WestPoint Stevens rises as loss shrinks; Revlon gets $125 million investment; Loral falls on big loss

By Carlise Newman

Chicago, Nov. 14 - Friday again was focused on earnings, with WestPoint Stevens Inc. paper rising modestly after the company reported a narrower loss for the third quarter.

Net income for the third quarter of 2003 was a loss of $12.8 million, or $0.26 per share, compared with a net loss of $16.6 million, or $0.33 per share in 2002.

Loss before taxes for the third quarter of 2003 was $16 million compared with a loss before taxes in 2002 of $25.9 million. Included in the third quarter of 2003 were $8.7 million in expenses related to the company's restructuring initiatives, and $12.7 million in expenses related to the bankruptcy proceedings, compared with $16.1 million in expenses in the third quarter of 2002 related to WestPoint Stevens restructuring initiatives.

"It wasn't great news, but it was good enough to give the bonds a decent jolt," one trader said.

WestPoint Stevens' 7 7/8% notes due 2008 were up 2 points to 13½ bid, according to a trader. They had fallen nearly 2 points Thursday. Earlier in the week, the bonds were slightly higher at 15 bid.

"The company is continuing to move forward on a consensual basis with negotiating new terms for a Chapter 11 plan of reorganization with all its major creditor constituencies. While the retail environment remains challenging we are seeing signs of continued improvement in the fourth quarter of 2003 and are well positioned to benefit from recent market opportunities associated with Pillowtex's liquidation," said M.L. Fontenot, president of the company.

Pillowtex Corp. filed for Chapter 11 in July with an agreement to sell its assets to GGST LLC, including substantially all of its plants, equipment and brands, subject to court approval. The sale went through in October, for $121 million.

WestPoint, a West Point, Ga.-based home furnishings manufacturer, said its net sales for the third quarter of 2003 decreased 3% to $445.2 million compared with $460.5 million a year ago.

Meanwhile Revlon Inc. bonds jumped after the company said that Ron Perelman's MacAndrews & Forbes Holdings Inc. has agreed to provide up to $125 million to Revlon in 2004, to enable the company to continue to execute its plan (see story elsewhere in this issue).

MacAndrews & Forbes also agreed to provide $25 million that can be made immediately available to Revlon.

Revlon's 8½% notes due 2006 were up two points to 68 bid. The 8 5/8% due 2008 were up 2 points to 55 bid, according to a trader. The bonds rose a modest ½ point Thursday but earlier in the week were up as much as 4 points.

"Revlon has been smoking lately and Perelman's investment will keep them going for a while," he said.

The $100 million loan also requires consent of the banks included in the company's credit agreement. Revlon expects bank consent to be obtained with an amendment and waiver of the credit agreement, which should be obtained before Jan. 31, 2004.

"My interest is in creating long-term and sustainable value and I believe Revlon, with its great brands, strong leadership team, reversal of market share declines and stabilizing sales, is making substantial progress towards that end. I am confident that this investment will provide Revlon with the resources to continue to strengthen the business and its underlying profitability for the long-term," said Ronald Perelman, chairman of MacAndrews & Forbes, in a news release.

Revlon is a New York-based cosmetics company.

In other news, Loral Space & Communications Ltd. said its third-quarter loss more than doubled, as a weak economy drove down sales.

The New York-based satellite company said its loss rose to $128 million, or $2.90 per share, from $57 million, or $1.53 per share, a year earlier. Revenue fell 78 percent to $47 million.

Loral's 10% notes due 2006 were down 2 points to 79 bid, according to a trader.

"That was a big loss for them. I'm surprised the bonds didn't show more of an impact, although they've been pretty positive with the Intelsat sale in the background," he said.

Intelsat Ltd. said on Tuesday it could complete its $1.1 billion purchase of the North American satellites of bankrupt Loral as early as year-end.

Loral said results reflected "the negative impact of the economic downturn on the space industry and Loral's business units." It said this resulted in "industrywide pricing pressure," though its contract renewal rate remains at about 80%.

The company said that since the end of the third quarter, its Space Systems/Loral satellite-making unit has received $75 million of advances on orders for three satellites.

Elsewhere, Amerco's 7.85% due 2003 were seen 1 point lower at 96 bid, despite news Thursday that the parent of U-Haul reached an agreement with its official committee of unsecured creditors about the treatment of their claims under the company's reorganization plan, drawing an agreement from the committee to support the plan.

Under the terms of the agreement, the holders of over $700 million of unsecured debt would receive a combination of cash and new notes in full payment of their claims, with no dilution of the company's existing equity.

In other news, Adelphia Communications Corp.'s 9 7/8% due 2007 were down 1 point to 84 bid.

Of late, the bonds had been trending higher in the mid- to high-80s. But "it's hard to dictate a pattern for Adelphia because you can see the bonds anywhere from 5 points up to 5 points down for no real reason," one trader said.

Finova Group Inc. rose to 56 bid, 56½ offered from 53 bid, 53 ½ offered. The paper got a boost on Wednesday when the company's 10-Q said it bought back $100 million of senior notes during the quarter during the quarter, and the bonds rose to 52 bid, 53 offered from 50 bid, 51 offered.

(Paul Deckelman contributed to this report)

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