Remy bonds drops on rumor; Fedders steady; Movie Gallery firms

By Stephanie N. Rotondo

Portland, Ore., March 8 - Distressed automotive parts producer Remy International Inc. dominated the bond market Thursday as new rumors sparked heavy movement in the company's notes.

The rumor mill is indicating that the Anderson, Ind.-based company will soon release its quarterly results - and the numbers are not good.

The new buzz is in addition to speculation earlier this week that the company is making its final steps toward bankruptcy.

In other rumor-plagued paper, Fedders Corp. bonds were seen unchanged. The notes have been at the front lines for the last week, as rumors - and news - have followed the company.

Earlier this week, the company announced it had arranged a refinancing deal. The company is believed to have missed a coupon payment and instead has entered the grace period.

Wednesday's acquisition announcement boosted Movie Gallery Inc. bonds, but activity fell off during Thursday trading. The notes were seen as better, but with very little activity.

Traders across the board were indicating a quiet day in the bond market.

"I'm afraid its one of those nothing days," a trader said.

Remy bonds drop

Speculation moved Remy's notes yet again, as buzz that the company would post poor quarterly results circulated.

"Every shop was trading Remy," a trader said, adding that the distressed auto paper was the main focus during the day.

"It's a staple," he said. "Everybody has Remy in their portfolio."

A trader said the rumor prompted a 5-point loss in Remy's bonds during morning trading, though the notes did come back a bit. He placed the 8 5/8% notes due 2007 at 73.5 bid, 74.5 offered, while the 11% bonds due 2009 saw a 13 bid, 16 offered.

At another desk, a trader saw the company's 8 5/8% senior notes fall to 73 bid, 75 offered from prior levels at 77 bid, 79 offered. He saw its subordinated 11% notes drop to 15 bid, 17 offered from 20 bid, 22 offered on Wednesday, and its 9 3/8% subordinated notes due 2012 plunge to 14 bid, 16 offered from 18 bid, 20 offered.

Another trader saw the 11s at 14 bid, 15 offered, which he called a 4-point drop, and opined that he didn't think the senior bonds had moved much, estimating them "down a point or so, I guess," at 72 bid, 73 offered.

A trader said he had not seen any official earnings report yet, but "the trades sure seemed to indicate [the rumor] was true."

Rumor and speculation has fueled Remy's fires this week, prompting investors to drop its bonds like a bad transmission. The first rumor centered on the company's still-unconfirmed search for debtor-in-possession financing. Though the company has not commented on the rumor, if the company is looking for DIP financing, it can mean a bankruptcy filing might be right around the corner.

The company has interest payments coming due on its bonds on April 15 and on May 1, which could give some indication about what kind of shape that company is actually in.

Calls made to the company were not returned Thursday.

Fedders unchanged, up

Fedders was seen unchanged during a day of quiet trading. One trader placed the 9 7/8% notes due 2014 at 56 bid, 56.5 offered, just up slightly from the day's opening figures in the 55 levels.

The trader added that the Liberty Corner, N.J.-based company's stock slid 7 cents, or 7%, to close at 93 cents.

"It may not sound like a lot, but it is on a dollar stock," he said.

However, a trader called the bonds - which have been gyrating around wildly in the 50s all week - up 1½ points on the session to end at 55.5 bid, 56.5 offered.

The company announced earlier this week that they had signed a commitment letter with Goldman Sachs Credit Partners LP to refinance some of its debt. While still unconfirmed, it is widely believed that the company missed its coupon payment due last week and there is no indication when the payment will be made.

Calls made to the company were not returned Thursday.

Movie Gallery firms

Dothan, Ala.-based Movie Gallery was seen a point better by one trader, who pegged the 11% notes due 2012 at 91.

"They were up a little bit at the open; then they died," he said.

Another trader saw the notes up perhaps half a point, to 90.5 bid, 91.5 offered.

The movie rental chain announced Wednesday that it had acquired MovieBeam Inc., an on-demand movie services provider. The acquisition, expected to be priced at less than $10 million, caused heavy activity in the company's bonds and equity.

Auto names mixed

Among the already bankrupt auto parts names, Delphi Corp.'s 6.55% notes that were to have come due last year were seen trading about a half-point better, at 111.5 bid, 112.5 offered, while Dana Corp.'s 6½% notes due 2008 firmed by a point to 73.5 bid, 74.5 offered.

But a trader saw absolutely no movement in Collins & Aikman Corp.'s bonds, despite the news that the Troy, Mich.-based automotive interior components maker - which is selling off its various operations - had signed a letter of intent with Cadence Innovation for the sale of a "significant portion" of its North American plastics business assets and operations. Terms were not immediately released, although the company said that details will be made available when Collins & Aikman notifies the bankruptcy court.

Despite that news, the trader quoted the company's 10¾% senior notes due 2011 unchanged at "3-4 - close the door."

Also unchanged were Tower Automotive Inc.'s 12% notes due 2013 at 8 bid, 10 offered, and Dura Automotive Systems Inc.'s 8 5/8% senior notes due 2012 at 30 bid, 31 offered and its 9% subordinated notes due 2009, languishing at 4.5 bid, 5.5 offered.

MagnaChip down, Tembec up

A trader saw MagnaChip Semiconductor Ltd.'s 8% notes due 2014 down 2 points to 67 bid, 68.5 offered. He did not see any fresh news out on the South Korean computer chip manufacturer but offered that the bonds "have been tanking all this past week."

Tembec Inc.'s bonds were seen better on the session, with a trader quoting its 8½% notes due 2011 up 2 points at 73 bid, 74 offered.

A market source at another desk saw those bonds up 2½ points at 73.5 bid. There was no fresh news out on the Montreal-based forest products company.

Paul Deckelman contributed to this article.

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