Federal-Mogul bonds gain 5 points on the week; Hines Horticulture firms

By Stephanie N. Rotondo

Portland, Ore., March 30 - Federal-Mogul Corp. got the week's gold star Friday, as its bonds continued to surge up 5 points on the week.

The notes gained momentum earlier in the week on the announced acquisition of one of Federal-Mogul's fellow distressed automotive parts producers by a private equity firm. But the bonds took off on their own as the company released its February operating results and announced a new joint venture.

Meanwhile, Hines Horticulture Inc.'s bonds are picking up speed, but no one can explain why. The notes had lost steam earlier in the week on a twice-delayed earnings release.

Solo Cup Co. saw vastly different markets on its bonds during the trading day, which seemed curious to one market player. The notes closed the week essentially unchanged, but were very active.

Overall, traders reported a "dead" Friday. One source thought the week's lackluster activity could be due to market players traveling and attending conferences. But, he said, it could have been anything.

Federal-Mogul charges up

A trader, who saw Federal-Mogul's bonds up at least 5 points over the week, dubbed Federal-Mogul's bonds the "star performer" of the week.

He pegged the notes at 89 bid, 90 offered, adding that all issues of the company's bonds "trade about even."

Another trader echoed that market, but specifically mentioned the 7½% notes due 2004 and the 7 3/8% notes due 2006.

The first trader attributed the rise to three things: the company's recently released operating report, Cerberus Capital Management LP's deal with Tower Automotive Inc. and the auto parts maker's recent joint venture with Johnson Controls.

The company reported $8.2 million in net earnings for February on $250.5 million in net sales, a decline from $48.3 million in net earnings for January on $253.7 million in net sales. Still, the trader called the numbers "very good."

Looking forward to the company's next quarterly report, a company representative said the results are expected to come out in mid-April.

On the Cerberus/Tower deal, the trader said it showed an underlying interest in overseas operations. Federal-Mogul, like Tower, is highly exposed overseas. This could be good for Federal-Mogul, because the Tower deal shows there is interest there, the trader said.

But, do not expect a buyout any time soon, at least according to the company. The company representative told Prospect News that there was no expectation of selling the company.

The Johnson Controls joint venture is also boosting interest in Federal-Mogul, the trader said, calling it a "high-grade company." Federal-Mogul announced Thursday that the group would begin marketing a new line of batteries under the Champion brand.

A bankruptcy court approved the distressed automotive parts supplier's fourth amended joint plan of reorganization in early February. A confirmation hearing is set for May 8.

In other names in the autosphere, a trader saw Remy International Inc.'s 8 5/8% senior notes due 2007 up a little at 82 bid, 83 offered. He said there was no news out to cause the gain.

Hines Horticulture better

Hines Horticulture's bonds were seen a bit firmer Friday after losing ground the beginning of the week due to a delayed earnings report.

A trader said he saw the 10¼% notes due 2011 at 80.5 bid, 81 offered. A market source quoted the notes up 5 points from the previous day's close of 74 to end the week at 79.

But a market participant said he did not really see much going on in the notes. He said he was curious to find out why the company had delayed its earnings yet again.

The nursery supplier first delayed releasing its earnings report in early March. The company gave the need for more time to complete its audits as its reason for delaying the release a second time.

Calls made to the company to find out when the results will be released went unreturned Friday.

Solo Cup steady, active

A market participant was "surprised" at the difference he saw in markets on Solo Cup's bonds. He said he saw the company's 8½% notes due 2014 marketed at 82 bid, 84 offered, then a while later at 85 bid, 86 offered. He added that the notes last traded at 85.5, up slightly from the previous day's close at 85.25.

"So no real change, but there was a decent amount of volume," he said.

The company reported net sales of $2.49 billion for the fiscal year ended December 2006. The figured compared to net sales of $2.43 billion for the fiscal year ended January 2006.

Earlier in the week, the provider of disposable food service products announced that it had sold about 118 acres of the former United States Steel property in Chicago to Southworks Development LLC. The terms of the deal, expected to close on Nov. 30 upon approval by the city of Chicago, were not disclosed.

Broad market mixed

Technical Olympic USA Inc.'s bonds had a "pretty big bounce," a distressed trader said. One market player saw the 10 3/8% notes due 2012 at 75 in the morning, then at 76 later in the day. A market source slotted the notes at 75, up from the previous day's close at 71. Traders had no explanation for the movement.

A trader called Delta Air Lines Inc.'s 8.3% notes due 2029 unchanged at 56.5. Another trader said the paper had been active on the week's oil news.

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