Visteon bonds improve on numbers; U.S. Concrete holds its ground; broad market steady to firm

By Stephanie N. Rotondo

Portland, Ore., April 30 - The distressed debt market was "unchanged to firm," a trader reported Friday.

"It's not behaving like the equities for a change," he quipped.

Visteon Corp. was heading toward the firm side, according to sources. The company released improved quarterly results, which had given the bankrupt automotive parts supplier's bonds a slight boost.

Meanwhile, U.S. Concrete Inc.'s debt was seen holding around the same levels it closed out at on Thursday. In the previous session, the bonds had jumped as much as 4 points on the day, following word that the company had inked an agreement with a bondholder group in which it would file for bankruptcy. Though bondholders are slated to get some equity out of the deal, one market watcher doesn't think too highly of the accord.

Visteon improves with numbers

Visteon bonds ended "up a little more," a trader said, following the company's earnings release.

The trader quoted the 7% notes due 2014 at 113 bid, 114 offered.

Another trader also saw the issue around the 114 mark and also placed the 8¼% notes due 2010 at that level.

Yet another source pegged the 7% notes at 113½ bid, 114 offered.

"There wasn't much trading [in the name] before today," he said.

For the first quarter of 2010, Visteon posted net income of $233 million, or $1.79 per share, on sales of $1.85 billion. For the same period of 2009, the company had reported net income of $2 million, or 2 cents per share, on sales of $1.3 billion.

Adjusted EBITDA came to $161 million, compared with $22 million the previous year.

Visteon generated $40 million in cash from operations during the quarter, compared with an outflow of $275 million in 2009. Free cash flow was positive $15 million, versus negative $300 million in the comparable period.

Cash and equivalents were nearly $1.1 billion.

"Increased global vehicle production, combined with our ongoing operational improvements and cost-reduction efforts, drove our year-over-year financial improvement," said Donald J. Stebbins, chairman, chief executive officer and president, in the earnings release.

"We benefited from aggressive actions taken over the past year to keep our cost structure in line with significantly reduced global volumes. Although in the near term we remain concerned about European production volumes, we're confident that our worldwide engineering and manufacturing footprint positions Visteon to support new global vehicle programs and grow with our customers around the world."

Visteon is a Van Buren Township, Mich.-based automotive parts supplier.

Other autos mixed

A trader said General Motors Corp.'s benchmark 8 3/85 bonds due 2033 were down half a point at 37¾ bid, 38 offered.

And, Cooper-Standard Automotive Inc.'s new bonds "did very well," a trader said, quoting the Novi, Mich.-based auto components maker's 8½% notes due 2018 as having "hung in around the 103 level," after the $450 million issue priced on Thursday at par and rose to around 102 bid, 103 offered in aftermarket dealings.

U.S. Concrete holds its ground

U.S. Concrete's debt remained around the levels seen Thursday after the company had announced it would file for bankruptcy protections.

A trader said "probably $10-odd million" of the 8 3/8% notes due 2014 changed hands, hitting a high of 64 and a low of 621/2.

"So within that range, all the bonds traded," he said. "So it's holding up toward recent highs."

But another trader said the paper was "a little off the top, still settling in I think," at 62½ bid, 64½ offered.

At another desk, a trader said the bonds were in the "same ZIP code," around "64-ish."

On Thursday, the Houston-based concrete manufacturer said it had reached an accord with bondholders, which would allow for the company to file for Chapter 11. The agreement includes a debt-for-equity swap that would give bondholders new stock in the reorganized company.

Analysts at Gimme Credit LLC are ringing the "I told you so" bell, as they claim to have accurately predicted the outcome of U.S. Concrete's situation. In a note published Friday morning, analyst Vicki Bryan opines that bondholders got a rough deal.

"RMIX said that a 'substantial majority' of bondholders have agree to settle for 15% of the equity in the restructured company - which by our estimation is still decidedly negative," she wrote. "This implies that RMIX bonds...will be exchanged for illiquid, unregistered stock with zero value."

Bryan also speculates that the company's future is still shaky.

"Even a restructured RMIX might be hard pressed to survive," she said in the note. The company's narrow business focus limits its recovery potential until residential and commercial construction industries widely begin to break ground with new projects, which is not likely for another year or so."

Upon issuance of the research report, Gimme Credit said it was withdrawing coverage on the company.

Broad market steady to firm

Elsewhere in the land of distressed debt, Harrah's Entertainment Inc.'s debt was "sideways" on the day, according to a trader.

The trader pegged the 5 5/8% notes due 2015 at 71 bid, 71½ offered and the 6½% notes due 2016 around the 70 level.

Another trader quoted the 10% notes due 2018 at 87 bid, 87¾ offered.

Ambac Financial Group Inc.'s 6.15% notes due 2037 were "pretty active," a trader said, and better, trading in an "11-ish" context.

"They had been closer to 10," the trader added.

Paul Deckelman contributed to this article

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