Salton bonds, shares higher; Dana up on less-unfavorable monthly numbers

By Paul Deckelman and Sara Rosenberg

New York, June 1 - Salton Inc.'s bonds, and the Lake Forest, Ill.-based small appliance maker's shares, were seen higher on Thursday despite the lack of any fresh news about the company. However, there was a little speculation that Salton might benefit from an expanded contract between Wal-Mart Stores and General Electric, under which the latter will supply the retailing giant with a line of small appliances. Such thinking sees GE possibly contracting with Salton to actually make some of those appliances, which would then carry the GE brand.

Elsewhere, Dana Corp. bonds were higher after the bankrupt Toledo, Ohio-based auto parts supplier reported a smaller loss sequentially in its April operating statement. That in turn was seen helping to push Delphi Corp.'s bonds higher.

Delphi's former corporate parent General Motors Corp. was meantime better when its May sales data - despite showing a big decline from year-earlier levels - came in at about what the market expected.

Salton's 12¼% notes due 2008 were seen having pushed higher to 77 bid - up from their 72.5 opening, and well up from the levels around 68.75 at which they had languished earlier in the week.

Salton's New York Stock Exchange-traded shares jumped 31 cents (11.27%) to $3.06, although volume of 185,000 was below the usual turnover.

No firm news was seen out about the company, which manufactures and distributes the popular "George Foreman" line of electric hot dog and hamburger grills, as well as other small appliances.

However, investor hopes may have gotten a boost from the announcement by Wal-Mart that GE, which makes and distributes electrical appliances, has agreed to provide Wal-Mart with an expanded line of such things as blenders, coffeemakers, toaster ovens and waffle machines. There was some speculation Thursday on investment-oriented internet bulletin boards that GE might subcontract out some production to Salton, although there was no official word around of any such relationship.

Elsewhere, a trader said that Dana's bonds, and those of bankrupt Troy, Mich.-based Delphi, "were up two points on the heels of Dana's good monthly numbers."

While Dana reported a first-quarter loss of $126 million versus a $16 million year-earlier profit, its numbers seem to be improving sequentially. The company also reported a net loss of just $16 million - and $13 million of that from continuing operations - in the month ended April 30 versus a $62 million loss in the previous month.

The trader saw Dana's 6½% notes due 2009 up two points at 88 bid, 89 offered, while Delphi's 6½% notes due 2009 were likewise up a deuce, at 84 bid, 85 offered.

He said the Delphi bonds rose Thursday solely on sector sympathy with Dana, rather than because of any fundamental developments.

"Yesterday [Wednesday, GM chairman and chief executive officer Rick] Wagoner had already mentioned his thoughts about [negotiations for ] a deal between GM and Delphi to be on the right track - but there was nothing new today [Thursday]."

GM, its former subsidiary Delphi, and the United Auto Workers union have been negotiating for months in an effort to reach a consensual agreement that would allow Delphi - saddled with costly labor contracts when it was spun off by GM in 1999 - to lower its employee costs without provoking a union strike. Delphi's unionized hourly workers make an average of $27 per hour. The company wants to cut that to $16.50 with the help of a GM subsidy, but says that if GM won't pony up that money, it will cut wages to $12.50 per hour.

Delphi, another trader said, "seemed to have broken out of the high-70s range that it had been in."

He saw the 6.55% notes that were to have matured in exactly two weeks from now trading as high as 84 bid, before settling in at 83.3.

GM, Ford gain

Meanwhile, a trader said that "GM and Ford [Motor Co., along with other carmakers] were out with their sales numbers," which he said showed industry leader GM pretty much "in line" with market expectations of a continued decline, though Number-Two domestic producer Ford's were weaker than anticipated. GM posted a 16% slide in monthly sales, while Ford reported a 6% drop.

Still, bad as they were, "the numbers didn't scare anybody really. We just saw some buyers on weakness, and the bonds actually rose about a half a point."

He saw GM's benchmark issue, the 8 3/8% notes due 2033, at 76 bid, 76.5 offered, up half a point, while GM arch-rival Ford's flagship 7.45% notes due 2031 were likewise half a point better, despite the weaker numbers, at 73 bid, 73.5 offered.

Exide rises

Another automotive name seen higher was Alpharetta, Ga.-based vehicle battery maker Exide Technologies Inc., whose 10½% notes due 2013 were seen up two points at 87 bid, 88.5 offered. Exide's Nasdaq-traded shares meantime rose 30 cents (6.71%) to $4.77, although volume of 409,000 was actually slightly below the usual pace.

Exide reported in an 8-K filing with the Securities and Exchange Commission that an Illinois federal court had given final approval to an amended settlement between the company and the government, which had prosecuted Exide's Illinois subsidiary in 2002 on allegations it conspired to commit wire fraud. Exide agreed to pay $27.5 million to settle the case - but the court, recognizing Exide's liquidity problems, said that it does not have to come up with all the money at once, setting up a quarterly payment schedule that stretches through 2011. Exide also does not have to pay interest on the money which it owes.

A trader saw little or no movement from Wednesday's levels among such troubled names as Owens Corning, Armstrong World Industries Inc., Calpine Corp. and Adelphi Communications Corp.

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