Mississippi Chemical up on asset sale; Oakwood Homes continues slow ascent

By Carlise Newman

Chicago, Dec. 1 - Mississippi Chemical Corp. bonds got a small boost Monday on the news that its subsidiaries Mississippi Potash Inc. and Eddy Potash Inc. have entered into an agreement to sell their potash assets to two subsidiaries of Intrepid Mining LLC for $27 million.

Mississippi Chemical's 7¼% notes due 2011 were seen at 14 bid, ½ a point higher. Traders could not recall prior levels.

Under the agreement, which will be the stalking horse bid in an auction, certain liabilities will be assumed by the purchasers. The sale is expected to close in the first quarter of 2004.

Elsewhere Oakwood Homes Corp. was still gaining momentum as traders came back from long Thanksgiving weekends.

The company's bonds had improved in recent days on news that it is to be acquired by Clayton Homes Inc., a subsidiary of Berkshire Hathaway Inc., for $373 million.

Oakwood's 7 7/8% notes due 2004 and 8 1/8% notes due 2009 were 1 point higher at 49 bid, 51 offered, according to a trader. After the news last Tuesday, Oakwood paper got as high as 51 bid and then fell back to close at 47 bid.

"Part of what has caused this rally is the fact that they've already got the creditors backing the sale. Less red tape," he said.

The Greensboro, N.C.-based home builder said it has already been informed that the sale has the support of the Oakwood's official committee of unsecured creditors.

The transaction is expected to close by March 31, 2004.

Meanwhile Levi Strauss Inc. bonds were lower, albeit at varying levels, on news that chief financial officer Bill Chiasson will leave the company as it looks for ways to cut debt and costs.

The San Francisco-based jeans maker, which has seen its credit rating slashed in recent months due to a high debt load and poor performance, named Jim Fogarty of Alvarez & Marsal as interim CFO.

Levi's 7% notes due 2006 were seen "in the mid-60s" and down 3 points from last Wednesday, according to a trader. The bonds had been trading in the 69 bid range for most of last week, but had incurred gains of about 3 points the Friday prior to the short week. Another trader cited the bonds at 67 bid, down 2 points.

Levi's 12¼% notes due 2012 were seen at 69 bid, down 2 points. Another source pegged Levi paper down 4 points across the board.

"There was a time when Levi bonds weren't passing the desk that often but more recently we do a lot of trading in them," the trader said.

In November, Levi Strauss warned that full-year sales would drop by 6% to 7%, which prompted rating agencies Moody's Investors Service and Fitch to cut its senior debt ratings.

Assuming stable exchange rates, Levi Strauss said it expected full-year net sales would decline by 2% to 3%. Net debt at year-end is projected to be between $2.1 billion and $2.2 billion, as compared to previous guidance of about $2.1 billion.

Levi Strauss said last month that it would not file its third-quarter earnings report on time because it discovered accounting errors for past years and would have to correct prior earnings reports.

The company said it had discovered that in 1998 and 1999 it mistakenly took the same tax deduction twice for losses related to various manufacturing plant closures.

Elsewhere, Collins & Aikman Corp. paper was unchanged to slightly higher. The company's 10¾% senior notes due 2011 were ½ point better at 89½ bid, 90½ offered, according to a trader. Another trader pegged the bonds at that level, but said they were unchanged.

The bonds had been trading in the mid- to high 80s for the last few weeks, and were last seen at 90 bid last Wednesday.

"It was really dead. We just did bits and pieces of the same things we've seen for the last week or so like Collins & Aikman," one trader remarked. "A lot of people haven't even come back to work yet. This market milks the holidays."

In mid-November, the Troy, Mich.-based auto parts supplier reported a narrower third-quarter loss on lower expenses and reaffirmed its 2003 guidance, excluding restructuring and impairment charges. The company said its third-quarter loss was $32.1 million, or 38 cents a share, compared with a loss of $45.2 million, or 54 cents a share, last year.

In other news, Allegiance Telecom Inc. bonds revved up after a brief drop last week. The bonds had been trading higher prior to that on a news report that Qwest Communications Inc. has offered to buy the company for $350 million including assumed debt.

Allegiance's 11¾% notes due 2008 rose 2 points to 42½ bid. The bonds had trading at those levels last Monday and fell slightly on Wednesday to end the session at 40½ bid.

Qwest is still far away from completing a deal and news reports said at least two other bidders other than Qwest have expressed interest in Allegiance.

Allegiance is a Dallas-based telephone and data company which filed for Chapter 11 bankruptcy protection in May,

Finally, Adelphia Communications Corp.'s 9 7/8% notes due 2007 were up 1 point to 83½ bid. The notes had been wavering 1 point higher or lower for the last several weeks.

(Paul Deckelman contributed to this report)

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