Remy bonds steady despite rumors; Bally mixed on refinancing hopes; Calpine up

By Stephanie N. Rotondo

Portland, Ore., April 13 - The rumor mill was working overtime Friday, as not one, but two rumors emerged on Remy International Inc., prompting a tug-of-war with its bonds.

Thursday trading saw early losses in Remy's bonds amid rumors that the company would miss its April 15 coupon payment. But a late afternoon surge on a potential new deal for the struggling company caused the notes to gain 5 points, according to one trader.

Come Friday, the notes held their ground, neither giving up, nor gaining on the close of the business week.

Separately, late-breaking news Thursday saw Bally Total Fitness Holding Corp. give up a few points on its bonds. The company announced that it had reached a forbearance agreement with its senior lenders and would not be making an upcoming coupon payment.

The bonds gave up a little more during the trading day, but its equity rebounded slightly on hopes of a refinancing deal.

Meanwhile, Calpine Corp. saw another day of gains in its bonds as the company announced a new deal with a California utility.

A weaker semiconductor index pushed the technology sector downward, leaving ASAT Holdings Ltd.'s and MagnaChip Semiconductor LLC's bonds out in the cold. A trader said the companies were also feeling a squeeze by some of the electronics companies they supply.

Profit takers were blamed for a slight loss in Technical Olympic USA Inc.'s notes. A trader said the bonds had seen a week of pretty decent gains, calling the notes up as much as 5 points over the week.

Remy steady

Remy rumors abound, which has prompted a back-and-forth struggle in the bonds.

On Thursday, a trader said he saw the notes lose 3 points on the day on concern that the automotive components maker would miss an upcoming coupon payment. At another desk, however, a trader said the notes surged in afternoon trading on rumors that the company has inked a new deal with General Motors Corp. - a deal that supposedly increases the distressed company's EBITDA by $20 million to $30 million.

The second trader said the 11% subordinated notes due 2009 closed on Thursday in the 30 level, remaining essentially unchanged at the close of the market Friday. He also saw the 8 5/8% senior notes due 2007 in the 91 bid, 92 offered context on Thursday, also about the same at close on Friday.

Another market source said he saw the 9 3/8% notes due 2012 catch a 26 bid on Thursday but saw little more activity come Friday.

Leah Campbell, a spokesperson for Remy, issued a "no comment" to Prospect News on Friday regarding the pending coupon payment. She did say that a press release will be available Monday discussing the topic.

Also expected to be included in the release is information on the company's recapitalization. The company recently announced that it had begun discussions with a majority of its noteholders to negotiate a plan.

Campbell also declined to comment on the GM rumor.

Bally mixed

Health club operator Bally Total Fitness, which warned last month it may be forced into bankruptcy, saw its shares bounce Thursday on short covering by bondholders, a trader said. He also noted there was confidence of a refinancing and chatter of a possible takeover.

On Friday, Bally said it has obtained a waiver of sorts related to its $284 million senior secured credit facility; the company also said it will not make a $15 million coupon payment due Monday on its 9 7/8% senior subordinated notes due October 2007.

Bally (NYSE: BFT) traded in a band of 67 cents to 84 cents before settling Friday at 70 cents, a gain of 4 cents on the day, or 6.06%.

Its bonds, meanwhile, came in mixed. The senior subordinated notes were seen by one market player at 80.5 bid, 81.5 offered, while another source saw the notes trading in the 81 level. The source also saw the 10½% notes due 2011 around 95. The source also mentioned that the notes are trading flat, with two bills due to the seller.

"Liquidity is up to $54 million as of April 11 from $45 million on March 14 - nice," a trader said. "There are some folks who think they will get the waiver for payment and then will refinance - double nice. The biggest stockholders are the bondholders, so that tells me it is pretty firm. We also heard that there was some chatter that there could be a takeover very quickly, before the October note will be due."

The company said it is in talks with bondholders regarding waiver and forbearance agreements on the 9 7/8% notes and declared liquidity of about $54 million as of Wednesday. The company said that outside of the bonds about to mature, it believes it has enough operating liquidity to continue into 2008.

Under the forbearance agreement with bank lenders, the lenders will not exercise any remedies under their credit agreement as a result of defaults due to Bally's inability to provide financial reports for the fiscal year ended Dec. 31. The forbearance period expires July 13 but may expire earlier under certain conditions.

The Chicago-based company warned March 15 it may file Chapter 11 bankruptcy because of trouble repaying about $827 million of debt, $300 million of which represents the 9 7/8% bonds. But skipping the coupon on that issue also will trigger a cross default under the indenture governing the company's 10½% senior notes maturing in 2011.

Bally stock also is under a threat of delisting due to the company's failure to file its 2006 annual report on time, among other factors.

New deal boosts Calpine

Calpine's bonds were seen up again, this time on news that the company had signed a new agreement with Southern California Edison.

A trader called the 8½% notes due 2008 up half a point at 115.75, adding that the notes gained as much as 5 points on Thursday.

Under the new deal, Southern California Edison will buy 225 megawatts of geothermal energy from Calpine's Geysers plant north of San Francisco, supplying about 130,000 homes.

Financial terms were not disclosed. The deal still needs to be approved by the California Public Utilities Commission and the court overseeing Calpine's bankruptcy case.

Weak index hits MagnaChip, ASAT

A trader said a weaker semiconductor index pushed the sector down, with ASAT losing at least 3 points and MagnaChip also coming in lower.

He quoted ASAT's 9¼% notes at 86, while MagnaChip's 8% notes due 2014 came in at 59 bid.

"They go in tandem together," he said of the chip makers.

The trader said the companies - especially MagnaChip - were also "getting squeezed" by electronics producer Phillips. He said Phillips has been putting pressure on suppliers, such as MagnaChip, to lower its costs.

The entire sector was reacting ahead of industry leader Intel's earnings report, slated to be released Tuesday, an Associated Press report said. The Philadelphia Semiconductor Index fell 5.82, or 1.2%, to 470.06 during afternoon trading.

Technical Olympic down on day

Technical Olympic's bonds gave up about half a point of its Thursday 1- to 1.5-point gain, a trader said, though he added the notes were still up about 5 points on the week.

He quoted the 9% senior notes due 2010 at 96.5, down from the previous day's levels of 97.5. Another market source saw the notes at 96, down from 96.25.

The trader blamed profit takers for the day's slight loss, attributing the week's gains to "one large buyer going around, pushing the bonds up."

Broad market mixed

Hines Horticulture Inc.'s bonds were seen two-sided by one market source, who quoted the 10¼% notes due 2011 at 76 bid, 80.75 offered. He said the "offer side is in line, but the bid is kind of low." He also noted the notes saw only small trades.

At another desk, a trader said Fedders Corp.'s 9 7/8% notes due 2014 had a "little better stability." He said the notes closed at 43.5, which was an almost 1-point bounce, but he called the bonds "unchanged really."

However, "people felt they'd slip lower into the 40s," he said.

In the autosphere, Federal-Mogul Corp.'s bonds were seen better once again, but there is still no explanation as to why.

"There is definitely a reason out there," a trader said, adding he could not seem to find out what it was.

The trader slated the 7½% notes due 2009 at 92.5, which he called up about 2 points.

Ronda Fears contributed to this article.

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