Dura bonds fall on turnaround firm buzz; Movie Gallery better

By Paul Deckelman and Sara Rosenberg

New York, Aug. 14 - Dura Automotive Systems Inc.'s bonds were seen down several points Monday, nudged into the breakdown lane by market scuttlebutt that the embattled Rochester Hills, Mich.,-based automotive components supplier had hired a well-known New York restructuring firm - later reported by one news service to be Miller Buckfire & Co. - a development seen by some in the market as an ominous indicator that a court date might not be too far away.

Elsewhere, Movie Gallery Inc.'s bonds - which had fallen sharply on Thursday after the company stunned Wall Street by reporting a loss rather than the expected solid profit, and which then continued to decline on Friday - were seen having partially rebounded in Monday's dealings.

And Sea Containers Ltd.'s bonds were lower after the company warned Friday that it may not pay off a series of notes that are slated to come due just 60 days from now.

Sources in the bank loan market meantime said that there was little or no activity in the paper of distressed names Monday, with some players having simply hung out the "gone fishing" sign.

Dura's bonds, issued by its Dura Operating Corp. subsidiary, were seen headed lower Monday, as its 9% subordinated notes due 2009 dropped 2 points to 22 bid, 23 offered, a trader said, amid an otherwise largely quiet auto sector.

A trader in distressed notes saw those bonds get as low as 21 bid, 23 offered late in the day, while the company's 8 5/8% senior notes due 2011 were a point lower at 76 bid, 77 offered.

Yet another trader saw the Dura seniors at 77 bid, 78 offered, which he called a 1 point loss, while the sub bonds were 2 points down at 22 bid, 23 offered.

A trader cited market rumors that Dura - struggling to return to profitability and to avoid having to follow a number of auto supplier-sector peers into bankruptcy - had hired a restructuring firm to advise it, "so some people are quoting them flat [i.e. without the accrued interest], although they were pretty much trading with [interest]" even though "people were trying to bid the bonds flat."

On Monday evening, well after the market had closed, The Wall Street Journal's online news site reported that Dura had in fact hired New York-based restructuring specialist firm Miller Buckfire & Co. "to help with financial and operational issues." The report cited two unidentified automotive sources said to be familiar with the move.

The Journal noted that earlier this year, another auto supplier well known to junk marketeers - Toledo, Ohio-based Dana Corp. - hired Miller Buckfire less than a month before it filed for Chapter 11.

Dana's bonds, meantime were generally seen little moved on the session, with a trader quoting its 6½% notes due 2008 at 83 bid, 83.25 offered, unchanged, and its 5.85% notes due 2015 at 73.25 bid, 74.25 offered, down ¼ point. While he saw Dana's 7 1/8% notes due 2029 at 76.75 bid, 77.75 offered, down ¾ point on the session, he saw financing arm Dana Credit Corp.'s 8 3/8% notes due 2007 unchanged at 91.75 bid, 92.75 offered.

Bankrupt Troy, Mich.-based auto components maker Delphi Corp.'s 6½% notes due 2009 were unchanged at 84 bid, 85 offered, while its 7 1/8% notes due 2029 were also steady at 77 bid, 78.5 offered.

Bankrupt Troy-based interior components maker Collins & Aikman Corp.'s 10¾% notes due 2011 were seen at 10 bid, 11 offered, having tightened a point on the offered side, a trader said, but otherwise unmoved. Bankrupt Novi, Mich.-based auto parts maker Tower Automotive's 13% notes due 2013 were unchanged at 52.5 bid, 53.5 offered.

Cooper-Standard higher

Not everyone in the autosphere was on the downside Monday. Tower's Novi neighbor, Cooper-Standard Holdings Inc.'s 8 3/8% notes due 2014 were seen up 2 points to 76.5 bid, 77.5 offered, on "strong numbers," a trader said, as the automotive components maker posted $20.1 million of net income for the second quarter, nearly three times the year-earlier $7.7 million.

Automotive bellwether General Motors Corp.'s benchmark 8 3/8% notes due 2033 were unchanged at 83 bid, 83.5 offered, with "not much going on," a trader said, while GM arch-rival Ford Motor Co.'s 7.45% notes due 2031 were ½ point better at 77.5 bid, 77.75 offered.

Foamex soars

Outside of the automotive area, a trader saw Foamex International Inc.'s bonds up as much as 5 points on the session, at 98 bid, par offered, although he had seen no fresh news about the bankrupt Linwood, Pa.-based foam rubber maker that might explain such a rise.

However, at another desk, a trader saw Foamex's 9 7/8% notes due 2007 and its 13½% notes that were to have matured in 2005, at 93 bid, with no offers, "same as they had been on Thursday."

A market source saw the 13½% bonds around the 99 level, but said he had seen no trades in the previous days against which to match it.

Foamex, yet another trader said was up around 95 bid on the 131/2s, and at one point reached as high as 97 - but added "it was very light volume. It was very illiquid."

Movie Gallery bounces

Movie Gallery's 11% notes due 2012 - which late last week had nosedived an astonishing 20 points, 12 on Thursday and 8 more on Friday, to around the 60 bid level, on the company's unexpected loss Thursday, seemed to have recovered some of their previous verve, with traders reporting the bonds up anywhere from 1½ points to 2 points, at around the 62 level. They saw no fresh news out on the company, and chalked to gain up to a snap-back after last week's awful drubbing.

Equity investors, however, continued to wallow in misery for a third straight session, with the Dothan, Ala. -based video rental chain operator's Nasdaq traded shares down another 16 cents (6.40%) to $2.34.

Sea Containers sinks

A trader saw Sea Containers'10¾% notes slated to mature on Oct. 15 down 2 points on the session at 91.5 bid, 92.5 offered, citing fears that the struggling Bermuda-based maritime and railroad transportation company won't be able to pay those bonds off when they come due.

On Friday, Sea Containers, as part of an update on the company's finances, said the payment "will not be made unless the company concludes that it will be able to pay in full when due its other public notes maturing in 2008, 2009 and 2012 and all other unsecured creditors, and to retain sufficient working capital."

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