Le-Nature's bank debt tightens; Remy bonds roiled on numbers, Rothschild hire

By Paul Deckelman and Sara Rosenberg

New York, Nov. 10 - Le-Nature's, Inc.'s term loan B saw levels continued to tighten up on Thursday as the bid inched higher, although there was no fresh news seen out on the bankrupt Latrobe, Pa., manufacturer of flavored bottled water and other beverages.

In the junk bond market, Remy International Inc.'s bonds fell sharply after the Anderson, Ind.-based manufacturer of automotive electrical systems announced a wider third-quarter loss versus a year ago, and said that it had retained Rothschild Inc. as an advisor to help it explore various refinancing alternatives. The bonds recovered some - but not all - of their early losses after a morning conference call.

Moving in the other direction were the bonds of the bankrupt San Jose, Calif.-based power producer Calpine Corp., which posted its first quarterly profit in two years as it benefited from hotter weather.

Also on the upside was Avondale Mills Inc., although traders saw no fresh out about the Monroe, Ga.-based textile producer, which is in the process of liquidating its assets.

Le-Nature's loan seen tighter

Traders in the market for distressed bank debt said that the company's term loan B closed out the day quoted at 43 bid, 45 offered, compared to Thursday's closing levels of 42 bid, 45 offered.

Le-Nature's is currently reorganizing in Chapter 11 after having an involuntary Chapter 7 liquidation action filed against it Nov. 1 by disgruntled shareholders converted.

The involuntary Chapter 7 had been filed by creditors amidst claims that the company falsified documents, showed discrepancies in financial results, diverted funds and destroyed documents.

The company's 9% notes due 2013, meantime, were seen at 13 bid, 15 offered, up a little from lows around 11 bid, 13 offered earlier in the week.

Those bonds had been trading around par bid at the beginning of the month, then plunged as low as the 9-10 area on the revelations about the company's problems, before coming off those lows and getting as good as 14 bid when the Chapter 7 involuntary liquidation proceedings were converted to a standard Chapter 11 reorganization.

Remy 'on a ride'

Elsewhere in the junk market, Remy International was one of the few big movers on a day mostly dominated by new issues, traders said.

One saw the company's bonds "go on quite a ride," with its 8 5/8% notes due 2007 opening at 88 bid, 90 offered, falling as low at 80 bid, but then coming part of the way back to end at 83 bid, 85 offered, still down five points on the day.

The 11% notes due 2009 opened at 46 bid, 48 offered, fell as low as 33 bid, and then closed at 38 bid, 40 offered.

The trader also saw Remy's 9 3/8% notes due 2012 open at 41 bid, 43 offered, drop as low as 27 bid, 29 offered, and then finish at 35 bid, 37 offered.

The Remy bonds fell after the company - which makes and markets automotive electrical and electronic components under the well-known Delco Remy brand - reported an operating loss of $3 million for the third quarter ended in September, a deterioration from the $1.5 million operating income in the comparable quarter in 2005. Net loss for the third quarter increased by $2.5 million to $30.5 million compared with a net loss of $28 million for the same period last year.

Remy also announced that Rothschild Inc. has been retained to provide advice and assistance regarding refinancing alternatives. Remy's president and chief executive officer, John Weber, said the company "continue[s] to make progress on the potential divestiture of non-core businesses. Rothschild's role is to assist us in the optimal application of proceeds from such divestitures. It is important we access the best advice we can to help us make the right decisions."

A trader noted that several weeks ago, Remy bonds had traded off on market speculation that Rothschild had been hired, with some investors apparently feeling that the investment bank was being brought aboard in preparation for a possible bankruptcy filing - strictly unofficial and unconfirmed speculation which has not panned out.

The Remy bonds moved back up after the conference call at which Weber and the other executives reassured investors about the company.

The CEO went on to emphasize that Remy continues to make its scheduled interest payments as required by its loan agreements and indentures.

Remy reported debt, net of cash-on-hand, of $725 million at Sept. 30, compared to $722 million at Dec. 31, 2005, according to Kerry Shiba, the company's chief financial officer.

Available liquidity, including unrestricted cash of $25 million, was $119 million at the end of the third quarter.

"Our liquidity remains strong," Shiba said.

Calpine gains

Calpine bonds were seen firmer, following the company's report of its first quarterly profit in two years.

The company reported net income of $1.7 million, or nil per share, compared with a net loss of $216.7 million, or 45 cents per share, a year ago. Calpine cited spark-spread improvement in the face of unseasonably warmer temperatures, which spurred demand for power to run air conditioners.

A trader saw its 8½% notes due 2008 up 3 points at 69 bid, 71 offered, and its 7¾% notes due 2009 two points up at 75 bid, 77 offered.

Avondale gains on no news

Avondale Mills' 10¼% notes due 2013 were pegged at 111 bid - well up from recent levels at 99.75, a market source said.

No news was seen out on the company, which is in the process of liquidating its operations and shutting down following a disastrous railroad accident near one of its textile plants in early 2005.

Avondale is distributing a $215 million insurance settlement it collected for damages arising from the railroad crash and chemical spill near one of its South Carolina textile factories. The toxic spill killed nine people, including six employees, disrupted production and forced the company to spend large sums trying to unsuccessfully clean up the factory.

Avondale has said that it will liquidate its assets, and pay its bondholders and other creditors in full.

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