Dana, Federal-Mogul bonds drive upward; MagnaChip weaker, still reacting to poor earnings

By Stephanie N. Rotondo

Portland, Ore., April 11 - Automotive components makers seemed to rule the day Wednesday. Traders said Dana Corp. and Federal-Mogul Corp. saw their bonds boosted, though on both accounts it was unclear why.

Dana is continuing to sell its non-core businesses, a move targeted to reduce labor costs, which in turn could give the company the ability to emerge from bankruptcy as a competitive company.

Federal-Mogul, on the other hand, has been all quiet on the news front in the last two weeks, but a trader wondered if something new would be released Thursday.

Poor annual and fourth-quarter earnings are haunting MagnaChip Semiconductor LLC. The results, posted last month, prompted heavy losses in the company's bonds, and a trader is seeing more of the same.

Mid-week brought with it a little more activity as market players returned to their desks after taking time off for a long holiday break.

Dana bonds boosted

A trader called automotive parts maker Dana's bonds up as much as 3 points during trading. He said the 7% notes due 2029 climbed 3 points to close at 79 bid, 79.5 offered, while the 9% bonds due 2011 rose 2 points to close at 74.5 bid.

The trader was uncertain why the bonds surged.

The bankruptcy judge overseeing its case approved bidding procedures for the sale of the majority of Dana's hose and tubing business. The sale is part of the company's restructuring plan to sell its non-core businesses.

A Turkish company, Orhan Holding, AS, is so far the highest bidder, to the tune of $70 million. The judge could approve the sale by June 6 if no higher bid emerges.

The company also is looking to sell its fluids products assets, worth about $20 million to $30 million.

The bankruptcy judge also has ordered Dana to make a $5.2 million contribution into its nonunion employees' pension plan by Friday. According to the order, the Toledo, Ohio-based Dana must also make a separate pension payment of $487,000 connected to the February sale of its engine-parts business to Germany's Mahle GmbH for $157 million.

Federal-Mogul climbs up

Elsewhere in the autosphere, a trader saw Federal-Mogul's bonds picking up a couple of points, quoting the notes - which tend to trade evenly - at 90.5 bid, 91 offered.

The trader could not explain the surge, speculating that perhaps news would be out on Thursday.

"Maybe someone knows something we don't," he said.

Last month, the company's bonds had a wining streak, spurred by acquisitions throughout the industry, as well as good monthly operating results and a new joint venture with Johnson Controls Inc.

The trader also mentioned that the company's stock closed higher. The equity gained 15 cents, or 17.24%, to close the day at $1.02.

MagnaChip weaker

A trader mentioned that MagnaChip's notes are "continually falling" on bad annual and fourth-quarter earnings posted last month. He saw the 8% notes due 2014 down half a point at 61.5.

The company recently scheduled its first-quarter earnings conference call for April 26. It was also announced that PixelPlus Co., a South Korea-based fabless semiconductor company, withdrew its defamation lawsuit against the Seoul, South Korea-based chipmaker.

Fedders 'drifts'

Fedders Corp. traded in a 2-point range of 45 to 47, with "decent activity," a trader said. He called the 9 7/8% bonds due 2014 at 45.5 bid, 46 offered, down "maybe a point" from yesterday.

Another trader said the bonds were down "another 2 points" to 45 bid, 46 offered and down 4 points on the week on "no news - they've just been drifting."

Tembec bonds rally

Tembec Inc.'s 8 5/8% notes due 2009 were seen down as much as 3 points on Wednesday to 66.5 bid, 67.5 offered, according to a market source, but then came partly back later in the session.

A trader saw the bonds ending down 2 points at 67 bid, 68 offered, citing "the strength of the Canadian dollar," which shot up to a four-month high against the U.S. dollar to close at US$0.8773, up from Tuesday's close at US$0.8720.

Another source saw the bonds at one point get as high as 70, climbing from early lows around 66.5 - but still ending at 67, down 1.25 points.

Broad market mixed

A trader said there was renewed buying interest in Bermuda-based Sea Containers Ltd. He said the company's bonds rose about 2 points across the board, pegging the 7 7/8% notes due 2008 at 84 and the 10¾% notes that were to come due in 2006 at 88.

Technical Olympic USA Inc. showed some signs of improvement in morning trading, the trader said, but in the afternoon, the bonds gave back some of their earlier gains. Still, the trader said the notes were up slightly, with the 10 3/8% due 2012 closing at 76.5. The notes had gained 2 points in the morning to trade at 77.25.

The trader also saw the 9% notes due 2010 up 1 point at 95 bid, 95.5 offered. At another desk, a trader saw the senior notes up a point on no news, to 94.5 bid, 95.5 offered.

Delta Air Lines Inc.'s 8.3% notes due 2029 lost some altitude, according to a trader, but he could not explain why. He saw the bonds close the day at 57.625 bid, 57.75 offered. The bonds closed the previous day around 59.5.

Mrs. Fields' cookie crumbling?

A trader also saw Mrs. Fields' Famous Brands LLC's 11½% notes due 2011 off a point at 82 bid, 84 offered, citing a published report that speculated about the possibility that the Salt Lake City-based baked goods maker might have trouble making its next coupon payment. That payment comes due in mid-September.

Paul Deckelman contributed to this article.

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