Fleming firmer after new management takes over; AMR higher as union accepts new deal

By Carlise Newman

Chicago, April 25 - Fleming Cos. Inc. firmed Friday on news that the company took steps to further its reorganization process and hired a new chief financial officer and treasurer with restructuring experience.

The Dallas-based grocery supplier named a new interim chief financial officer, replacing the remainder of the top leadership from before its bankruptcy filing. Fleming hired restructuring experts Becky Roof and Mike Scott to help lead its chapter 11 reorganization process. Roof will serve as interim chief financial officer and Scott will become interim treasurer.

In response, Fleming's 9¼% notes due 2010 were quoted at 13.5 bid/14.5 offered on Friday, up from 12.5 bid/13.5 bid offered on Wednesday, and a half-point higher than Thursday. The company's 10 1/8 notes due 2008 were seen at bid at 21.25 and offered at 22.

Roof and Scott are principals of AlixPartners LLC, specializing in corporate restructuring and turnaround services. Fleming retained AP Services LLC, an affiliate of AlixPartners, to assist in the company's reorganization.

On Tuesday, Fleming received court approval of its $150 million secured debtor-in-possession financing package. The court also approved the creation of a junior trade lien on company assets for use in restoring trade terms from vendors who participate in the vendor support program.

"Fleming is just hanging...who knows where they'll be a few months from now," said a distressed debt trader.

Wildly oscillating American Airlines averted an imminent bankruptcy filing for the third time in a month as its flight attendants agreed on Friday to a concessions deal aimed at keeping the world's largest carrier out of Chapter 11.

American's 9% notes due 2012 - having seen levels in the 40s and the teens in the last few months - rose two points to land at 33 bid/35 offered from 31 bid/33 offered Thursday after the company tentatively digested the possible avoidance of bankruptcy.

The decision from the Association of Professional Flight Attendants to accept a revised proposal from American parent AMR Corp. helped cap a turbulent few days at the carrier that included the resignation of chief executive Don Carty, appointment of a successor, and an earnings report that showed AMR lost over $1 billion in the first quarter.

Carty resigned under pressure on Thursday after employees rebelled over what they said was his failure to inform them of executive bonuses and pensions until after they had voted on concessions. The airline had said it may file for bankruptcy within days if it could not get the union that represents flight attendants to agree to the revised concessions deal.

The other two major unions at American - the Allied Pilots Association and Transport Workers Union, which represents ground workers and mechanics - said on Thursday they agreed to certify their votes on wage concessions after the company agreed to a new incentive plan, reduce the terms of the deal to five years from almost six years and allow the contracts to be open for renegotiation after three years.

The flight attendants union agreed on Friday to accept concessions with the same new terms.

"We've seen some firming up in that paper but you just don't want to hold your breath," said a distressed debt trader.

WorldCom Inc.'s bonds fell back slightly Friday to 28¾ bid/29 1/8 offered, according to a trader. On Thursday the bonds were bid as high as 29¾ and ended the session near those levels, which was a point better than Wednesday.

WorldCom had been better bid in recent days on improved sentiment about telecommunications companies after AT&T Corp. released a surprisingly strong earnings report Wednesday. AT&T posted a better-than-expected quarterly profit of 571 million, or 73 cents a share, including income from an accounting change. That compared with a year-earlier net loss of $975 million, or $1.32 a share.

"Most of the WorldCom trades were done at the 28 7/8 level. We did a few there today," said the trader.

Nortel Networks Ltd.'s bonds and bank debt remained in the black Friday. The Brampton, Ont.-based telecom equipment maker's 6 1/8% notes due 2006 at were quoted at 95 bid/96 offered, two points higher than Thursday's levels of 93 bid/94 offered and about five points higher from Tuesday's levels, according to a trader.

On Thursday, Nortel reported its first profit in three years. Its first-quarter profit was $54 million, or 1 cent a share, versus a loss of $841 million, or 26 cents, a year earlier. Nortel has cut thousands of jobs, closed operations, written off unpaid customer contracts and marked down the worth of assets whose value has declined. Those cost cuts have helped to stabilize its business after three years of a downward spiral.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.