Owens Corning slides; Dan River fails to hold on to gains; WorldCom sees mild gains

By Carlise Newman

Chicago, Nov. 3 - Owens Corning paper fell further Monday, burdened by pessimism about talks in Washington that are focused on finding a comprehensive legal settlement of asbestos claims - both at Owens Corning and elsewhere.

Struggling in bankruptcy and grappling with numerous claims of asbestos-related illnesses caused by its own plants, Owens Corning was hurt by pessimism that the talks - between companies, their insurers and asbestos claimants - would reach a successful outcome in Monday's activity.

Owens Corning paper was down 1½ points to 43 bid, 44 offered Monday, according to a trader. Another source pegged the bonds down 1¾ points to 42¾ bid, 43¾ offered.

Adding to the Toledo-based flooring company's woes was news that its asbestos case was halted after a successful request by two holders of Owens Corning bank debt to have U.S. District Court Judge Alfred Wolin removed from the case.

Kensington International Ltd. and Springfield Associates LLC, two funds associated with New York distressed debt investor Elliott Associates that together hold $275 million in Owens Corning debt, claim Judge Wolin has a conflict of interest.

The funds alleged that Wolin hired two consultants to help with five asbestos cases, including the Owens Corning case, who have a conflict of interest because they also represent a class of asbestos plaintiffs in the G-I Holdings Inc. bankruptcy case.

The funds suggested that the consultants' role in the G-I proceedings makes them biased toward asbestos plaintiffs.

The company's committee of unsecured creditors also asked the court to appoint a trustee on Friday.

Meanwhile, Dan River Inc. bonds, which had been recovering last week, fell on Monday. The 12¾% notes due 2009 fell back to 25 bid from 26 bid on Friday. After several days underwater, the bonds had risen to 29 last Thursday.

"No real reason for the fall today," one trader said.

The paper had experienced a steep drop in mid-October after the company amended its senior secured credit facility, waiving the maximum leverage ratio covenant violation that existed at the end of the third quarter and revising requirements during the fiscal fourth quarter.

The company anticipated having difficulty meeting financial covenant requirements in the fourth quarter of fiscal 2003 unless there was a significant improvement in current business activity.

As for the third quarter violation, net sales declined to $104 million, down $44 million or 30% from the third quarter of fiscal 2002, causing EBITDA to be less than expected and in excess of specified levels of indebtedness to EBITDA.

Dan River is a Danville, Va. designer, manufacturer and marketer of products for the home fashions and apparel fabrics markets.

WorldCom Inc. was higher Monday on the news that its confirmation plan had been approved, which came out after the close on Friday.

WorldCom was 1 point higher Monday at 39 bid, 40 offered, according to a trader. The bonds rose 2 points Friday in anticipation that the plan would be approved, and ahead of Friday, had steadily risen 10 points.

"There wasn't much of a rise today because the approval had been priced in for the most part all of last week," the trader said.

Under the amended plan filed Oct. 22, holders of WorldCom senior debt - both bank debt and notes - may choose to receive 14.36 shares of new common stock for each $1,000 of the holder's allowed claim, or new notes at the rate of 35.9 cents on the dollar.

Unsecured claim holders will receive 7.2 shares of new common stock for each $1,000 of the holder's allowed claim and cash at the rate of 17.9 cents on the dollar. Holders of WorldCom's subordinated claims and equity interests will receive nothing.

In total, WorldCom will issue between $4.5 billion and $5.5 billion of new notes.

Meanwhile, Denny's Corp. paper was higher. At one point the 11¼% notes due 2008 were up as much as 7 points on the session, but ended up 4 points higher at 60 bid.

After posting dismal third-quarter earnings last Wednesday, the restaurant chain had good news to share on Friday with positive October same-store sales of 3.9% as of Oct. 22. No previous figures were available.

Elsewhere, WestPoint Stevens Inc.'s 7 7/8% notes due 2008 were down 1 point to 11½ bid, a trader said. The WestPoint, Ga.-based home fashions manufacturer recently obtained approval from the U.S. Bankruptcy Court to extend the company's exclusive right to file reorganization plan from Jan. 31, 2004 until March 31, 2004.

The company's official creditors' committee has the option to require a further hearing on the extension.

WestPoint Stevens said previously it had decided not to implement the previously announced agreement in principle with holders of its outstanding unsecured debt. Instead, the company will negotiate new terms for a chapter 11 plan of reorganization with all its major creditor constituencies.

In other news, Adelphia Communications Corp.'s 9 7/8% notes due 2007 were up 1 point to 81 bid, according to a trader. The bonds had been storming ahead for several weeks, up 2 or 3 points each day, but lost steam last week and fell 2 points.

"Nothing unusual about them bouncing around," the trader added.

(Paul Deckelman contributed to this report.)

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