Adelphia bonds, bank debt better as auction ends; Tower seen trading flat

By Paul Deckelman and Sara Rosenberg

New York, Feb. 1 - Adelphia Communications Corp.'s bonds were seen sharply higher Tuesday - a significant reversal of the weakness they showed on Monday. The bankrupt Greenwood Village, Colo.-based cable operator's bank debt was meantime seen up slightly now that the bidding deadline for the company's assets has closed and talk on figures coming in for those assets was heard to be buzzing all around the marketplace.

Elsewhere, the bonds of Tower Automotive's unit, RJ Tower Corp., were quoted several points higher Tuesday - but they were heard by several traders to be now trading flat, giving up the accrued interest on investor worries about whether Tower had been able to make a scheduled Feb. 1 interest payment.

Adelphia's bonds shot up from their recent lows, with its 10¼% notes due 2011 quoted by one trader as having jumped as high as 94 bid from prior levels around 89 bid, 90 offered, before finishing at 91 bid, 92 offered. He also saw the company's 10¼% notes due 2006 having likewise pushed up to around 89 bid from Monday's close at 85 bid, 86 offered, before coming off that high to end up 87 bid, 89 offered.

At another desk, Adelphia's 10 7/87% notes due 2010 were seen having firmed to 89 bid from 86.5 previously, while its 10¼% notes due 2006 improved to 86.5 bid from 84, and its 10¼% notes due 2011 rose to 92.5 bid from 91.

Adelphia, said one market source "just reversed Monday's fall." He saw the cable operator's 9 7/8% notes due 2007 at 87 bid, up from 83.5 previously.

The 9 7/8% notes were quoted at another shop as having firmed to 88 bid, up more than three points on the day, while its Century Communications 8 7/8% notes due 2007 were also ahead by more than three points at 110 bid.

On the bank debt side of the company's ledger, the Century revolver was quoted at 98.5 bid, 99.25 offered, up about a quarter of a point on the day, while the Century Old paper was quoted at 99 5/8 bid, par offered, unchanged to up about an eighth on the day, a trader said.

According to various news reports Time Warner Inc. and Comcast Corp. bid north of $17 billion for the Adelphia assets.

Adelphia - which slid into bankruptcy in 2002 amid allegations that company founder John J. Rigas and sons and other members of his family in senior management positions had systematically looted Adelphia of hundreds of millions of dollars - is pursuing a two-track strategy, soliciting bids from current cable operators and/or financial backers, while at the same time reserving the right to reject the bids and continue to reorganize in hopes of emerging from bankruptcy as an independent company three years after it first sought Chapter 11 protection.

Earlier this month, the company extended its deadline for final bids on its assets until Jan. 31 to give all of the bidders who expressed interest in its cable systems more time to come up with their final offers. It had originally set a deadline for those bids at mid-month, but said that the response to its asset sale had been so great that in order to accommodate that, the company would use the full month of January to conduct due diligence.

On Monday, the bonds had fallen about three points across the board, on media stories, including one report in The Los Angeles Times, that indicated that demand for its assets was going to be less than originally anticipated and the company might not reach its target of at least $17 billion for the assets.

However, investors seemed to have second thoughts about that bearish scenario on Tuesday, heartened by the news that in addition to the joint Comcast and Time Warner bid, a sizable bid for the whole company had been received from leveraged buyout shops Kohlberg Kravis Roberts & Co. and Providence Equity Partners.

Details of the bids were not published.

Boston Exelon auction

In other bank loan trading news, there was a "big" Boston Exelon auction on Tuesday with the energy project finance paper trading somewhere in the 102 to 103 context, according to a trader.

The Boston Exelon project was owned by Exelon Corp. at one point but now it is owned by lenders.

Tower up but trading flat

Back among the bonds, RJ Tower's 12% notes due 2013 were "all over the map," according to a trader who quoted the bonds having nominally risen in price to 57.5 bid, 59.5 offered, trading flat, from the prior evening's close at 53.75 bid, 54.75 offered, when they were still trading with accrued interest. Loss of several points of accrued interest was said by traders to essentially offset the gain of several points in the bonds's nominal price.

Another trader had the bonds having moved up to 57.5 bid, 58.5 offered, trading flat, from 52.5 bid, 54.5 offered.

He cited market speculation that Tower might not make a scheduled interest payment due Feb 1 on its nearly $150 million of 9¼% euro-denominated notes due 2010. There was no official word out from the Novi, Mich.-based automotive components maker as to whether or not that payment had been made.

"There was a rumor that they were gonna have the coupon." the trader said, "but then they started trading flat," on the speculation that the payment had not been made and would not be.

Tower is in something of a liquidity crunch, following the longer-than-expected holiday-time plant closings by many of its carmaker customers, and it warned late last month that those closings would adversely affect its first-quarter liquidity by up to $40 million, forcing its to dip into its cash reserves to keep operating normally. That Jan. 20 warning caused its bonds to tumble first to the high 60s and then to the mid-50s over the next few sessions from prior levels before the warning above 80.

Intermet higher

Another automotive name - Intermet Corp., the bankrupt Troy, Mich.-based producer of stamped metal parts for the Big Three and other carmakers - was seen having firmed to 59 bid, 61 offered from 56 bid, 58 offered.

A trader said that the recently volatile airlines were pretty quiet. "I didn't see them move," he said. "They're trading, but I didn't see any price movements."

AMR Corp.'s 9% notes due 2016 were seen hovering around 70. Delta Air Lines' 7.70% notes due 2005 were unchanged around 58 bid.

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