Owens Corning bonds retreat; Adelphia paper pushes upward

By Paul Deckelman and Sara Rosenberg

New York, June 28 - Owens Corning bonds, and those of fellow bankrupt asbestos-challenged company Armstrong World Industries Inc., moved sharply lower Wednesday as the recent rise in those issues apparently ran out of gas.

That also seemed to be the case with the bonds of Adelphia Communications Corp., which had also been pushing upward over the past few sessions, fueled by positive developments within the bankrupt Greenwood Village, Colo.-based cable operator's Chapter 11 case.

However, Adelphia's TCI and Parnassos bank debt was a touch higher on Wednesday as the court confirmed the plan to sell Parnassos and Century-TCI to Comcast Corp., according to a trader in that market.

The TCI and Parnassos bank debt closed out the day quoted at 98.75 bid, 99.75 offered, up a quarter of a point from Tuesday's closing levels of 98.5 bid, 99.5 offered, the trader said.

A trader in distressed bonds meantime saw Adelphia's 10¼% notes due 2011 dip to 55 bid, 57 offered from prior levels at 56 bid, 58 offered. He also saw its 10¼% notes slated to come due later this year at 51 bid, 53 offered, down a point on the day.

Another trader saw most Adelphia bonds unchanged, although he did see its 9½% notes that were to have matured last year at 97.5 bid, up from 96 previously.

The bank debt firmed - although the bonds mostly didn't - on the news that judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York had removed one of the final legal hurdles barring Adelphia from selling itself to Time Warner Inc. and Comcast Corp. in a deal estimated to be worth $17 billion.

The judge confirmed an order allowing Adelphia to sell a majority interest in two cable properties it jointly owns with Comcast. That will let Comcast buy out Adelphia's interest in Century-TCI and Parnassos, which between them have over a million subscribers in markets in Los Angeles, upstate New York and northeastern Ohio.

Getting that out of the way will in turn facilitate the sale of the remaining approximately 80% of the company to Time Warner Cable NY and Comcast, which will complete the breakup of what was once the fifth-largest cable operator in the United States, while strengthening Comcast and Time Warner's positions at the top of the industry.

In conjunction with clearing the deal for the joint ventures, Gerber on Wednesday entered an order allowing the sale of the rest of Adelphia's assets even though Adelphia's proposed reorganization plan has not yet been approved by its creditors and confirmed by the judge, as is usually the case in bankruptcy proceedings. Instead, Gerber's order separates the asset sale from the bankruptcy process, which has been mired for months in disputes about how the sale proceeds will be distributed among creditors. Adelphia can now seek regulatory approval for the sale without waiting for its creditors to accept of its overall restructuring plan. The Federal Communications Commission is expected to vote on the Adelphia transfer of assets to Time Warner and Comcast around mid-June.

Adelphia last week filed an amended version of its restructuring plan, taking the expedited sale process into account. It has been in bankruptcy for four years now, driven into Chapter 11 by revelations that it had $2.3 billion in debt off its balance sheets.

Owens Corning lower

Elsewhere, Owens Corning's bonds were seen off, as the recent string of strong gains finally fizzled out. The distressed-debt trader saw its 7½% notes due 2018 at 82 bid, 84 offered, down from 86 bid, 88 on Tuesday, while Armstrong's bonds were at 71 bid, 73 offered, down two points from Tuesday. "Both were down a couple of points," he said.

A trader saw the Owens 71/2s fall to 82.5 bid, 83.5 offered at the opening, and then push up to 84.25 bid, 85.25 offered by the end of the day, "off the lows, but still down at least two points from where they had been."

Armstrong's 6.35% notes due 2003 unchanged at 74 bid, 75 offered.

The Owens Corning bonds had been rising steadily since a decision last Friday by the judge overseeing its reorganization approving an agreement between the company and major creditor groups such as bondholders, trade creditors, asbestos claimants and shareholders, who will support the company's proposed reorganization plan.

The deal was approved by judge Judith Fitzgerald of the U.S. Bankruptcy Court in Wilmington Del., where the company filed for Chapter 11 protection nearly six years ago, pushed into bankruptcy under deluge of thousands of asbestos injury-claim lawsuits.

The global settlement, first announced in late May and finally approved last week by Fitzgerald at a hearing in Pittsburgh, ended the threat of continued litigation that could have kept the company mired in bankruptcy for additional years. At this point, Owens Corning envisions an exit from Chapter 11 later this year, perhaps as early as Oct. 31.

In the troubled automotive sector, General Motors Corp.'s bellwether 8 3/8% notes due 2033 were seen trading around 75, up perhaps a ¼ to ½ point on the session, while its General Motors Acceptance Corp. financial arm's 8% notes due 2031 were up ¼ point at 93.25 bid, 95.75 offered. GM arch-rival Ford Motor Co.'s flagship 7.45% notes due 2031 were up ¼ point at 70.25 bid, 70.75 offered, while its Ford Motor Credit Co. finance unit's 7% notes due 2013 were unchanged at 85 bid, 85.25 offered.

A trader saw bankrupt former GM subsidiary Delphi Corp.'s 6.55% notes due 2006 up ¼ point at 81.5 bid and 82.5 offered. Its 7 1/8% notes due 2029 were up half a point at 76.75 bid, 77.75 offered.

Bankrupt Toledo, Ohio-based partsmaker Dana Corp.'s 5.85% notes due 2015were "about unchanged," the trader said, at 74.5 bid, 75.5 offered.

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