Collins & Aikman collapse continues; other auto bonds slide as well

By Paul Deckelman and Sara Rosenberg

New York, Aug. 22 - Levels on Collins & Aikman Corp.'s pro-rata bank debt widened out during Tuesday's market hours, traders in distressed loan paper said, while the bankrupt Troy, Mich.-based automotive interior components company's beleaguered bonds continued to deteriorate as well, with the once-robust senior notes now trading for just a few pennies on the dollar.

Bonds of other automotive-related names were also "getting crushed" Tuesday, in the words of a junk trader - although none are yet as badly off as Collins & Aikman. However, the subordinated bonds of Dura Automotive Systems Inc. are not much better, traders said, as those notes declined into the mid-teens.

Apart from the autos, bonds of bankrupt Greenwood Village, Colo.-based Adelphia Communications Corp. - which had firmed on Monday in the wake of the company's filing of what it hopes will be its final plan of reorganization - were a little easier, possibly on profit-taking.

Collins carnage continues

A trader in the bank loan market saw Collins & Aikman's pro rata paper close out the day quoted at 48 bid, 52 offered, down from Monday's closing levels of 49 bid, 51 offered.

Just two months ago, in late June, that paper was trading at 94 bid, 95 offered.

And it was just two months ago that the company's 10¾% notes due 2011 were trading at what now seem to be impossibly lofty levels at 30 bid, 32 offered.

On Tuesday, those bonds, which have steadily slid from that "peak," were seen by junk traders down another point - to 5 bid, 7 offered.

"Yikes," one trader exclaimed, adding "they can't fall a whole lot more."

The company's 12¾% subordinated notes due 2012, meantime, trade at nearly worthless levels of less than a penny per dollar.

Separately, Collins & Aikman asked the Detroit bankruptcy court that is overseeing its re-organization to defer adequate protection payments of $7.2 million per month for September through December which are due on its pre-bankruptcy bank debt. The company made its request in anticipation of filing a plan of reorganization by the end of August, according to its court filing. It also noted that bank lenders would largely receive equity in return for the debt (see related story elsewhere in this issue).

Other auto names weak

Collins & Aikman's bonds are only the most dramatically distressed among the automotive sector - but that whole segment of the high-yield world continued to reel for a third straight session in the aftermath of Friday's big announcement by Ford Motor Co. of coming output cuts and Monday's warning from Standard & Poor's that Ford's move could harm the finances of a number of supplier companies.

Other auto names hurting

"The auto names got crushed again today," a trader declared, noting for instance, that Metaldyne Corp.'s 11% subordinated notes due 2012 fell to 76 bid, 76.5 offered from Monday's levels around 78 bid, 79 offered, while its 10% senior notes due 2013 were at 93.75 bid, 94.75 offered - a fall off from Monday's closing levels above 95, although they were up from their lows around 92-94.

The Plymouth, Mich.-based automotive metal forming company was one of eight automotive parts suppliers singled out on Monday by Standard & Poor's, which put them on CreditWatch for possible ratings downgrades, saying those companies' exposure to troubled Ford could impact badly on their cash flow and liquidity, now that the Number-Two domestic carmaker has slated big output cuts in the third and fourth quarters. Others on the S&P hit list included former Ford unit Visteon Corp., as well as Hayes Lemmerz International Inc., Cooper-Standard Automotive Inc. and Mark IV Industries Inc.

The trader said Metaldyne's inclusion on the list was "a little odd," since its biggest customer is not Ford but DaimlerChrysler AG, which accounts for over 25% of the company's sales - but he acknowledged that Metaldyne, which makes metal component parts for engines, transmissions, suspensions, axles, and drivelines, does have some Ford exposure and is heavily levered - a combination which makes it ripe for a ratings downgrade.

Among other auto names whom that trader saw spinning their wheels were Tower Automotive Inc., as the bankrupt Novi, Mich.-based vehicular frame maker's RJ Tower 12% notes due 2013 "got clocked," falling to 38.25 bid, 39 offered, from prior levels at 42 bid 44 offered, and Dura Automotive Systems Inc., whose Dura Operating Corp. 8 5/8% senior notes due 2012 fell to 73.75 bid, 74.75 offered from prior levels above 75, while its 9% subordinated notes due 2009 slipped to 16 bid, 16.5 offered from around 17.5.

"That's where a lot of the action was," he said. "Most of the activity was really confined to the auto parts guys. It's interesting how Ford has become the driver [of the automotive sector] instead of GM [General Motors Corp.] now. They're the ones you now have to watch for, falling out of bed."

A market source at another desk saw Visteon's 7% notes due 2014 a point lower at 88 bid, although the Van Buren Township, Mich.-based former Ford parts unit's 8¼% notes due 2010 were only slightly easier at 97 bid.

The source saw Ford's own 7.45% notes due 2031 a point lower at 75.75, while arch-rival GM's benchmark 8 3/8% notes due 2033 dipped just ¼ point to 82.75.

Another trader saw the GM bonds unchanged at those levels, and quoted the top carmaker's General Motors Acceptance Corp. financing unit's 8% notes due 2031 up ½ point at 99.75 bid, 100.25 offered. He saw the Ford 7.45s actually up a quarter point, at 76 bid, 76.5 offered, while the latter's Ford Motor Credit Co. finance unit's 7% notes due 2013 were unchanged at 90 bid, 90.5 offered.

That trader also saw the Metaldyne bonds down about 2 points on the day, Tower down 3 and both Dura issues off a point, and also saw bankrupt Toledo, Ohio-based auto parts manufacturer Dana Corp.'s 6½% notes due 2008 down at least 2 points at 80.25 bid, 81.25 offered, while Dana's 5.85% notes due 2015 lost 1½ points to 71 bid, 72 offered.

However, another trader's view was that "GM, Dana and Delphi [Corp.] were all the same," not much changed on the day.

Another trader agreed with that assessment when it came to Delphi, the bankrupt Troy, Mich.-based former GM subsidiary. He saw its 6½% notes due 2009 at 88.5 bid, 89.5 offered and its 7 1/8% notes due 2029 at 80 bid, 80.75 offered, both unchanged on the day.

Adelphia drifts off

Away from the autos, Adelphia Communications' bonds came down from the gains they had notched on Monday, which followed the company's filing of its latest amended plan of reorganization.

In Tuesday's dealings, a market source saw the Colorado cabler's 10¼% notes due 2011 at 60 bid, down 3/8 on the session, while its 8 3/8% notes due 2017 were down a full point at 108. Its 11 7/8% notes due 2007 eased to 123 bid, from 124.5.

Airlines lose altitude

Also on the downside, a trader said, were the bonds of such bankrupt air carriers as Delta Air Lines Inc. and Northwest Airlines Corp., although he had seen no fresh news out to justify a retreat.

The airlines' bonds have recently been strengthening, propelled upward by the pullback in world crude oil prices lately - a possible harbinger of lower jet fuel costs down the line - and by enactment of pension reform legislation which included concessions sought by the troubled airlines, giving them more time to get their pension plans fully funded. That bill was signed into law last week.

With those gains behind them, the trader saw the bonds of bankrupt Eagan, Minn.-based Number-Four carrier Northwest down 2 points on the session to around 46.5 bid, while those of the equally bankrupt Number-Three domestic carrier, Atlanta-based Delta, were a point down at around 25 bid.

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