Adelphia bonds continue climb as emergence nears; Delphi gains

By Paul Deckelman and Sara Rosenberg

New York, Oct. 26 - Adelphia Communications Corp.'s bonds continued to firm on Thursday, pushing upward, traders said, as the bankrupt Greenwood Village, Colo.-based cable TV systems operator nears its emergence from Chapter 11 reorganization.

In the automotive sector, Delphi Corp.'s bonds were once again on the rise, helped by buyout speculation about the bankrupt Troy, Mich.-based parts maker, as well as by indications that its efforts to forge a deal with former parent General Motors Corp. and the United Auto Workers union that would enable Delphi to cut its bloated labor costs, seemed to be making progress.

MagnaChip Semiconductor Ltd.'s distressed bonds were heard to have gyrated wildly as the Korean chipmaker reported earnings, first falling several points from Wednesday's levels, and then bouncing back up to end up several points.

And bankrupt Toledo, Ohio-based insulation maker Owens Corning - whose established bonds still carry junk ratings and trade as distressed debt - priced over $1 billion of new investment-grade bonds - part of the company's exit financing as it prepares to leave Chapter 11 at the end of the month.

Trading in the bank debt of distressed companies was virtually nil on Thursday, participants in that market indicated.

Adelphia attraction continues

Traders saw Adelphia Communications bonds continuing to push sharply higher - those bonds have been going up a point or two a day for around a week now - with one quoting its 10¼% notes due 2011 at 82 bid, 83 offered, which he called a 3 point gain on the day.

A trader in distressed bonds, who also saw the 101/4s at that 82 bid, 83 offered level, saw its 10¼% notes due 2006 at 77.5 bid, 79 offered, which he called a 2 or 3 point gain.

"They seem to be really active," he said of the bonds. "We saw a lot of quotes. Trades [in Adelphia] totaled in the tens of millions."

Traders speculated that Adelphia's bonds have recently risen because the company is getting close to the time that it will officially emerge from Chapter 11, where the company has been mired since mid-2002. The bankruptcy filing followed the discovery of massive accounting irregularities which led to the ouster of the company's founder, John Rigas, and his family members, from positions of power. Several members of the family who had held executive positions as Adelphia, including the elder Rigas, were later tried on fraud charges by federal authorities.

The first trader suggested that besides the coming emergence, Adelphia's bonds got a boost from the strong quarterly results posted by industry leader Comcast Corp. - which, along with Time Warner Cable, purchased essentially all of Adelphia's assets earlier this year in a $17 billion deal that was facilitated by an unusual bankruptcy court ruling. That ruling allowed the sale to go through even though Adelphia had not yet had a plan of reorganization approved by the court and its various creditor groups, who have been battling over the distribution of the company's assets.

Separately, Adelphia's plan administrator for its joint venture plan of reorganization set Nov. 15 as the next date for distributions to creditors under the plan, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the plan, creditors whose disputed claims have been subsequently allowed will receive their distributions on this next periodic distribution date if there is enough cash remaining.

The first trader suggested that in addition to Adelphia, the debt-laden St. Louis-based cable operator Charter Communications Inc.'s bonds also got a sector sympathy boost from the strong Comcast showing.

He quoted its 11% notes due 2015 up 1½ points at 96 bid, 96.5 offered.

Delphi bonds climb again

Delphi Corp.'s bonds continued their recent climb, which has been fueled by buyout speculation about the company after Ripplewood Holdings was reported readying a bid, as well as signs Delphi may be able to reach a consensual agreement with GM and the UAW on cutting the bloated labor cost structure it inherited when the carmaker spun its parts unit off in 1999. Such an accord would avert a potentially ruinous strike which could result if the bankrupt company tries to unilaterally impose a new wage and benefit accord on its hourly workers.

A market source saw Delphi's 6.55% notes that were to have been redeemed earlier this year firm to 104, a 1½ point rise, while its 6½% notes due 2009 were 1¼ point up at 103.25. Delphi's 7 1/8% notes due 2029 firmed to 94.5 from 92.875.

Besides the reasons cited, traders also said that Delphi - like other auto names - was getting a boost from the rise in Lear Corp. bonds, as the Southfield, Mich.-based maker of automotive seating and interior components reported a sharply reduced third-quarter net loss versus a year ago, and said that it was making progress on shedding its North American interiors business.

MagnaChip bounces wildly around

While Lear got a boost from its earnings data, MagnaChip Semiconductor was swinging violently from down as much as 5 points, back up to up 2 or 3 after it posted results.

A trader saw the company's 8% notes due 2014 plunge to 47 bid, 48 offered after the results were released, a loss of about 4 or 5 points, he said,

But then, "after a conference call on which they indicated that they had sufficient cash and gave their forecasts for the quarter," the bonds moved back up, to 54.5 bid, 55.5 offered, which he called a gain of about 4 points on the session.

The Korean high-tech firm had a net loss for the fiscal quarter ended Oct. 1 of $47.7 million, sharply wider than $13.2 million in the third quarter of 2005.

Owens Corning issue prices, tightens

A trader said the $650 million of new Owens Corning 6½% notes due 2016, which priced at 99.734, or 180 basis points over the comparable Treasury issue, were seen having tightened by the end of the day to bid levels around 171 bps over Treasuries, and offered levels 169 bps over.

Its new $550 million of 7% notes due 2036, which priced at 98.023, or 230 bps over Treasuries, likewise tightened to a closing level of 221/219.

Owens Corning's established bonds, like its 7½% notes due 2018, continue to trade in the lower 50s.

Owens Corning, which was forced into bankruptcy in 2000 under a deluge of asbestos related lawsuits, envisions that its plan will allow it to set up a trust fund mechanism to deal with the numerous claims, while using cash and stock to settle the claims of debtors and other stakeholders.

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