Lear active, better on plan to file; Ford higher on sales report; FairPoint paper holds steady

By Stephanie N. Rotondo

Portland, Ore., July 1 - Lear Corp. was the nom du jour Wednesday as the market wondered whether or not the company was going to file for Chapter 11 protections.

There was no answer until after the market had closed when Lear announced that it would in fact file. Still, though there had been no update during market hours, the company's debt traded actively, gaining as much as 8 points on the day.

Meanwhile, Ford Motor Co.'s debt structure headed upward after the automaker reported its June sales figures. The numbers - which showed an 11% decline year over year - are believed to be better than the company's competitors.

FairPoint Communications Inc.'s paper was seen holding steady, if not showing modest gains. The telecommunications provider's new chief executive said that he had "every intention" of avoiding bankruptcy, despite the company's recent struggles associated with its takeover of Verizon landlines in New England.

On the first day of the third quarter, traders reported lighter volume, though more seemed to get done.

"Considering volume was down, it was a little more exciting," said one trader.

Thursday's market will not be an early close ahead of the Fourth of July holiday. The market will be closed on Friday.

Lear active, better

Lear bonds experienced active trading yet again, as the market waited for word on whether or not the automotive parts supplier had filed for bankruptcy.

One market source quoted the Southfield, Mich.-based company's debt generically at 32 bid, 34 offered, deeming that up 5 to 7 points, depending on the issue in question.

Another source called the 5¾% notes due 2014 more than 8 points better at 36.5 bid.

Yet another source saw the 8¾% notes due 2016 trading between 34 and 37, versus levels around 27 previously. He added that the debt was trading flat, or without interest.

At another desk, the term loan was quoted at 73½ bid, 74½ offered, up from 67½ bid, 68½ offered.

At market close, there was no news regarding the company's restructuring plans. However, by 5 p.m. ET, Lear announced that it was in fact planning to file for Chapter 11 protections.

Lear said in a press release that it had "reached an agreement in principle regarding a consensual debt restructuring with steering committee representing its secured lenders and its bondholders." Under the terms of the agreement, the release stated, the company's trade creditors would be paid in full.

The release declined to give further details regarding the agreement.

JPMorgan Chase & Co. and Citigroup have committed $500 million for debtor-in-possession financing. The DIP facility will also serve as an exit financing facility with a three-year term upon Lear's emergence from bankruptcy.

"This restructuring is being undertaken to maximize the long-term value of the company," said Bob Rossiter, chairman, chief executive officer and president, in a statement. "Lear is a leading global Tier 1 automotive supplier with excellent technical capabilities in critical product lines - seating systems, power distribution and electronics, as well as a competitive, low-cost footprint, a diverse customer base, a solid backlog of new business and a strong cash position. With these strengths and the additional flexibility we will have as a result of the proposed DIP facility, we intend to complete the restructuring as quickly as possible, and emerge as an even stronger and more competitive partner to our customers.

"We want to assure everyone - customers, suppliers, employees, and the communities of which we are a part - that Lear is committed to positioning our business for sustainable success," Rossiter continued. "We believe that the agreement in principle with the steering committees of our secured lenders and bondholders to support our plan of reorganization will enable us to emerge expeditiously."

As of Thursday, Lear will be in default on its 8½% notes due 2013 and its 8¾% notes. The company elected to enter the 30-day grace period in lieu of making the semi-annual interest payment and the expiration is July 2. The company also chose to forgo principal and interest payments due on its senior credit facility on June 30.

Ford better on sales report

In other automotive names, Ford Motor's bonds ended somewhat better after posting its June sales report.

A trader said $15 million of the 8% notes due 2016 traded at 79.25, calling that "a little better, like maybe a point."

Another trader said there was "a couple active issues," placing the 8% notes at 78 bid, 79 offered and the benchmark 7.45% notes due 2031 around 61, compared with levels around 60 on Tuesday.

Ford's term loan also posted some gains in trading as the company announced June sales results that, although showed a year-over-year decline, were better than expected, and the company even said that it increased its market share during the month, according to a trader.

The Dearborn, Mich.-based automaker's term loan was quoted at 74 bid, 75 offered, compared with 72¾ bid, 73½ offered, the trader said.

For the month of June, total Ford sales were 155,195, down 10.9% from 174,091 in June 2008.

Total car sales for the month were 54,040, down 17% from 65,109 last year.

And, total truck sales for the month were 94,113, down 7.7% from 101,981 in the previous year.

"We're making steady progress and are firmly focused on our plan to build a sustainable and exciting Ford," said Jim Farley, group vice president of marketing and communications, in the release. "We remain grounded, however, given challenging industry and economic conditions."

FairPoint paper holding steady

FairPoint Communications' bonds were holding steady as the company's new chief executive said efforts were under way to avoid bankruptcy.

One market player pegged the 13 1/8% notes due 2018 at 19.5 bid, 20.5 offered, a modest half-point gain. Another source said there were "a couple trades" around 20 but deemed that unchanged.

David Hauser took over the job of top dog at the Charlotte, N.C.-based telecommunications provider on Wednesday. He was appointed to the post on June 16.

In an Associated Press report, Hauser said he had "every intention of taking the steps we need to take without going through bankruptcy," referring to the company's effort to refinance upcoming maturing debt. FairPont has a coupon coming due in October on $531 million in debt. Last week, the company warned in a regulatory filing that it could be forced into bankruptcy if it could not reach an agreement with bondholders.

On Monday, Moody's Investors Service downgraded that company, citing a high default risk. The week prior, the company had announced a tender offer for its 13 1/8% notes.

Sara Rosenberg contributed to this article.

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