Fedders bonds hurting after Friday's call; Remy notes moving up; Doral structure mixed

By Stephanie N. Rotondo

Portland, Ore., May 21 - A bondholder call held Friday continued to hurt Fedders Corp.'s bonds on Monday, with traders seeing the debt drop as much as 5 points on the day.

"Fedders was the name of the day," a market source said. He placed the bonds at 32 bid, 36 offered, which was generally in line with what other market players quoted.

Elsewhere, a trader said that Fedders was "the only one who moved' in a generally quiet day. He saw them fall to 32 bid, 34 offered from prior levels around 38 bid, 40 offered.

Remy International Inc.'s bonds are also being affected by news from last week, or so a trader said. The bonds have been seen higher recently, and the trader attributed those gains to buzz that the Anderson, Ind.-based company might soon be edging even farther from bankruptcy.

Meanwhile, Doral Financial Corp.'s bonds are in a "standoff," a trader said, as market participants continue to absorb the recently announced buyout news. The preferred issues are moving in opposite directions of each other, while the equity continues to gain. In fact, the stock closed the day well above the price of the new shares.

Fedders notes fall

Fedders' 9 7/8% notes due 2014 "had a crazy print," according to one trader, at 34, with bids coming in later in the day at 33.75.

"It wasn't crazy," quipped another trader. "It was real."

The second trader quoted the bonds at "35-ish," trading between 34 and 37, which he called down 5 points.

"The bonds are really unchanged," he said, "trading around 35 [bid], 40 [offered]. Today they are just printing down toward the bid side."

At another desk, a trader pegged the debt at 34 bid, 36 offered.

But while the traders differed in their pricing, they all agreed that the slide was a continued reaction from Friday's bondholder call.

"It did not go so well for the company," the second trader said.

"We really did say to [management], 'what are you doing?'" the first trader said.

According to the trader, he did hear that, in the event of an asset sale - including the company's Asian properties - the bonds could be worth close to 40.

Remy better

Distressed automotive parts supplier Remy saw its bonds continue to move up, a trader said, on news released last week.

He pegged the 8 5/8% notes due 2007 at 96 bid, 96.5 offered, while at another desk, a trader saw the bonds at 95 bid, 96 offered.

The first trader said a news story came out late last week that said the company was close to finalizing a restructuring plan, which would keep the automotive parts maker out of bankruptcy.

"Basically, I think they are higher on news that they are closer to getting a restructuring plan in place," he said, adding that a rights offering was one of the options the company was looking at. And, with the 8 5/8% notes maturing at the end of this year, they are "running out of time," he said.

But, "it looks like it's going to get done soon," he said.

Another trader said the 11% notes due 2009 and 9 3/8% notes due 2012 moved up to 51.5 bid, 53.5 offered, up from 49 bid, 51 offered.

Elsewhere in the autosphere, Dana Corp.'s bonds were seen up a point across the board at 94 bid, 95 offered on the 6½% notes due 2008.

A trader also saw Dura Automotive System's 8 5/8% notes due 2012 a half a point better at 39 bid, 40 offered, while its 9% notes due 2009 were a quarter point ahead at 8.25 bid, 9.25 offered.

Doral mixed

Doral's structure is still seeing mixed results as investors continue to take in the buyout news.

A trader said the Puerto Rico-based bank's floating-rate notes were holding steady at 98.5. In the preferred issues, the 4.75% convertible dropped $1.00, or 0.70%, to $142, while a straight issue rose 45 cents, or 2.16%, to $21.25.

On the equity side, the stock was also up, gaining 14 cents, or 13.59%, to $1.17 - well over the offered 63 cents under the buyout agreement.

"That's interesting isn't it," the trader said. "But the stock isn't real until the deal goes through."

Still, it seems ridiculous, he said, that current stockholders are not being included in a rights offering.

"It doesn't make sense that they don't give them any rights," he said.

Aveta loan slides

Aveta Inc.'s term loan continued to slide on Monday although trading activity on the paper was muted, according to a trader.

The term loan ended the session at 65 bid, 67 offered, down from Friday's closing levels of 68 bid, 70 offered, the trader said.

On Friday afternoon, the company held a private lender call that had something to do with its struggling Puerto Rico business, and in anticipation of that call, the bank debt plummeted on Friday from Thursday's levels of 78 bid, 80 offered.

No further specifics on what was said in the lender call are available, the trader added.

Aveta is a Fort Lee, N.J., for-profit company focused on Medicare Advantage and the health care needs of the chronically ill.

Calpine gains

Calpine Corp. was seen "up a couple of points," with the 8½% notes due 2008 at 125 bid, 127 offered and the 7¾% notes due 2009 at 121 bids, 123 offered, both up 2 points.

Another trader saw the 8½% notes due 2011 up 2.5 points and said the rise was due to "speculation on a possible sale of [sector peer] Mirant," whose bonds rose on Friday, sparking some talk about possible sector consolidation.

Meanwhile, another trader also saw the 8½% notes due 2011 up, pegging the debt in the 130 levels.

Broad market mixed

A trader saw MedQuest Inc./MQ Associates Inc.'s 11 7/8% notes due 2012 "a little weaker" by a couple of points. He quoted the bonds at 79 bid, 80 offered.

Linens N'Things continued to "get beat up," he added, with its floating-rate note due 2008 dropping a point to 85.5.

The trader said he also saw Merisant Co.'s notes fall back from their highs in the low 70s. He slated the zero-coupon/12¼% discount notes at 64 bid, 65 offered.

At another desk, James River Coal's 9 3/8% notes due 2012 were called up a point at 96 bid, 97 offered, on "equity news," a trader said.

Hospital operator Lifecare's bonds, which were under pressure last week, "came back a little bit." The 9¼% notes due 2013 were up 3 points at 83 bid, 84 offered.

Tembec Inc.'s bonds were down a point or two at 58 bid, 60 offered for the 8 5/8% notes due 2009, 51 bid, 53 offered for its 8½% notes due 2011 and 50 bid, 52 offered for its 7¾% notes due 2012.

Among the airline issues, "Northwest [Airlines Corp.] looked like it would trade up, but it didn't," said a trader, who pegged the 10% 2009 notes at 74 bid, 76 offered. Delta Air Lines Inc.'s stubs for the former holders of the 8.3% 2029 bonds were unchanged at 6.75 bid, 7.75 offered.

Movie Gallery Inc.'s 11% notes due 2012 were up half a point at 82.5 bid, 83.5 offered.

Sara Rosenberg and Paul Deckelman contributed to this article.

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