Solutia falls further on guidance; Loral sags slightly; Collins & Aikman brightens from Ford contract

By Carlise Newman

Chicago, Oct. 10 - Solutia Inc. fell further Friday, weighted by guidance the company issued for the third quarter on Thursday. The St. Louis-based company said it expects an after-tax loss of $1.65 to $1.70 per share in the third quarter.

Solutia, which also said Thursday that it closed on a new three-year $350 million revolving credit facility, said the expected loss includes charges of $1.40 to $1.50 per share. Because of the new revolver and related transactions, three series of notes including the 7 3/8s of 2027 will no longer be secured, reverting to unsecured status.

Analysts expected a loss of 7 cents per share by Solutia, which reports its third-quarter earnings later this month.

Its 7 3/8% notes due 2027 were seen down 2 points to 63 bid, 65 offered at the end of Friday's abbreviated session ahead of the Columbus Day holiday, a trader said.

Elsewhere, Loral Space & Communication bonds gave up some of the gains they had incurred Thursday. Loral's 10% notes due 2006 were down 1 point to 65½ bid, 66 offered, one trader said.

On Thursday the bonds were higher despite news that the company rejected a $1.85 billion bid from EchoStar Communications Corp. to buy all the company's assets, with the 10% notes adding 2½ points.

On July 15, Loral reached an agreement to sell to Intelsat its six North American satellites, including Telstar 4, for $1.1 billion. Consistent with the bidding procedures approved by the bankruptcy court, Loral will evaluate any bids that it may receive for its North American satellites on or before Oct. 15, including one from EchoStar if it submits a bid for those assets.

Collins & Aikman's debt headed higher again Friday after being "all over the place" this past week, a trader said.

The Detroit auto parts supplier's paper had dropped over 10 points in three days after news that it may be dropped as a contractor by DaimlerChrysler AG's Chrysler Group, but then improved when the company had a positive private call with bank lenders Tuesday.

News reports a week ago said that Chrysler Group is ready to drop all current and future contracts with the auto parts supplier. Chrysler's current and planned business with Collins & Aikman is worth $1 billion, the reports said.

Collins & Aikman's 10¼% notes due 2006 were seen rising 3 to 5 points, according to various desks, with the most-quoted price being 87 bid, 88 offered.

"They came out with news this morning that they've gotten a new contract with Ford," a trader said. "And on that news the bonds are up a little, and they're still active."

Collins & Aikman said it was chosen by Ford Motor Co. to supply interior components for the new Futura sedan, the line that will replace Ford's highly successful Taurus.

Meanwhile, Mirant Corp. bank debt stabilized Friday after dropping a few points Thursday from an announcement that the company's chief financial officer, Harvey Wagner, resigned after less than a year in the job.

The Atlanta-based energy company said Wagner will stay on in an interim capacity until a replacement is hired.

Mirant's 2003 revolver was quoted at 51 bid, 52 offered; its 2004 revolver was seen at 54 bid, 56 offered; and the 2005 revolver at 75 bid, 77 offered. All were unchanged.

In January Wagner replaced Ray Hill as CFO of Mirant, which was heavily in debt and beaten down by lower electricity prices. The company has since filed for Chapter 11 bankruptcy protection.

Meanwhile, Charter Communications Inc. bonds continued to improve.

A trader saw Charter's benchmark 8 5/8% notes at 80 bid, 81 offered.

The new 10¼% notes were at 102.5 bid, 103 offered. Ten days earlier those notes had been at 100.25 bid, 100.75 offered, the trader said.

In other news, airline paper appeared to be up quite a bit after upgrades by analysts pepped up optimism that the companies will beat third-quarter earnings estimates.

United Airlines Inc. bonds were up around 13 bid. They had been lingering around the 10 bid level on the news that the company was delaying its pension contributions.

"The airlines in general were up on a little better pricing and higher loads. They were slightly better; not out of the woods but off the bottom," one trader said.

Delta Airlines Inc.'s 10% notes due 2005 were seen at 91 bid, 92 offered, up 1 point. Northwest Airlines Inc.'s 11¾% notes due 2005 were quoted at 88 bid, also up 1 point.

"It was a lightly attended day," a trader said of Friday's shortened session.

Among other distressed names, one source had the paper of Owens Corning "up about three to four points across the board," around 44 bid, 45 offered.

WorldCom, meanwhile, was "down a little bit. They were around 35 Thursday. Today they were 34.125 bid, 34.375 offered."

(Paul Harris contributed to this report)

© 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.