyout deal.

Winn-Dixie bonds gain

Also in distressed bond trading, Winn-Dixie's 8 7/8% notes due 2008 were seen half a point better at 54 bid, 56 offered, as the troubled Florida-based supermarket operator announced plans to cut 22,500 jobs, or 28% of its work force, and close 326 stores, or 35% of its total outlets, under its proposed Chapter 11 reorganization plan.

Most of the job cuts will be at the closed stores, with about 500 of them at the company headquarters in Jacksonville.

The plan means that the venerable Winn-Dixie - long a fixture in neighborhoods throughout the southeastern United States - will cease operations in four of those states - North and South Carolina, Virginia and Tennessee. It will meanwhile trim its business in its home base in Florida, as well as in Alabama, Mississippi, Louisiana and in Georgia, where it will exit the Atlanta market.

It will also exit a number of other long-time markets, including a number of larger markets, among them Augusta and Savannah in Georgia, Charlotte, and Raleigh-Durham N.C., Chattanooga, Tenn., and Charleston, S.C., among others.

The company - driven into Chapter 11 in February after a year of big losses - has been trying to turn itself around for a year and a half. Part of the turnaround involves the company's exit from a number of food-processing businesses, including six dairy plants, a pizza plant in Montgomery, Ala., and a Georgia-based plant that produces soda, juices and condiments; however, it said that if it could not find buyers for those operations, it would continue to operate two of the dairies and keep the beverage plant open, but would simply close the others.

Winn-Dixie has found itself hard-pressed to compete with such rivals as Publix Super Markets Inc., a Florida-based traditional supermarket operator, and retailing giant Wal-Mart Stores Inc., which has aggressively opened new "superstores" that combine a supermarket-like operation with its discount stores in many Winn-Dixie markets.

The company earlier this year announced plans to test out new marketing concepts and other sales tactics in nearly a hundred outlets in the Miami area and then roll those improvements out to its other stores to boost sales there, but many supermarket analysts are doubtful those changes will allow it to survive against it larger and better-capitalized rivals.

Delta better

Elsewhere, a trader in distressed bonds saw Delta Air Lines Inc. bonds higher, perhaps given lift by a rise in the trouble Atlanta-based carrier's shares, among other airline stocks, as world crude oil prices retreated.

He saw Delta's benchmark 7.70% notes due 2005 a point better at 88 bid, 90 offered, and its 8.30% notes due 2029 at 27 bid, 29 offered, also up a point. Delta's 7.90% notes due 2009 were two points up at 35 bid, 37 offered.

However, he said that bankrupt ATA Holdings' 12 1/8% notes and 13% notes fell to 28 bid, 30 offered from 31 bid, 33 offered previously, chalking the fall in the insolvent Indianapolis-based airline company on "lots of sellers around. No one wants to buy."

The trader said he saw no movement in the recently hard-hit bonds of Northwest Airlines Corp., although a source elsewhere quoted the Eagan, Minn.-based carrier's 7 7/8% notes due 2008 down a point at 46 bid.

Another trader, though saw its 10% notes due 2009 at 45 bid, 47 offered, up a point. He saw American Airlines parent AMR Corp.'s 9% notes due 2012 at 79.5 bid, 80.5 offered and Continental Airlines Corp.'s 8% notes due 2005 at par bid, 100.5 offered, both up half a point.

July-dated light sweet crude futures closed at $58.90 a barrel, down 47 cents on the New York Mercantile Exchange. Those prices had hovered at close to $60 on Friday and Monday. Crude prices are seen as a barometer of likely future price trends for jet fuel.

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