Delphi bank debt, bonds lower; Salton bonds sizzle on Amalgamated asset sale

By Paul Deckelman and Sara Rosenberg

New York, Aug. 29 - Delphi Corp.'s bank debt fell off by about half a point Monday and its bonds were seen several points lower, amid a proliferation of news reports over the weekend about the negotiation process between Delphi's former corporate parent General Motors Corp. and the United Auto Workers union. The troubled Troy, Mich.-based automotive parts maker has asked for GM and the UAW to help it stay out of bankruptcy.

Elsewhere, Salton Inc.'s bonds slated to come due in December got a big boost from the news that the Lake Forest, Ill.-based small-appliance maker has agreed to an asset sale that should bring in net proceeds of $80 million - more than enough to take out those remaining bonds.

Delphi's term loan was quoted at 102.5 bid, 103 offered by one trader and 102.5 bid, 103.5 offered by a second trader.

Its revolver was quoted at 95 bid, 95.5 offered by the first trader and 95 bid, 96 offered by the second trader.

"UAW said they wouldn't support all the concessions [being sought by the companies, so] they're both a little lower," the first trader said about Delphi's term loan and revolver.

"It's no surprise whatsoever," the second trader said about the UAW not wanting to support the entire GM proposal. "I think people are realizing from all the press this weekend that these negotiations are not going as smoothly or as quickly as everyone may have hoped."

Delphi is currently looking to GM for some sort of financial buyout, similar to the deal that GM's main rival, Ford Motor Co., recently gave to its former subsidiary, Visteon Corp. Ford agreed to take 25 unprofitable plants off Visteon's hands and either run them itself or try to sell them.

Visteon and Delphi, each spun off several years ago by their respective auto giant parents, were left saddled with costly labor contracts that make it impossible for them to make a profit. While Ford's deal with Visteon has provided some measure of temporary relief to the Van Buren Township, Mich.-based company, Delphi has so far gotten no such help from GM.

Delphi has warned that it may be forced into bankruptcy if it does not get concessions from the union and help from GM. New chairman Steve Miller has indicated that such a filing could come before Oct. 17 - when federal bankruptcy laws will change, becoming less friendly to debtor companies.

As a legacy of its spin-off from GM, Delphi has to pay workers it inherited from GM the same kind of higher wages that GM, Ford and Chrysler pay, rather than the sort of lower wages that other auto component makers pay.

Late Friday, the UAW issued a call for GM to take back some 7,000 workers from its former subsidiary.

Delphi's 6.55% notes due 2006 were seen on Monday having retreated to 87 bid, 89 offered from 90 bid, 92 offered, while its 6½% notes due 2009 lost two points, ending at 82 bid, 84 offered.

A trader also saw its 6½% notes due 2013 off a point at 78 bid, 80 offered, while its 7 1/8% notes due 2029 were also a point lower at 72 bid, 74 offered.

A market source at another desk saw Delphi's 7 1/8s fall to 73 bid from 75.75, while its 6½% 2013 notes ended at 78.75 bid, off from 81.25.

He saw Visteon's 8¼% notes due 2010 a quarter-point down at 98.75.

Yet another trader saw the 2013s down four points at 77 bid, 78 offered, and the 2006s at 87.5 bid, 88.5 offered.

The trader also saw GM's 8 3/8% benchmark notes due 2033 "first down and then back up as oil prices went back down," quoting the bonds unchanged at 85.5 bid, 86.5 offered.

Tower higher

Among automotive suppliers which have already gone bankrupt, a trader in distressed bonds saw RJ Tower Corp.'s 12% notes due 2013 move up to 91 bid, 93 offered from 88 bid, 90 offered, while Collins & Aikman Products Co.'s 10¾% notes due 2011 stayed "where they already were" at 35 bid, 36 offered.

Salton gains on sale

Outside the autosphere, Salton's bonds climbed on the news that the company entered into a definitive agreement to sell its 52.6% ownership interest in Amalgamated Appliance Holdings Ltd. to a group of investors led by Interactive Capital (Proprietary) Ltd. for anticipated net proceeds after expenses of approximately $80 million.

That pushed the troubled small appliance maker's remaining outstanding 10¾% notes due this Dec. 15 up to bid levels around 85-86, well up from prior levels around 75, while its 12¼% notes due 2008 were seen little traded, but were being quoted offered around 70, with estimated bid levels around 66, up from prior levels around 60.

Salton announced earlier in the session that it had completed its debt exchange offer, which took out $75 million of the Dec. 15 notes, leaving $50 million still outstanding, and it said it would consider various liquidity moves - presumably aimed at coming up with the $50 million that the cash-strapped company doesn't currently have - including the possible sale of assets or businesses, creation of new foreign debt, a repurchase of debt or further cost cuts.

However, by the afternoon, Salton announced the sale of the Amalgamated Appliance stake. Leonhard Dreimann, chief executive officer of Salton, said that the maker of the George Foreman electric burger grills would "continue to aggressively explore other ways to improve our liquidity."

Charter steady

Charter Communications Inc.'s bonds were seen little changed Monday, holding onto most of the gains notched last week, when the debt-laden St. Louis-based cable operator announced plans to exchange new debt for some $8.4 billion of existing bonds coming due in 2008, 2009, 2011 and 2012. A traders saw the company's 9.92% 2011 notes holding steady at 76 bid, 76.75 offered, while its 8 5/8% notes due 2009 were likewise unchanged at 82 bid, 84 offered.

© 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.