Adelphia bank debt continues rise; Delphi better on buyout data

By Paul Deckelman and Sara Rosenberg

New York, June 16 - Adelphia Communications Corp.'s bank debt continued to tread higher as some more private calls took place during Friday's market hours, according to a trader.

The bankrupt Greenwood Village, Colo.-based cable company's TCI bank paper closed out the day at 99 bid, par offered, up about half a point on the day, the trader said, although a different trader had the TCI debt going out at 98.25 bid, 99 offered on Thursday, which would make Friday's gains even higher.

In addition, Adelphia's Century Old and Century New bank debt closed out Friday around 96 bid, 97 offered, also up about half a point on the day, the trader added.

On Thursday, sources said that there was an ad-hoc lender call to discuss various lender concerns over recoveries being escrowed and agents receiving offers from the unsecureds for a settlement and not distributing the information to the broad lender group. Following this call, the TCI bank debt had moved up by about a point.

However on Friday sources declined to comment on what the latest meetings discussed saying that they were on the private side.

While the company's bank debt was active, a trader in distressed bonds said that he had seen little or no activity Friday in the name, figuring that they remained around the levels to which they had fallen on Thursday - 46 bid, 48 offered for Adelphia's 10¼% notes due 2006 and 51 bid, 53 offered for its 10¼% notes due 2011, both down two points during that session.

Elsewhere, a trader saw auto parts producer Delphi Corp. getting a boost on news that many of its unionized hourly employees, and those for former corporate parent General Motors Corp. are taking advantage of the two companies' respective buyout offers. Delphi also saw creditors backing the bankrupt Troy, Mich.-based company's efforts to get a judge to allow it to void unprofitable contracts with GM, its largest customer.

Delphi paper was "up a little bit on late yesterday [Thursday's] news of buyout progress," a trader said, quoting the company's 6.55% notes due 2006 at 84.5 bid, 85.5 offered, up two points on the session.

The United Auto Workers union said late Thursday that over 33,000 factory workers at GM and Delphi have accepted buyout offers from the two companies so far, exceeding early expectations. Delphi is seeking to sharply cut its 33,000-member hourly work force in order to bring labor costs down and, along with GM, has offered hefty bonuses to union workers to get them to leave.

The union did not specify how many of the 33,000 workers taking buyouts come from Delphi and how many come from GM's 113,000 unionized labor force.

Delphi also got encouragement on the news that its creditor groups are backing its efforts to cancel the contracts with GM. Delphi, spun off from GM in 1999, says many of its parts-supply contracts with its former parent are uneconomical for the company.

GM steady

Despite that potential negative, traders saw GM's own bonds little changed on the day, with its 8 3/8% notes due 2033 hanging in there at levels around 75.5 bid, 76.5 offered. The 8% notes due 2031 of GM's financial arm, General Motors Acceptance Corp., were likewise steady at about 93 bid, 94 offered, a trader said

While Delphi rose, the trader said, bankrupt Toledo, Ohio-based parts manufacturer Dana Corp. also "caught a little of it," to finish the day at 86.5 bid, 87.5 offered.

Dura Automotive's 9% notes due 2009 were better at 56.5 bid, up 1½ points.

But other auto names were seen weaker, including bankrupt Novi, Mich.-based vehicle frames maker Tower Automotive Inc., whose 12% notes due 2013 eased to 70 bid, 71 offered. Bankrupt Troy-based interior components manufacturer Collins & Aikman's 10¼% notes due 2011 were at 30 bid, 32 offered, each "a little weaker," the trader said.

Tembec drops, bounces back

A trader characterized struggling Canadian forest products producer Tembec Industries Inc.'s bonds as "pretty volatile today," with its 8 5/8% notes due 2009 having opened "very sloppily," trading down two points at the outset.

"I guess people were concerned about the approval of the tariff deal that was announced a month or so ago."

Under the terms of that accord, announced in late April, the United States - which had long contended that Canadian lumber producers like Montreal-based Tembec were undercutting domestic companies and which for the past four years has collected a total of some $5 billion in tariff penalties on their wood exports to the States - will give 80% of that money, or about $4 billion, back to the Canadian producers. Tembec, one of the biggest losers under the tariff scheme, is slated to get about $300 million back - assuming the deal goes through.

"Some [of the investors] assumed the deal was falling apart - but later on in the morning, about 10:30 or 11 [ET], the Canadian Trade Minister said that he was optimistic that the deal would be completed and get the [necessary] approvals." The Tembec bonds then "bounced back," to finish the day at 53.5 bid, 54.5 offered, essentially unchanged. "But it was ugly, first thing in the morning."

Asbestos names lower again

Traders saw asbestos-challenged names - which had seemed to catch a bid of a bid around mid-week, after having been clobbered for almost two straight weeks before that - heading back downward. He saw bankrupt Toledo-based insulation maker Owens Corning's 7½% notes due 2018 at 85.5 bid, 87.5 offered, down from 87 bid, 89 offered the previous day, while Armstrong World Industries Inc.'s bonds hovered "in the low 70s", pretty much where the bankrupt Lancaster, Pa.-based floorcovering maker's bonds had been on Thursday.

The trader noted the steep fall in the Owens Corning bonds over the past two weeks, from their peak levels around 122 in late May.

"These things were active, all the names were active. It's what the distressed market has been focused on," he said. "I think some of these guys were long a lot of bonds - and they probably had a tough week."

Besides profit-taking and sector investor worries over the ultimate face of the asbestos claims bill now before the Senate, the trader also noted an unfavorable verdict in an asbestos lawsuit case involving Georgia Pacific Corp. "It was only about $10 million" he said - but raises the possibility of other suits against other companies which could jeopardize Owens Corning's planned settlement with its own asbestos claimants.

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