Adelphia bonds up on news of acquisition deal; Owens Corning bank debt gains

By Paul Deckelman and Sara Rosenberg

New York, April 8 - Adelphia Communications Corp. bonds were seen solidly higher Friday, on news reports that the cable industry giants Time Warner and Comcast Corp. had reached a preliminary agreement with Adelphia to acquire the bankrupt Greenwood Village, Colo.-based cabler.

Owens Corning's bank debt and bonds were meanwhile seen improved, aided by renewed market hopes that Congress might still be able to cobble together legislation creating an asbestos claims payment fund.

A market source saw Adelphia's 10¼% notes due 2006 at 92 bid, up from 89 and its 10¼% notes due 2011 up to 96 from 94.25, while likewise lifting its 10 7/8% notes due 2010 to 92.75 bid from 91.25.

He also pegged the bonds of Century Communications Corp., an Adelphia subsidiary, higher, with its 9½% notes coming due later this year up half a point at 106, and its 8 7/8% notes due 2007 at 104.75 bid, up from 103.5.

A trader at another shop reported Adelphia's 10¼% 2006 notes as having firmed 90 bid, 92 offered, from prior levels at 88 bid, 90 offered, and saw its 10¼% notes due 2011 likewise up two points, at 96 bid, 98 offered.

Another market source saw the company's 9 7/8% notes due 2007 up more than a point at 89.5, while the Century 8 7/8s were up about 1½ points at 105.

According to press reports, Time Warner, Comcast and Adelphia reached agreement late Thursday on the preliminary framework for the two cable giants to buy Adelphia out of bankruptcy for about $18 million in cash and stock warrants - although spokespersons for the three companies all declined comment as of Friday afternoon.

The New York Times reported that Time Warner and Comcast will pay about $13.5 billion in cash and about $4.5 billion in warrants for stock in a new company to be formed by combining Time Warner's cable business and Adelphia.

The combined bid apparently tops a last-minute $16.5 million all-cash offer from Cablevision Systems Corp. and a smaller bid from a Kohlberg Kravis Roberts & Co.-led group.

The second trader, however, noted that since the reported deal has not been confirmed yet, and in any event is still just a preliminary agreement, and with Cablevision still lurking around the perimeter - and having apparently gotten rid of a major albatross around its neck by finally closing down its money-losing VOOM satellite TV business, should it wish to seek funding to boost its bid and upset the apple cart before the acquisition is finalized - for now, it's anything but a done deal.

"It ain't over till it's over," he said, invoking baseball great Yogi Berra's well-known quip.

Owens Corning gains on fund hope

Elsewhere, the action is far from over in Washington - but the possibility that something may come out of continuing Senate discussions on an asbestos claim fund bill gave the bank debt and shares of bankrupt Toledo, Ohio-based insulation maker Owens Corning a boost Friday.

The bank debt was about half a point stronger, with the uptick seen likely as follow-through from Thursday's Bloomberg story that said asbestos legislation is a still possibility, according to a trader.

The paper was quoted at 109 bid, 110 offered at the end of the day, the trader said.

Meantime, Owens' bonds were seen by one trader to have powered up to 66 bid from 61 previously, while at another desk, the bonds were seen at a slightly more restrained 65 bid, 66 offered from 62 bid, 63 offered.

Earlier in the week, Owens' bank debt fell off by about half a point after The Wall Street Journal reported that some insurers who had been part of the effort to craft a $140 billion trust fund to pay asbestos-related medical claims were bailing out, frustrated by the lack of a viable bill.

"It's volatile," the bank loan trader added about Owens, explaining that "one day people feel upbeat about legislation and the next day they get nervous."

The insurers told the head of the Senate Judiciary Committee in a letter that the plan he was drafting was "unworkable."

But both committee chairman Arlen Specter, R.-Pa., and Senate Majority Leader Bill Frist, R.-Tenn., downplayed the impact of the insurers' withdrawal, noting that other insurers had not signed on to the withdrawal effort, and predicting that the Senate would soon be voting on the claims mechanism bill, which would essentially take the responsibility for compensating people with medical problems from past asbestos exposure out of the courts, and vest it in the claims fund.

Even as the insurers bailed out, an organization representing companies with asbestos liability concerns wrote to Congressional leaders to reiterate their industry's support for the trust fund effort.

The prospect that the asbestos fund bill might still be enacted also pushed up the bonds of bankrupt Lancaster, Pa.-based floorcovering maker Armstrong World Industries Inc., which rose a point to 69 bid, 71 offered. Another source saw the Armstrong bonds even better, at 70.75 bid, up from 67.

Salton up again

A trader said Salton Inc.'s bonds - which rose Thursday even as the Lake Forest, Ill.-based small appliance maker's stock zoomed, though on no real news - were again better Friday.

Its 12¼% notes due 2008 were seen at 61 bid, 63 offered, he said, up from 58 bid, 60 offered, while its 10¾% notes coming due in December rose to 75 bid, 77 offered from 74 bid, 76 offered Thursday.

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