Federal-Mogul up; Delta firm; Primus Telecom steady; MagnaChip gains

By Stephanie N. Rotondo

Portland, Ore., Feb. 7 - Federal-Mogul Corp. took the day's "biggest mover" award during a day of heavy trading Wednesday.

According to traders, investors are still reacting to the "Icahn proposal," which could ultimately give a controlling share of the company to billionaire investor Carl Icahn.

Delta Air Lines Inc. gained another point in light trading amid news that a bankruptcy court had approved its disclosure statement. The company will now begin soliciting votes to approve its reorganization plan.

Meanwhile, Primus Telecommunications Group Inc. saw a lot of activity in its notes, though at the end of the day the notes remained unchanged. Traders could not explain why the bonds moved.

MagnaChip Semiconductor Ltd. is regaining some of the losses it incurred after the company released its fourth-quarter earnings on Jan. 26. The debt followed Federal-Mogul in the big-movers category.

Integrated power company Calpine Corp. saw increases across the board in its debt, as rising bond prices pushed up convertible prices. In an announcement made Wednesday, the company said it had sold one of its energy centers in an effort to further its restructuring plan.

Federal-Mogul moves up

One distressed trader deemed Federal-Mogul the day's "biggest mover," as investors continue to digest the Icahn proposal.

The trader placed the company's notes as high as 85.5 during heavy trading. The bonds came down a bit, settling at 83.5 bid, 84.5 offered, still up on the day.

A bankruptcy court approved the auto parts maker's fourth amended disclosure statement on Feb. 2. Under the plan, domestic asbestos creditors could receive a 50.1% stake in the company once it emerges from Chapter 11 protection. Ultimately, however, Icahn could become controlling stakeholder in the company.

Icahn already owns a significant portion of the Southfield, Mich.-based company's unsecured debt. According to the company's reorganization plan, Icahn also has an option to buy up to 86.12% of the asbestos creditors' stake through a stock purchase. The shares would be issued to a trust created under the plan to be used to compensate asbestos victims. If Icahn exercises the option, the investor will pay a total of $775 million into the trust.

A confirmation hearing will be held on May 8.

Other distressed auto parts makers did not perform as well as Federal-Mogul. Wednesday saw Remy International Inc. down 1 or 2 points, with its 8 5/8% notes due 2007 off a point at 86 bid, 87 offered, and its 11% notes due 2009 down 2 points at 36 bid, 38 offered. The 9 3/8% notes due 2012 were also down 2 points at 33 bid, 35 offered.

Dura Automotive Systems Inc.'s 8 5/8% notes due 2012 dropped a point, leveling off at 33 bid, 34 offered.

Delta flying higher

Delta was "slightly firmer," according to one trader, on news that the company's disclosure statement was approved by the bankruptcy court overseeing the case. The airline can now solicit votes on its reorganization plan.

The 8.30% notes due 2029 were seen at 63 bid, 64 offered, up just over a point from the previous day. The trader noted there was "not a lot of trading."

"Having received another crucial and tremendous vote of confidence in our plan and our people, we remain on course to exit bankruptcy this spring - possibly as soon as late April - as a strong, fiercely competitive airline," Edward H. Bastian, Delta's chief financial officer and head of the company's restructuring efforts, said in a press release. "Upon emergence, Delta will be one of the best positioned airlines in the country based on financial strength and profit potential, with unit costs among the lowest of any traditional network carrier."

Over the next two weeks, Delta will begin mailing notices of the confirmation hearing to its qualified claim holders. The confirmation hearing on the plan will be held April 25.

"The confirmation date is as expected," a trader said.

In other bankrupt airline paper, Northwest Airlines Corp. was also a point higher. Its 9 7/8% notes due 2009 were quoted at 96 bid, 98 offered.

Calpine up

Calpine saw its numbers go up as it received bankruptcy court approval to sell its 250-megawatt Goldendale Energy Center to Puget Sound Energy for $120 million.

The San Jose, Calif.-based company's 8½% senior unsecured notes due 2011 gained a point, closing the day at 95 bid, 96 offered. The 8½% notes due 2008 were also up a point at 100 bid, 101 offered.

Traders said the company's convertibles were also up. One noted that, as the bonds go to par, the convertibles push up, as "these guys will get whatever is left." The 4½% convertible due 2023 jumped 4 points to 88 bid, 90 offered, while the 6% convertible due 2014 gained 3 points to 80 bid, 82 offered. The 7¾% convertibles went up 4 points, as well, landing at 87 bid, 88 offered.

The distressed power company said the sale to a utility subsidiary of Puget Energy will further the company's restructuring program. Calpine is selling a number of assets to focus "on those core power assets and key markets in which Calpine can best compete," the company said.

Primus sees heavy activity

Primus Telecommunications traded a "decent volume," moving as high as 56.25, according to one market insider. Despite the volume, the company's 8% bonds due 2014 fell back to unchanged, ending the day at 55.5 bid, 55.75 offered.

Holders of the senior notes served the company and its subsidiary, Primus Telecommunications Holding, Inc., with a complaint on Jan. 29. The purpose of the complaint was to declare some fund transfers illegal or fraudulent and to prevent payment of funds.

The company said the claims were without merit. Both parties said they would litigate the claims.

The insider, however, was unsure what prompted the activity in the debt - last week, he said, the notes traded very little.

Primus Telecommunications is a McLean, Va.-based provider of international and domestic voice, voice-over-internet protocol, internet, wireless, data and hosting services.

In other distressed telecommunications paper, Iridium LLC gained about half a point on Wednesday. Its bonds ended trading at 29.5 bid, 30 offered.

The company filed for bankruptcy in April 1999.

MagnaChip gains

MagnaChip is faring "a lot better," one distressed trader noted, as its notes climbed 1.5 to 3 points.

The 8% notes due 2014 was the biggest gainer, earning 3 points on the day. The trader pegged the notes at 68 bid, 69 offered. The 8.61% notes jumped 1.5 points, landing at 88 bid, 89 offered.

Over the last few weeks, MagnaChip saw its debt declining in reaction to a less-than-stellar fourth-quarter earnings report. The company posted a net loss of $45.6 million compared with a net loss of $22.9 million in the fourth quarter of 2005.

MagnaChip management said the company is positioned for a turnaround in 2007, though revenue is not expected to pick up in the first quarter.

MagnaChip is a Seoul, South Korea-based designer and developer of mixed-signal and digital multimedia semiconductors.

Sirva, Delphi loan paper up

Sirva Inc.'s bank debt inched its way higher as investors continue to mull over the company's intention to refinance its credit facility, according to a trader.

The bank debt closed the day at 97 bid, 98 offered, up from around 96 bid, 97 offered, the trader said.

During a conference call on Tuesday, company officials said that they are in the beginning stages of a refinancing effort.

Officials also said that with the company's financial reporting improvements and the current markets, there are opportunities for improvement in structure and cost.

Sirva is a Westmont, Ill.-based provider of relocation services and moving services to corporate clients, military and government agencies, and the consumer market.

Delphi Corp.'s debtor-in-possession second-lien loan was active at higher levels on Wednesday as better buyers stepped into the market, according to a trader.

The second-lien paper closed the day at par ¾ bid, 101 offered, up from previous levels around par ½ bid, par ¾ offered, the trader said.

Delphi is a Troy, Mich.-based auto parts maker.

Le-Nature's rise continues

Elsewhere in the distressed-bond market, a trader saw Le-Nature's 9% notes due 2013 jump 5 points to 35 bid, 36 offered, its third straight day of gains.

Those bonds had ended last week at 25 bid, and have gained a full 10 points since then.

Traders said they saw no news about the busted fruit-drink manufacturer, which slid into Chapter 11 last year amid allegations of massive wrongdoing on the part of ousted chairman Gregory Podlucky and his allies within the company's management.

A court-appointed trustee overseeing the disposition of the company's assets was recently reported to be close to hiring a broker to sell its idled bottling plant in Latrobe, Pa., where the company is based. He told the court that several prospective brokers have spoken with potential buyers and that a sale could occur within 90 days.

Trustee R. Todd Neilson also said recently that the federal government does not intend to claim the cars, diamonds and other assets seized by investigators as part of their investigation of Podlucky and the other ousted executives.

Sara Rosenberg and Paul Deckelman contributed to this article.

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