Adelphia bonds off on non-confirm maneuver; Calpine higher

By Paul Deckelman and Sara Rosenberg

New York, May 30 - Adelphia Communications Corp.'s bonds were seen lower across the board Tuesday after the bankrupt Greenwood Village, Colo.-based cable operator's late-Friday announcement that it is seeking bankruptcy court approval for the proposed sale of its assets to Time Warner Cable and Comcast Corp. - without a creditor vote or confirmation hearing on its proposed plan of organization.

Traders saw the bonds of bankrupt San Jose, Calif.-based power generating company Calpine Corp. trading several points higher, although none seemed to have much information on the catalyst for the move.

In the bank debt arena, Armstrong World Industries Inc.'s paper retreated during the session as the market in general felt somewhat heavy with little trading volume, according to a trader.

The company's loans closed out the day quoted at 80 bid, 81 offered, down about half a point, the trader said. However, on Friday, a different trader had the bank debt quoted at 81 bid, 82.5 offered - meaning that levels may have fallen off by as much as a point to a point and a half.

Junk bond traders meantime said that the bankrupt Lancaster, Pa.-based floor, ceilings and cabinet maker's bonds, and those of sector peers like Owens Corning, "were up earlier, but are pretty much unchanged now," one of them said at late afternoon ET.

He saw Armstrong's bonds at 82 bid, 83 offered, while bankrupt Toledo, Ohio-based insulation maker Owens Corning's 7½% notes due 2018 bonds were at 111 bid, 112 offered, both unchanged on the day.

There had been volatile trading during recent weeks of those bonds, and those of bankrupt Southfield, Mich.-based Federal-Mogul Corp., a maker of automotive brake linings. The companies had been driven into bankruptcy some years ago by a flood of asbestos lawsuits, and their bonds had languished. But the notes had moved up sharply earlier in the month - only to later lose about half their gains as profit-taking took them down to their current levels - after Owens Corning announced that it had reached agreement with its creditor groups on a restructuring plan.

Adelphia sinks

Adelphia Communications' inability to get all of its various creditor groups on the same page led to Friday's announcement that the company had taken the unusual step of seeking the U.S. Bankruptcy Court for the Southern District of New York's permission to complete the asset-sale transaction with Time Warner Cable and Comcast without having to confirm a Chapter 11 reorganization plan.

The creditor groups are squabbling over how to divvy up the anticipated $16.8 billion cash and stock proceeds from the sale of the company's assets to its larger rivals.

A trader saw Adelphia's 10¼% notes due 2006 at 45 bid, 47 offered, down three points on the day, while its 10¼% notes due 2011 were down two points at 50 bid, 52 offered.

Calpine higher on speculation

While Adelphia was on the downside, a trader saw Calpine's notes up three points across the board, with its 8½% notes due 2011 at 43.5 bid, 44.5 offered.

"There was speculation about some sort of rule change [within the bankruptcy proceedings] that may impact them in a positive light," he opined, although he also noted that it was all speculation in light trading."

At another shop, a trader saw the Calpine Canada Energy Finance II ULC 8½% notes due 2008 up five points at 63 bid, 65 offered, and saw the parent's 7¾% notes due 2009 at 62 bid, 64 offered, well up from 56 bid, 58 offered. He saw its 4¾% converts due 2023 three points better at 40 bid, 42 offered, but had no insight as to what was driving the rise.

Calpine's nearly worthless Pink Sheets-traded shares were seen up two cents (5.88%) to 27 cents on volume of 4.3 million shares, somewhat heavier than usual.

Avondale steady

Also among distressed-debt names, Avondale Mills Inc.'s 10¼% notes due 2013 were seen unchanged at 87.5 bid, - the same level to which those bonds had jumped last week from prior levels in the 60s, on news of a big insurance settlement that would be paid to the Monroe, Ga.-based textile company, arising out of a railroad accident and resulting chemical spill that caused great operational damage to one of its plants and threw the company into a financial tailspin.

The company on Tuesday announced that it would cease its operations and liquidate in order to maximize value for its creditors and shareholders, but does not plan to file for any form of bankruptcy protection. It also told Prospect News that it plans to repay its creditors, including its bondholders, using proceeds from the liquidation and from the $215 million insurance settlement (see related story elsewhere in this issue).

Collins & Aikman gains

In the automotive sphere, a trader was quoting bankrupt Troy, Mich.-based interior components manufacturer Collins & Aikman Corp.'s 10¾% notes due 2011 up three points, to around 38 bid, citing "speculation of a takeover, maybe [by] Third Avenue Funds as a possible buyer of this paper, so they moved up stronger." That speculation was fueled by a report in Automotive News, an industry trade paper, which identified the New York investment company as a likely successful bidder for Collins & Aikman.

Most other auto names little moved

Collins' bankrupt Troy neighbor, Delphi Corp.'s 6.55% notes due 2006 were up ¼ point at 80.25 bid, 81.25 offered, while its 7 1/8% notes due 2029 were also ¼ point higher, a trader said, at 79 bid, 80 offered.

There likewise didn't seem to be much movement in the bonds of Delphi's former corporate parent, General Motors Corp. and its General Motors Acceptance Corp. financial arm. The former's benchmark 8 3/8% notes due 2033 were down ½ point, the trader said, at 75.75 bid, 76.75 offered, while GMAC's 8% notes due 2031 were ¼ point lower, at 94 bid, 94.5 offered.

GM arch-rival Ford Motor Co.'s 7.45% notes due 2031 were half a point lower at 72.5 bid, 73, offered, while its Ford Motor Credit Co. financing unit's 7% notes due 2013 were also off a half at 86.25 bid, 86.75 offered.

Across the whole automotive sector - which had firmed smartly last week on investor hopes that better times may lie ahead for GM, which could in turn help Delphi, which is seeking its erstwhile parent's help in trying to modify its costly labor agreements - things were relatively restrained, with most issues a ¼ to ½ point lower.

Exide jumps

An exception was Exide Technologies, whose 10½% notes due 2013 were seen around 85 bid, 87 offered, up at least three to four points on the session. However, traders were at a loss to explain the rise in the bonds, or in the Alpharetta, Ga.-based storage battery company's Nasdaq-traded shares, which were meantime up 35 cents (8.29%) to $4.57, on volume of 824,000, more than twice the usual turnover.

Another gainer was bankrupt Novi, Mich.-based auto frames maker Tower Automotive Inc. A trader saw its 12% notes due 2013 at 73 bid, 74 offered, up two points on the day.

© 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.