Dura continues slide, other parts names follow; McLeod, Fleetpride price

By Paul Deckelman and Paul A. Harris

New York, Sept. 19 - Dura Automotive Systems Inc.'s bonds continued their slide toward oblivion on Tuesday as the troubled Rochester Hills, Mich.-based automotive components company's senior notes fell several more points down into the mid 50s. Dura's bonds and shares have been roiled over the past few sessions amid renewed talk that bankruptcy is a distinct possibility.

That helped to pull down other auto-related names, such as Tower Automotive Inc., Delphi Corp. and Dana Corp., which are already bankrupt, as well as Lear Corp., which is not.

One auto name which was seen going nowhere Tuesday was Ford Motor Co., even after both Standard & Poor's and Moody's Investors Service downgraded Ford's credit ratings and those of its Ford Motor Credit Co. financing arm in the wake of debt-market dismay with the company's latest version of its "Way Forward" turnaround plan - which many feel does not go far enough.

A high yield syndicate official marked the broad market lower on Tuesday, citing profit-taking after the market's strong run dating back to Labor Day and negative sentiment trailing downgrades in the credit ratings of Ford.

Meanwhile the primary market's needle moved a little as two issuers came with a tranche apiece.

The day's total issuance was $270 million.

FleetPride refinances bridge

FleetPride Corp. priced an unannounced $150 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 11½% on Tuesday.

Banc of America Securities and Deutsche Bank Securities were joint bookrunners for the deal, which was brought to repay the bridge facility put in place to fund the acquisition of the Texas heavy duty truck and trailer parts distributor by Investcorp, Banc of America Capital Investors and members of management.

A source close to the deal said that there had been no official price talk.

McLeodUSA upsizes

Elsewhere McLeodUSA Inc. priced an upsized $120 million issue of five-year senior second secured notes (B3/B-) at par on Tuesday to yield 10½%.

The yield came on top of price talk and the deal was increased from $110 million.

Jefferies & Co. ran the books for the debt refinancing and general corporate purposes deal from the Iowa-based telecom.

Secondary market traders said they had not seen the new bonds of either Fleetpride or McLeod in aftermarket dealings, noting that the relatively small and illiquid issue that each company brought to market was likely bought up and put away.

Service Corp. launches $500 million

Those mourning a slower-than-expected build-up to the new issue calendar since Labor Day might take heart in Tuesday's launch of a $500 million two-part deal from Houston funeral services firm Service Corp. International.

The company will undertake a trip along the investor roadshow trail for its senior notes (existing ratings Ba3/BB) beginning Wednesday.

The offering will be comprised of a $250 million tranche of eight-year notes and a $250 million tranche of 12-year notes.

JP Morgan and Merrill Lynch & Co. will bear the books for the acquisition funding and debt refinancing deal.

American Entertainment floater

Finally, late Tuesday a sell-side source told Prospect News that American Entertainment Properties Corp. is believed to be in the market with a $250 million offering of eight-year senior floating-rate notes via Bear Stearns.

The deal, to fund a dividend to the prospective issuer's ultimate parent, American Real Estate Partners, LP, is expected to price after a brief roadshow.

American Entertainment Properties is the parent of Las Vegas-based American Casino & Entertainment Properties.

Dura drives distressed autos lower

Back among the established names, "distressed autos" was where the bulk of the action was said a trader, who estimated that some names were down at least "3 or 4 points."

They were led lower by Dura, whose 8 5/8% senior notes due 2012 were seen having lost at least 2 points, the trader said, to 57.5 bid, 58.5 offered, while another trader saw the bonds at that same level - but called them down as much as 4 points on the day.

At another desk, a trader said he had seen the bonds fall as low as 56 bid, 58 offered as "all of the autos went straight down."

Dura's subordinated 9% notes due 2009 meantime, which have already been beaten down into the single-digit neighborhood, were seen little changed, with several traders pegging them at around 9 bid, 10 offered, though one called them 8 bid, 10 offered. Most of the recent trading in Dura has been in the 8 5/8% notes, which are seen by market players as still having at least some value.

Those 8 5/8s have plunged precipitously in the last week; they were trading in the high 70s for much of August, although they closed out that month having eased to around 73. The bonds stayed in that context for the first roughly two weeks of this month - but slipped several points into the upper 60s, around the middle of last week, when Lehman Brothers warned that a bankruptcy filing in the next couple of months was likely.

That was followed by market rumors that the company was having difficulty lining up the debtor-in-possession financing it would use to keep going after a filing, as well as a judge ruling against Dura's attempts to force one of its suppliers to continue selling parts, even though Dura owes the supplier more than $1 million.

Those negative developments continued to hammer the bonds a few points every day down to the current upper-50s levels.

Dura's Nasdaq Global Market-traded shares meantime fell another four cents (10.86%) to 33 cents apiece, although volume of 462,000 was only slightly higher than the average turnover in that name.

In a further blow, the Nasdaq informed Dura late Tuesday that it was in danger of being de-listed from the Nasdaq Global Market, since its price has been below $1 per share for at least 30 consecutive days. However, the company has six months in which to cure the embarrassing situation - one possibility is a reverse stock split - and even then, it might still prevent total de-listing by transferring to the smaller and less prestigious Nasdaq Capital Market from Nasdaq Global Market.

Other partsmakers follow suit

With Dura leading the way downward, "all told, it was a pretty rough day" for the sector, one of the traders said.

One of the hardest-hit names was bankrupt Novi, Mich.-based vehicular frames maker Tower Automotive, whose 12% notes due 2013 fell 4 points, he said, to 26 bid, 27 offered.

"Tower got smacked," another trader said. "They got hit right from the opening bell."

He quoted the notes at 25.75 bid, 26.75 offered, which he said was a good 10 points below the levels that the bonds held only a few days ago.

On Monday, Tower said in a filing with the Securities and Exchange Commission that it anticipates costs of some $9.2 million to close a plant in Upper Sandusky, Ohio. It expects $1.1 million of employee-related costs, $4.3 million for asset impairment charges, $1.5 million for other non-cash charges and $2.3 million of other costs.

Going forward, Tower expects another $3.4 million of future cash expenditures in connection with the Sandusky plant, which employs 135 people. Tower expects to shift the work now done at the Ohio site to its other plants in North America.

Elsewhere, a trader saw other sizable losers among the auto sector, including bankrupt Troy, Mich.-based parts supplier Delphi Corp., whose 6.55% notes scheduled to come due next month were down 2 points to 90 bid, 91 offered, while bankrupt Toledo, Ohio-based parts concern's 6½% notes due 2008 were off 3 points at 72.5 bid, 73.5 offered.

Cooper-Standard, Lear sink

Among the non-bankrupt auto names still getting clobbered, he said was Cooper Standard Automotive Inc., whose 11% notes due 2012 were down 2 points at 91 bid, 92 offered.

At another desk, a trader saw Lear's 8.11% notes due 2009 down a point at 95 bid, 95.5 offered.

Ford unmoved by ratings cuts

However, all of the traders agreed that Ford's bonds hung in there, even after Moody's cut Ford's B2 rating to B3, with a negative outlook, while S&P lowered Ford's ratings and those of the credit arm to B from B+ previously, with a negative outlook.

A trader saw the Dearborn, Mich.-based number-Two domestic carmaker's signature 7.45% notes due 2031 unchanged at 76.25 bid, 76.75 offered, while Ford Credit's 7% notes due 2013 were also steady at 91.25 bid, 92.25 offered.

The bonds of both entities had retreated last week from their recent highs when Ford - wallowing in red ink amid sagging sales and an alarming loss of market-share - unveiled plans Friday to try to cut its cost structure down to size by offering all 75,000 of its United Auto Workers-represented hourly workers buyouts and early retirement packages, and saying it would cut an additional 10,000 white-collar jobs - about one-third of its professional, technical and administrative employees.

However, analysts generally said that the initiative was a case of "too little, too late" and that more drastic cuts would have to be made - and some factories closed as well, if Ford was to have any chance at all to turn its situation around. Critics of the plan also said that Ford should look to replenish its depleted coffers by selling a controlling stake in the valuable Ford Credit arm, much the way arch-rival General Motors Corp. did earlier this year with its General Motors Acceptance Corp. financial arm in a deal that netted the auto giant $14 billion.

The ratings agencies cited the company's anticipated weak operating performance and cash-flow generation through 2009, as well as its rapid rate of cash burn.

Dole spinach worries

Apart from the autos, which were "the big losers," a trader said, "the market was steady to up ¼ to ½ point."

One exception, he said, was Dole Foods, whose 7¼% notes due 2010 were off ½ point at 93.5 bid, 94.5 offered. He cited the burgeoning story about tainted spinach, noting that Dole, a fruit and vegetable producer, could have some exposure there. The company's bonds, he said, had been easier since the spinach news broke on Friday.

However, he said, Dole sector peer Chiquita Brands International Inc.'s bonds, which usually zig-zag in tandem with Dole, "held in there," since, he said, the Cincinnati-based produce company has little or no exposure to the spinach market. Chiquita's 8 7/8% notes were steady at 94.5 bid, 95.5 offered and its 71/2s stayed at 90 bid, 91 offered.

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