Curative Health, Tekni Plex bonds better; Mirant bank debt heads lower

By Paul Deckelman and Sara Rosenberg

New York, Nov. 8 - Curative Health Services Inc.'s bonds were seen solidly higher Tuesday in apparent response to several pieces of good news for the provider of medical products and services.

Tekni Plex Inc. bonds were seen higher for a second consecutive session, as investors apparently reacted positively to the Somerville, N.J.-based packaging and rubber hose maker's latest financial results.

On the downside, Mirant Corp.'s bank debt was seen to have dropped off by about 1½ points on market technicals, despite the company's good quarterly numbers report that came out after the close Monday, according to a trader.

A trader saw Curative Health's 10¾% notes due 2011 at 71 bid, 73 offered - well up from recently quoted levels in the mid-to-upper 60s. He suggested that "it wasn't all today" - an indication that the notes had taken a two-step jump upward, buoyed by news of a big contract and by news that the company's lenders want to give it a little breathing room.

Another trader said that the Curative bonds had been "moving up" over the past several sessions. He saw them go from 66 bid, 67 offered on Friday to 70 bid, 71 offered on Monday and 71.5 bid, 72.5 offered on Tuesday. He said the bonds are still trading flat, or without their accrued interest, following the company's announcement last Monday that it would not make the scheduled Nov. 1 coupon interest payment on the bonds, instead invoking the standard 30-day grace period and saying it would hold talks with its noteholders and evaluate all of its options.

But the news out of the company's headquarters in Hauppauge, N.Y., has gotten better since then.

Curative announced Tuesday that it has re-signed a multi-year contract with VHA Inc. to be one of VHA's suppliers for wound care management services. VHA, based in Irving, Texas, is a national alliance serving more than 2,400 leading community-owned health care organizations and their affiliated physicians nationwide. It serves fully one quarter of the community-owned hospitals in the United States, including many of the nation's largest and most respected institutions.

Curative did not put a financial price tag on the deal, although it is thought to be a sizable source of revenue.

Announcement of the renewal of the VHA contract comes on the heels of earlier news, seen Monday, that the company had gotten a loan waiver from its bank lenders for leverage ratio and bond interest payment defaults.

Tekni-Plex higher

Elsewhere, Tekni-Plex's 12¾% subordinated notes due 2010 "keep moving up," a trader said, estimating that those bonds, which had recently been seen in the mid 40s, had climbed as high as 50 bid on Monday, and then continued upward to close Tuesday at 52.5 bid, 53.5 offered, "so it's up two points on the day and more than eight points the past two days."

The move may have been due to short-covering, or to positive investor reaction to figures contained in the latest 10-K report for the fiscal year ended July 1, which was filed Friday with the Securities and Exchange Commission.

Among the positives contained in the report, the company's net sales increased to $695.5 million in fiscal 2005 from $635.6 million in fiscal 2004, representing a 9.4% gain. Net sales in its packaging segment grew 13.9% to $348.7 million in the most recent period from $306.1 million in the comparable period of 2004 due to both higher selling prices and sales volumes.

Tekni-Plex expressed optimism that high raw materials costs might mitigate, and said that recent capital market transactions - including the company's recent bond issue - had left it in a financially stronger position than it had been in for a while.

Mirant loans sink

In the bank debt market, Mirant's 2003 paper was quoted at 103 bid, 104 offered, a trader said, down 1½ points on the session, on technical factors.

The bankrupt Atlanta-based energy company reported an operating loss of $167 million for the three months ended Sept. 30 compared to operating income of $147 million last year and operating income of $12 million for the nine months ended Sept. 30 compared to $453 million last year, according to a 10-Q that was filed with the SEC.

Calpine loans lower

Also in the power-generating sector, Calpine Corp.'s second-lien bank debt was down by about one or two points on the day, with levels quoted at 73 bid, 75 offered, according to a trader, who said that there was no particular news sparking the downturn.

On Tuesday morning, the company did announce that none of the noteholders of Calpine Construction Finance Co. LP's second priority senior secured floating-rate notes due 2011 have elected to tender their notes under the purchase offer commenced on Oct. 6 in connection with the sale of its 550-megawatt Ontelaunee Energy Center in southern Pennsylvania.

The San Jose, Calif., power company was required to offer to purchase the notes with proceeds from the asset sale under the indenture.

There is currently $415 million of principal amount of the notes outstanding.

A bond trader saw Calpine's notes mixed, but essentially little changed. He quoted its 7¼% notes due 2009 a point easier at 42 bid, 44 offered, while its 8½% notes due 2008 were a point firmer at 52 bid, 53 offered. Overall for Calpine, though, he saw "no change there."

Asbestos names higher

Owens Corning's bank debt was up about half a point on Tuesday, with levels quoted at 134.5 bid, 135.25 offered, on no particular news, according to a trader.

The bankrupt Toledo, Ohio, insulation maker and building materials company's bonds, meantime were also seen firmer, with one trader seeing the bonds open at 76 bid, 78 offer, get as good as 78, and then come off that peak to close up a point on the day at 77 bid, 79 offered.

"The asbestos bonds [in general] have been moving up," he said, noting bankrupt Lancaster, Pa.-based floorcovering maker Armstrong World Industries' 9 ¾% notes up a point at 73 bid, 75 offered, and its 6-coupon bonds likewise a point better, at 71 bid, 73 offered.

An announcement last week out of Washington indicated that the Senate Judiciary Committee will hold a hearing next week into allegations that the planned $140 billion asbestos claims fund Congress is trying to set up to handle claims against companies like Owens and Armstrong might not be big enough to handle all of those claims. That theoretically could be a first step toward increasing the size of the company- and insurer-financed fund, which in turn could increase bi-partisan support for the controversial bill.

And a trader saw Delta Air Lines Inc.'s bonds pushing as high as 20 bid before coming off that peak to end at 19 bid, 20 offered, about a point above where the bankrupt Atlanta-based Number-Three U.S. airline carrier has been lately.

He saw no real news out on the company, attributing the move to "just buyers," perhaps motivated by recently lower oil prices. Rival bankrupt carrier Northwest Airlines Corp.'s bonds were also up a little to 33.5, while yet another bankrupt carrier, United Airlines parent UAL Corp.'s notes were similarly firmer, at 15.5 bid.

© 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.