Technical Olympic bonds drop 5 points on rumor; Fedders steady

By Stephanie N. Rotondo

Portland, Ore., March 26 - A rumor that no one had heard was cited as contributing to a 5 point loss in Technical Olympic USA Inc.'s bonds Monday.

A trader said he had heard there was a rumor out on the struggling homebuilder but commented: "No one really knows" what it was.

Meanwhile, investors are waiting to hear Fedders Corp.'s 10-K results before jumping on board that ship. A bondholder conference call held Monday morning indicated the results would be out by the end of the week, with an April 3 conference call planned.

Elsewhere, Northwest Airlines Corp. finally got approval from a bankruptcy judge to seek approval of its reorganization plan.

The airline had been fighting several groups on the proposed plan, most prominently a group of its equity holders. The group has claimed that the company could be worth more post-bankruptcy is the airline merged with another. The group has also accused the company of "parking" any merger offers until after it emerges from bankruptcy.

On the news, Northwest saw its bonds fly higher, though on very little activity.

Overall, traders reported a "rather quiet" day.

"I'm so bored," one trader said.

"It's been dead," said another.

Technical Olympic clobbered

A rumor that "no one really knows" seemed to be the cause for a 5 point smackdown in Technical Olympic's bonds.

A trader said there was talk of a rumor circulating on the Hollywood, Fla.-based homebuilder, but "no one really knows what it is," he said.

At market close, he saw the company's 10 3/8% notes due 2012 at 70, which he called down 5 points on the day. Earlier in the trading day, a market participant quoted the notes at 77 bid, 78 offered.

Another trader said Technical Olympic "got mushed," adding that people "want to get out of the way."

He cited rumors that the Transeastern joint venture debt will be considered senior to the unsecured bonds in a workout scenario. He saw the 10 3/8% notes lower by 5 points at 68 bid, 70 offered.

Another trader said the company's debt was "getting hammered," quoting the 10 3/8s at 66.5 bid, 67.5 offered, which he said was down 4 or 5 points. He did not know what prompted the loss but noted stock was at a 52-week low.

The homebuilder is no stranger to losses: recent subprime mortgage lender concerns hurt the company, as well as poor earnings and a negative outlook for 2007.

A further indication that the company is not heading for a turnaround this year was a report issued by the Commerce Department Monday. The report showed new home sales dropping for the second consecutive month, falling to the slowest pace in seven years.

Fedders steady

Fedders held a conference call for bondholders Monday, in which traders had expected the company to "keep everyone warm and fuzzy."

According to a trader, the call was "useful."

"Today's conference call was useful, but vague because they couldn't say much before the 10-K comes out," he said.

He said the company told the bondholders that the 10-K would be filed by the end of the week. A conference call to discuss the earnings is scheduled for April 3.

The trader said he saw Fedders' 9 7/8% notes due 2014 down at 59. He said he did not think the price was "really indicative of the market," as the bonds were not very active.

"People want to see the 10-K before they pounce on it," he said.

Another trader called the bonds actually down a point at 58 bid, 60 offered. At another desk, a trader saw them unchanged around 59.5 bid, 60.5 offered, although he said "small pieces" had traded up at around 62 bid, 63 offered during the day. He remarked that it is a good thing that the Liberty Corner, N.J.-based company - which said on the conference call it is not selling its air-quality products division, its "crown jewel," because none of the buyers came up with the price it wanted - will not be pushed into selling the unit at a "distressed, fire-sale" price.

Another trader saw the bonds unchanged at 59 bid, 60 offered, but noted they are now trading with accrued interest since the coupon payment has been made, meaning they are in reality up a couple of points from where they were a few days ago.

Northwest flies higher

Northwest Airlines received the go ahead from a bankruptcy judge to begin seeking creditor approval of its reorganization plan.

The news prompted a trader to call the company 9 7/8% notes due 2007 higher, though he added the distressed paper did not see much activity. He quoted the notes at 88 bid, 89 offered, where he said they traded most of the day.

The company has to revise its disclosure statement to reflect agreements reached Monday, an Associated Press report said. Then the Eagan, Minn.-based airline can send the statement along with the reorganization plan to creditors for approval.

Under the plan, the airline will cancel all existing shares in the company. The company then plans to issue 272 million new shares, with a stock offering to sell 27.78 million shares at $27 a piece.

The plan also allows secured creditors to be fully reimbursed, with unsecured creditors receiving about 74 cents on the dollar.

A hearing to confirm the company's reorganization plan is scheduled for May 16.

In other distressed airlines paper, Delta Air Lines Inc.'s 8.30% bonds due 2029 were seen higher at 56 bid.

Tembec mixed

A market participant saw Tembec Inc.'s bonds "a little better than Friday," quoting the 8½% notes due 2011 at 64.75 bid, 65.75 offered.

At another desk, a trader saw the 8 5/8% senior bonds "doing nothing," hanging in at 71 bid, 73 offered. However, he called the 81/2s a point better at 64 bid, 66 offered and the 7¾% notes due 2012 also up a point at 62 bid, 64 offered.

The forest products company had seen several days of losses last week, mostly attributed to a strengthening Canadian dollar.

Broad market mixed

Merisant Worldwide, Inc., the maker of Equal, posted its fourth-quarterly results Friday and its bonds were higher.

The numbers, called "much better than expected," by a trader, prompted a 3 point gain in its 9½% notes due 2013. The trader placed the notes as closing at 76.5.

A trader saw Bally Total Fitness Holding Co. off a little on the day, with its 9 7/8% 2007s down 2 points at 81.5 bid, 82.5 offered, but saw its 10½% 2011s unchanged at 95 bid, 96 offered.

In the distressed autosphere, a trader said Remy International Inc. "gave back some" after rising on the equity rights rumors last week. Its 8 5/8% 2007s were off 3 points at 82.5 bid, 83.5 offered.

Meanwhile, a trader saw Solo Cup's 8½% notes due 2014s down a point at 85.5 bid, 86.5offered.

Movie Gallery Inc.'s 11% notes due 2012 traded as high as 93 before ending down a point on the day at 91.5 bid, 92.5 offered.

Spectrum bounces up

A trader saw Spectrum Brands Inc. "bounce back a little" after getting whacked last week. He saw the 7 3/8% bonds due 2015 at 79 bid, 80 offered - up 3 points - and the 8½% notes due 2013 at 94 bid, 95 offered, deemed up 2 points.

Another trader noted that Spectrum had filed an 8-K with the Securities and Exchange Commission. He saw the 7 3/8s trade as low as 77 before coming back to 79 bid, 79.5 offered at the end of the day. He called the notes unchanged, but said there had been "a lot of trading" in the credit.

Paul Deckelman contributed to this article.

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