Ford mixed, GM down on January sales; Spectrum files, debt gains; Idearc little changed on rating drop

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Feb. 3 - Ford Motor Co. and General Motors Corp. released January sales numbers on Tuesday and, as expected, the figures were dismal.

But while GM's debt structure was down overall on the back of the monthly report, Ford's debt ended mixed. Its loan gained some, while its bonds were up and down. Some sources speculated that Ford fared better on the day as it had received the funds from its recent credit facility draw on Tuesday, as well.

Meanwhile, Spectrum Brands Inc. filed for bankruptcy protections. But instead of weighing on its debt, the company's structure was mostly higher, though trading without accrued interest.

A possible restructuring in the near future prompted Standard & Poor's to drop its rating on Idearc Inc. But the bonds were little changed, as were those of its rival, R.H. Donnelley Corp.

New home data did little to help out homebuilders, traders reported. There was little action in the sector overall, but Hovnanian Enterprises Inc.'s bonds did trade some, a trader said. In homebuilding-related names, Masonite International Inc.'s term loan dipped a few points, despite positive news that the company had extended its forbearance agreements.

Ford, GM mixed on sales

Ford Motor and General Motors released January sales numbers during Tuesday's session and the news was not so good.

Still, Ford's term loan managed to post some gains during the session as the company completed its revolver draw. The term loan was quoted at 37 bid, 37¾ offered, up from Monday's levels of 35 7/8 bid, 36 7/8 offered, a trader said.

"Maybe liquidity related to drawing down their revolver," the trader said in explanation of the bank debt's performance.

GM, however, did not fare as well. Its term loan was quoted at 42½ bid, 44 offered, down from previous levels of 43½ bid, 45 offered, a trader said.

In the bonds, Ford's 7% notes due 2013 gained a point to close at 63 bid, while its benchmark 7.45% notes due 2031 fell some to 21.5 bid. GM's 7 1/8% notes due 2013 dropped about a point to 14.5 bid and its benchmark 8 3/8% notes due 2033 were likewise lower at 14 bid.

On Tuesday, Ford received $10.1 billion in funds that it borrowed under its available credit lines, the trader added.

According to the company, the draw was made as a result of the instability of the capital markets with the uncertain state of the global economy.

Also on Tuesday, Ford announced January results that included total sales of 93,506, down 40.2% from 156,391 in January 2008, total Ford, Lincoln and Mercury car sales of 28,707, down 35.1% from 44,259 last year, and total truck sales of 61,889, down 40.5% from 104,096.

"During the last four months, retail demand appears to have stabilized, and the strength of our new products is a key reason we're growing our share in these challenging market conditions," Ken Czubay, vice president, Sales and Marketing, said in a news release.

"We expect new, recent and future fiscal and monetary actions to help improve conditions in the second half of the year," Czubay added in the release.

GM's total sales for January were 129,227, down 48.8% from 252,565 last year, total car sales were 43,943, down 57.9% from 104,374 last year, and total truck sales were 85,284, down 42.4% from 148,191 in January 2008.

"We're attacking this unprecedented market as aggressively as possible, while offering more vehicles than ever that provide great value and that Americans enjoy owning," Mark LaNeve, vice president, GM North America Vehicle Sales, Service and Marketing, said in a news release.

"Our retail market share is a bright spot, holding steady above 21% for the second month in a row. That's a full point above the trailing 12-month average. It's important to realize that we accomplished this retail performance as the overall market ran about 6 million vehicles behind where it was last January [on a seasonally adjusted annual rate] and every manufacturer was deeply impacted," LaNeve added in the release.

Spectrum files, debt better

Spectrum Brands' term loan jumped up by a couple of points on news that the company filed for Chapter 11, according to a trader.

The term loan was quoted at 66 bid, 68 offered, up from previous levels of 61 bid, 63 offered, the trader said.

Elsewhere, a trader saw the 11% notes due 2013 trading around 30, without accrued interest, compared with around 28 on Monday with interest.

Another trader called the 7 3/8% notes due 2015 2 points weaker at 18 bid.

Under the company's pre-negotiated plan of reorganization, existing bond obligations in a principal amount of $1.05 billion would be canceled and noteholders would be issued new bonds in an aggregate principal amount equal to 20% of the total unpaid principal and interest on existing bonds together with shares of new common stock.

The claims of existing secured and other general unsecured creditors would be reinstated or unimpaired, and, therefore, payment of the claims would be received on existing terms either in the ordinary course or upon consummation of the plan.

Existing common stock will be extinguished under the plan, and no distributions will be made to holders of the current equity.

In connection with the bankruptcy filing, Spectrum Brands has received commitments for $235 million in debtor-in-possession financing from certain of its existing asset-backed facility lenders, with a participating interest from certain existing noteholders.

As a result of the reorganization, the company expects to reduce its balance sheet debt by approximately $840 million, eliminate approximately $95 million in annual cash interest payments for at least each of the next two years, and free up additional cash.

"We are pleased to have the support of noteholders representing, in the aggregate, approximately 70% of the face value of the bonds outstanding to move forward with a restructuring that will put our company in a stronger financial position for the future," Kent Hussey, chief executive officer, said in a news release.

"Our businesses have attractive growth prospects that have been encumbered by the level of debt the parent company is carrying. After careful consideration, we decided that the approach announced today would be the most effective and expedient path for us to develop a more appropriate capital structure to support our long-term business objectives. We estimate that when this refinancing has been completed, the company will generate in excess of $100 million in annual free cash flow," Hussey added in the release.

Spectrum Brands is an Atlanta-based consumer products company.

Idearc softer on rating change

A rating cut resulted in Idearc's bonds being quoted unchanged to a touch lower, traders reported.

A source pegged the 8% notes due 2016 at 2 bid, 4 offered, which he deemed unchanged to maybe weaker. Idearc's rival, R.H. Donnelley, saw its bonds also unchanged on the day, its 8% notes due 2013 at 12.5 bid, 13.5 offered and its 8 7/8% notes due 2016 at 10 bid, 11 offered.

Another source called the 8% notes linked to Dex Media nearly a point softer at 13 bid.

Standard & Poor's slashed its rating on Idearc, citing expectations for a restructuring in the near term.

Homebuilders little helped by data

Hovnanian Enterprises' bonds closed the session unchanged to a tad better following the release of new housing data Tuesday.

A trader quoted the 8 7/8% notes due 2012 at 37.5 bid, 39.5 offered. He also saw the 6½% notes due 2014 at 31 bid, 32 offered, which he said was "up a point in the last few days."

The trader also saw Beazer Homes USA Inc.'s 4 5/8% convertible notes due 2024 around 40, also unchanged.

At another desk, a trader placed the 6 3/8% notes due 2014 at 31.5 bid, a point stronger on the day.

With foreclosures on the rise, the National Association of Realtors saw its seasonally adjusted pending sales index for existing homes gain 6.3% in December to 87.7. That was up from a reading of 82.5 in November and better than the 82.3 reading many market players had expected.

Masonite loan limps along

Masonite International's term loan headed lower during market hours, with sources unable to explain the downward move since the company did come out with a bit of positive news.

The term loan was quoted at 43 bid, 45 offered, down from previous levels of 43½ bid, 46½ offered, the trader said.

On Tuesday, Masonite announced that it extended the forbearance agreement with its bank lenders to Feb. 9 from Jan. 30. The agreement covers non-compliance with EBITDA metrics as of June 30, 2008 and Sept. 30.

In addition, the forbearance agreement with senior subordinated noteholders was extended to Feb. 13 from Jan. 31. This agreement covers the company's failure to make an Oct. 15 interest payment on the notes.

Masonite is a Mississauga, Ont.-based manufacturer of residential and commercial doors.

Nova nosedives, Freescale active

Nova Chemicals Corp.'s 7.4% notes coming due in April continued to freefall, a trader said. He saw the bonds falling into the high-40s before rebounding some to close at 54.5 bid, 55.5 offered. That was about 5 points better from its intra-day lows, but much lower than the 60 bid, 62 offered levels seen on Monday.

"People just don't think they have the liquidity," he said. Along with its upcoming maturity, Nova has to raise $100 million in additional funds by the end of the month and another 100 million by June to appease lenders.

Meanwhile, Freescale Semiconductor Inc.'s 8 7/8% notes due 2014 finished at 22 bid, 23 offered. The trader said that level was "not much different, but a lot traded."

Paul Deckelman contributed to this article.

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