ASAT unchanged; Thornburg edges higher; Dana calls for Appaloosa bid, bonds boosted

By Stephanie N. Rotondo

Portland, Ore., Aug. 24 - Friday in the marketplace was as expected during the last few weeks of summer - pretty quiet.

"There is nothing going on," a trader said. "It's one of the deadest days I have seen."

"Today wasn't even worth coming in for," another trader said.

The "dead" day was attributed to the fact that it was a Friday during the summer, as well as the fact that many market players are taking advantage of the sunshine before the school year begins in September.

"Desks were thinly manned," a trader said.

"I didn't see too much direction one way or another," a trader said of the names that did trade during the session.

ASAT Holdings Ltd. followed that thought, as a trader said the bonds were decidedly unchanged after the company announced it had won approval on its consent solicitation.

Meanwhile, Thornburg Mortgage Corp. continued to edge higher, closing out the week almost 5 points better. The day's gains come despite news that the company is being sued for misleading investors. One trader, however, said there is not much value in the lawsuits.

Despite already having a reorganization plan in place, Dana Corp. is asking Appaloosa Management Partners to come forward with an alternative. The call for the proposal boosted "unqualified" bonds by at least 2 points.

ASAT unchanged

Semiconductor maker ASAT reported that 98% of its bondholders gave their consent to a solicitation aimed at amending the senior indenture, which includes a waiver of default.

The company is nearing the end of its 30-day grace period, as a coupon on the 9¼% notes due 2011 came due Aug. 1. At that time, Standard & Poor's said it was unlikely it would make the payment and downgraded the company.

According to a trader, the company also is looking to add bank debt to pay off its corporate debt.

Still, news that the amendment went through did little for the bonds, the trader said. He placed the notes at 55 bid, 65 offered, which he called unchanged.

The trader said the issue was "very illiquid," pointing to that as the cause for the wide spread.

The company also announced that its lenders had agreed to certain amendments related to its purchase loan money agreement.

Both bondholders and lenders will receive warrants as a consent fee.

Looking forward, Tung Lok Li, acting chief executive officer for the company, said that he expects sales in the first and second quarter of 2008 should improve and the bondholders approval on the solicitation will help the company to obtain new financing.

Thornburg edges higher

Thornburg Mortgage's bonds moved up about a point on the session, capping a week of gains.

The mortgage lender's 8% notes due 2013 started the week around 78 bid, 79 offered, as the company announced a $20.5 billion asset sale. The bonds continued to move higher throughout the week and were further boosted by the news that Countrywide Financial Corp. - a fellow mortgage lender - had received a $2 billion bailout from Bank of America.

By the end of the week, a trader said the bonds went out 83 bid, 84 offered, which he called up a point. Another trader saw the bonds around 84.

The gains come after several names in the mortgage industry were pushed into bankruptcy due to a tightening credit market and liquidity concerns. Earlier this week, the Federal Reserve took steps to try to prevent the market from shriveling up by cutting its discount rate. That move came after the central bank had added billions more into the banking system.

"The Fed is making sure behind the scenes that the major mortgage lenders have liquidity to make loans and the mortgage market returns to stability," a trader said.

Still, the doom-and-gloom days may not be over yet: Thornburg is being sued by at least two different groups who allege the company gave misleading information regarding its financial situation.

"That's just a nuisance," a trader said, adding that he did not see the cases having much of an effect on the bonds.

Dana to Appaloosa: Send a bid

Hedge fund Appaloosa Management has until Sept. 21 to submit an alternative reorganization plan to bankrupt parts supplier Dana, a filing with the Securities and Exchange Commission said Friday.

Appaloosa - the largest shareholder of the company - said earlier this week that it wanted to submit an alternate proposal to the Centerbridge Capital Partners plan, and even urged shareholders to step away from that deal.

With Dana calling for Appaloosa to turn its bid over, the company's "unqualified" bonds - that is, those that were not included in the Centerbridge agreement - moved up 2 to 3 points.

A trader pegged the 6½% notes due 2009 at 76 bid, 77 offered.

Appaloosa has previously called the recently approved Centerbridge plan inadequate. Under the plan, Centerbridge will invest up to $500 million once the company exits bankruptcy. The private equity firm will have the right to buy $250 million in series A preferred shares, while another $500 million of series B preferred shares will be offered to qualifying bondholders. Centerbridge will purchase up to $250 million of the leftover series B shares.

Creditors holding $1.3 billion of the company's debt approved the plan, while a group that holds $300 million did not support the deal.

In the rest of the autosphere, Delphi Corp.'s bonds are continuing to edge higher, gaining at least 3 points on the day, a trader said.

He quoted the 7 1/8% notes due 2029 around 104 and the 6.55% notes that were to have come due last year at 103.

Another trader said Dura Automotive Systems Inc.'s 9% subordinated notes due 2009 were unchanged at 3.25 bid, 4.25 offered.

Broad market mixed

Fedders Corp.'s 9 7/8% notes due 2014 were called unchanged at 16.5 bid, 17.5 offered.

A trader said Movie Gallery Inc.'s 11% notes due 2012 were up, last printing around 27.

"That bond confuses me," the trader said of the gain. "I don't think there is any value there."

The trader said he was not sure if the increase was due to short squeeze, or if someone was attempting to collect the paper in the hopes of making a deal.

Star Tribune loan better

The Star Tribune Co.'s term loan B saw bids inch higher ahead of a private first- and second-lien bank loan lender call that is scheduled to take place on Monday, according to a trader.

The term loan B was quoted at 86.5 bid, 87 offered, compared to previous levels of 84 bid, 87 offered, the trader said.

"I have no idea what the call is about. They already announced that they're doing an asset sale so that's baked into levels already and it's out of sequence for an earnings update. They just did that like a month ago," the trader remarked.

"People are speculating as to what the positive could be but no idea what it is yet. Assuming there's a positive because it's bid up. It's a direction it hasn't gone in a while, up," the trader continued.

You struggle to think that it's performance related because it's a tough market [for the newspaper sector]. Look at Tribune. They put out July numbers today and they were down, but no one expected otherwise," the trader added.

Tribune Co., a Chicago-based media company, reported its summary of revenues and newspaper advertising volume for the period ended Aug. 5 on Friday.

For the period, consolidated revenues were $467 million, down 5.9% from last year's $496 million, publishing revenues were $319 million, down 8.6% from last year's $349 million, and advertising revenues were $247 million, down 10.3% from last year's $275 million.

Tribune's term loan B was said to be unchanged on the day following the release of the July numbers, but a specific level was unavailable.

Star Tribune is a Minneapolis-based information provider and includes the Star Tribune newspaper, StarTribune.com and other print and digital products and services.

Sara Rosenberg contributed to this article.

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