Tower Automotive bonds fall; Collins & Aikman bank debt erosion continues

By Paul Deckelman and Sara Rosenberg

New York, Aug. 9 - Tower Automotive's junk bonds were seen by traders having fallen several points on Wednesday, amid a generally otherwise fairly quiet auto sector. No one saw any specific reason behind the decline in the bankrupt Novi, Mich.-based vehicular frames maker's bonds.

Its RJ Tower 12% notes due 2013 were being quoted down 2 points on the session, with one trader pegging the bonds at 51 bid, 53 offered and another at 52 bid, 54 offered.

Also in the automotive area, the recent slide in Collins & Aikman Corp.'s bank debt shows no sign of coming to an end, as levels dropped off by another couple of points Wednesday, with still no public news out to be driving this dive, according to a trader.

The bankrupt Troy, Mich.-based automotive interior components maker's pro rata bank debt closed out the day quoted at 63 bid, 65 offered, well down from Tuesday's levels of 68 bid, 70 offered, the trader said.

And the company's revolver closed out the day quoted at 59 bid, 62 offered, also down a couple of points on the day, he added.

Since the start of this week, Collins & Aikman's pro-rata debt has fallen by 10 points.

Junk bond traders also saw the company's 10¾% senior notes due 2011 continuing to move lower in tandem with that bank debt, as hopes that a solid bid for the company's domestic assets might soon emerge - the European operations have already been sold - seemed to recede ever further in the rear-view mirror. That speculation had been strong in early July, and had boosted both the bank debt and the bonds, with the 103/4s trading in the 30s - twice as high as their current levels. But when no bids materialized, both the bonds and the bank debt began their long fade.

In Wednesday's session the 103/4s were seen by a trader in distressed notes as having surrendered 2 more points to end at 12 bid, 13 offered. Collins & Aikman's subordinated 12 7/8% notes due 2012 meantime continued to languish down around a penny or two on the dollar.

Most autos little moved

Among other bankrupt auto names, "not much was going on," a trader said. He saw Dana Credit Corp.'s 8 3/8% notes due 2007 unchanged at 91.25 bid, 92 offered, continuing to hold the strong gains that those bonds notched last week - when they moved up to around the 90 level from the lower 80s on a Securities and Exchange Commission filing by parent Dana Corp. indicating that the bankrupt Toledo, Ohio-based automotive component maker's financial arm was in talks with its bondholders aimed at reaching a forbearance agreement that would give the Dana Credit breathing room as it attempts to improve its situation.

Meantime, Dana's own bonds were seen not much changed, with its 6½% notes due 2008 down ¼ point at 83 bid, 84 offered, its 5.85% notes due 2015 at 73.25 bid, 74.25 offered, also off ¼ and its 7 1/8% notes due 2029 up ¼ at 77 bid, 78 offered.

Bankrupt Troy-based parts maker Delphi Corp.'s 6½% notes due 2009 were up ½ point at 26 bid, 27 offered, while its 8 5/8% notes due 2011 down by that same ½ point at 79 bid, 80 offered.

Bonds of Delphi's one-time parent, General Motors Corp., were also steady, with the Detroit giant's benchmark 8 3/8% notes due 2033 up ¼ point at 82.75 bid, 83.25 offered, and its General Motors Acceptance Corp. financing arm's 8% notes due 2031 unchanged at 99.25 bid, 99.75.

However, a trader saw action in GM arch-rival Ford Motor Co.'s bonds, with the Number-Two domestic carmaker's 7.45% notes due 2031 moving as high as 77 bid, 77.5 offered "on short-covering, before they backed off" to end at 76.75 bid, 77.25 offered, up ½ point on the day.

"There was a little buying in Ford this morning, which kept most of its gains," he said, "but not much else was going on in autos."

Owens Corning better

Outside of the automotive arena, a trader saw some improvement in bankrupt Toledo-based insulation maker Owens Corning's bonds, which have been steadily hammered down over the past two weeks. But on Wednesday, the company's 7½% notes due 2018 were seen up 3 points at 58 bid, 60 offered. The company meantime filed with the SEC to sell shares upon its emergence from Chapter 11 after six long years of reorganization. The end to its case could come by late October.

There was meantime no change in the bonds of bankrupt Lancaster, Pa.-based floorcovering maker Armstrong World Industries Inc., which, like Owens Corning, was driven into bankruptcy under a flood of asbestos-related lawsuits. Armstrong's bonds were steady at 67 bid, 69 offered.

And traders saw Movie Gallery's 11% notes due 2012 up about 2 points at 82.5 bid, 83.5 offered. A trader suggested that there was a lot of short-covering in the Dothan earnings, Ala.-based video rental chain operator's bonds ahead of its scheduled release Thursday of what are expected to be strong earnings.

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