Dura Automotive bonds dip, loan firms; Auto sector better; Tembec notes gain

By Stephanie N. Rotondo

Portland, Ore., June 11 - Dura Automotive Systems Inc.'s bonds were seen slipping Monday while its bank debt edged higher.

The automotive parts maker's bonds have been firming over the last few weeks, but traders across the board have been at a loss to explain why. The move in the bank debt, however, is easier to explain.

The company filed papers on Friday to amend its debtor-in-possession financing, allowing for more flexible covenants.

Overall, the automotive sector was seen as better, with names like Federal-Mogul Corp. moving up about a point.

Meanwhile, Tembec Inc.'s bonds continued to see active trading, gaining as much as 2 points on the day.

A trader pointed to recent rumors related to the company as the catalyst for the day's increase. He said many market players were speculating on what the company might do to stay afloat.

With the broader market holding steady at the beginning of the week, traders were lamenting the market lull.

"I didn't even write a ticket today," one trader said. "It was absolutely dead."

Yet another said the day's trading was on "muted volume," quipping that the lack of movement could be due to more market participants leaving their desk's to enjoy four-day weekends.

Dura bonds dip, loan firms

Dura's bonds were called "fairly stable, maybe a point down" by a trader, while another was questioning why the bonds had been running up recently.

The first trader quoted the 8 5/8% senior notes due 2012 at around 62.5, down from the day's highs of 63.5 bid, 64.5 offered.

"They are definitely sliding a bit," he said.

The second trader said he had not seen anything in the debt but wondered why the bonds had been firming.

Traders across the board have been unable to account for the firmness, with no fresh news or rumors to move the notes.

Another trader noted that Dura's bonds fell again on Monday, with the 8 5/8% notes 2 points lower at 62 bid, 64 offered and its 9% notes due 2009 a point down at 14 bid, 15 offered.

Meanwhile, Dura's second-lien term loan started the week with positive momentum once again, as the debt inched about half a point higher, according to a trader.

The second-lien loan ended the day at 97.5 bid, 98.5 offered, up from around 97 bid, 97.75 offered on Friday, the trader said.

On Friday, the company filed papers with U.S. Bankruptcy Court for the District of Delaware requesting approval of an amendment to its DIP financing facility that would provide more flexibility under covenants while the terms of a plan of reorganization are being negotiated.

The amendment calls for, among other things, a reduction in the minimum EBITDA requirement for the period of May through August.

The company will pay up to $300,000 in DIP amendment fees.

Dura is a Rochester Hills, Mich.-based automotive parts maker.

Autos mostly up

Elsewhere in the autosphere, Federal-Mogul's 7 3/8% notes due 2006 gained about 0.75 point, a trader said, pegging the notes at 99.25 bid, 99.5 offered. He said the bonds are "still going up," a trend that the debt has seen over the last six to seven months.

Another trader said he saw Federal Mogul's bonds up 1 to 1.5 points, with its 7.9% notes due 2009 having moved up a point or so to par bid, 101 offered.

A trader saw Dana Corp.'s bonds "rockin' and rollin,'" with the Toledo, Ohio-based components maker's 6½% notes due 2008 going home at 105 bid, 106 offered, up from prior levels at 101.5 bid, 102.5.

Remy International Inc.'s bonds were seen as unchanged on what one market participant described as "a quiet day."

Tembec notes active

Tembec has been one of the more active names of late, as the broader distressed market has hit its summer lull.

A trader said the bonds were moving a lot in morning trading.

"There were a lot of quotes," he said, "but not much trades."

He attributed the activity to market speculation on what Tembec's next move would be. As fellow forest products company Ainsworth Lumber launched a new term loan in the last few weeks, the trader said many are wondering what Tembec will do to stay afloat. Of the options being bandied about, a refinancing of debt or potential debt-for-equity swap seem the most likely.

Still, the trader said the bonds fell slightly from the day's highs but managed to close the day better.

The trader placed the 8½% notes due 2011 as high as 60 bid, 61 offered, closing around 58 bid, 59 offered. He also saw the 7¾% notes due 2012 trade as high as 59, only to come back a bit to 58 bid, 58.5 offered. And the 8 5/8% notes due 2009 were quoted at 64.5 bid, 65.5 offered.

At another desk, a trader called the 7¾% notes up 2 points to around 58, while the 8½% notes were called unchanged at 59, after moving as high as 60. The 8 5/8% notes were deemed up a point at 65.

"There was a little bit of activity in each one of them," the trader said.

Another trader saw Tembec's bonds up a point, with the 8 5/8s at 64 bid, 66 offered. He said that those bonds had actually been as high as 66 bid during the session "before they came back down."

Broad market unchanged

Movie Gallery Inc.'s 11% notes due 2012 were called unchanged, "maybe down a touch," a trader said, at 83 bid.

Solutia Inc.'s bonds were also called unchanged, with a market source pegging the 7 3/8% notes due 2027 in the 91 level.

Also holding steady was Fedders Corp.'s 9 7/8% notes due 2014. A trader quoted the notes at 36 bid, 38 offered.

The trader said he also saw Calpine Corp.'s 6% convertible issue due 2014 attempt to move higher but ended the day unchanged at 115.75 bid, 116.5 offered.

Sara Rosenberg and Paul Deckelman contributed to this article.

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