Foamex bonds fizzle; Delphi, GM push higher

By Paul Deckelman and Sara Rosenberg

New York, May 25- Foamex International Inc.'s bonds were seen trading several points lower Thursday - possibly on the day's only headlines about the company, which gave details of the severance package for the company's chief financial officer, who resigned in April.

In the automotive arena, General Motors Corp. bonds, those of its General Motors Acceptance Corp. financing division and those of the giant carmaker's bankrupt former subsidiary, Delphi Corp., were seen up solidly, apparently aided by a newspaper report that some 20,000 of GM's more than 100,000 hourly employees will take advantage of the company's recent buyout offer and leave their jobs.

Traders said the distressed bond market, apart from those specific names, was quiet and slow on what was the last full trading session of the week. Things were expected to be even slower Friday, when the debt markets will see an early close at 2 p.m. ET ahead of the three-day Memorial Day holiday weekend, which will also see a full market close on Monday.

In the bank loan market, participants seemed to already be in a holiday mood, with little or no trading in distressed issues reported.

A distressed-bond trader saw Foamex's 9 7/8% notes due 2008 dropping to 88 bid, 90 offered from prior levels at 92 bid, 94 offered, although he did not see any movement in the company's other bonds.

At another desk, a market source quoted those bonds at 87.75 bid, down from 92 previously, and pegged the company's remaining 13½% notes due 2005 at that same level. The source saw Foamex's 10¾% notes due 2009 down ¼ point at 109.75.

The bankrupt Linwood, Pa.-based foam rubber products maker filed an 8-K report with the Securities and Exchange Commission detailing the separation agreement with CFO K. Douglas Ralph, who also had the title of executive vice president.

News of his departure was first disclosed on April 10 and the change was effective May 12. He had been in those posts since February 2003.

The filing said that the company entered into a separation agreement giving him one year's salary of $350,000 over a 52-week period, as well as medical and other benefits as if he were an employee during the severance period.

Movie Gallery higher

Elsewhere, a trader saw Movie Gallery's 11% notes due 2011 up a point at 74 bid, 75 offered, but saw no news about the troubled Dothan, Ala.-based video-chain rental company.

GM, Delphi climb

But the big movers, he said, were GM and Delphi. GM, he declared, was "going up," with the carmaker's benchmark 8 3/8% notes due 2033 moving up to 74.5 bid, 75.5 offered, a gain of 1½ points. He also saw the 8% notes due 2031 of GM's financing arm, GMAC, up a point at 93.5 bid, 94.5 offered.

Delphi, the trader said, was up even more, with its 6.55% notes slated to come due this year at 80 bid, 81 offered, a three-point gain, and its 6½% notes due 2009 also up a trey, at 79 bid, 80 offered. He saw Delphi's 7 1/8% notes due 2029 a point better at 77 bid, 78 offered. He said that the rise might be linked to short covering, or in reaction to any fresh news about the company's battle with its unions over Delphi's efforts to lower its pay scales.

Another trader saw the Delphi's "up a lot," with the 7 1/8s up 2¼ points at 78.25 bid, 79.25 offered, while GM's 8 3/8s were at 75.5 bid, 76 offered, up 1½ points on the day. GMAC's 8% notes were a point better at 93.75 bid, 94.25 offered.

GM's New York Stock Exchange-traded shares were seen up $1.39 (5.24%) in Thursday's dealings to $27.90 on volume of 28.5 million - about double the norm. Delphi's Pink Sheets-traded shares jumped 16 cents (13.22%) to $1.37. Volume of 9.6 million shares was about average.

GM shot up in apparent reaction to news reports - chiefly one in the auto giant's hometown paper, the Detroit News, which said that more than 20,000 of its hourly workers had accepted buyout offers made under a plan announced in March to offer buyouts or early-retirement incentives to all 113,000 of its hourly employees.

The paper's report attributed its information to unidentified sources. GM would not confirm the report, beyond saying that it is "very pleased with the employee participation rate."

If the 20,000 figure is accurate - and the offer still has a month to run - it would go a long way toward giving GM the 30,000 headcount cuts that it said previously that it hopes to have in place by 2008.

Delphi investors are carefully watching GM, hoping for further help from their company's one-time corporate parent. GM has already offered to pay for buyouts for 13,000 of Delphi's 34,000 hourly employees, and to take another 5,000 Delphi hourly workers on as GM employees. GM is hoping Delphi can avert a potentially costly strike by its employees, which would badly disrupt GM's production.

Also in distressed-land, Owens Corning's bonds were seen little changed on the session at 109 bid, 110 offered, in contrast to the gyrations the bankrupt Toledo, Ohio-based asbestos-challenged insulation maker's notes had seen earlier in the week, as well as the prior week, on profit-taking off prior hefty gains. The bonds of sector peer Armstrong World Industries Inc. - which had also dropped earlier in the week, then rebounded and dropped again - were likewise unchanged Thursday, at 80 bid, 82 offered.

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