Mirant bonds better, Collins & Aikman also; Delphi continues slide

By Paul Deckelman and Sara Rosenberg

New York, Aug. 31 - Mirant Corp.'s bonds were seen solidly higher on Wednesday, distressed-debt traders said, linking the rise to possible developments in the Atlanta-based utility company's ongoing bankruptcy case.

Another bankrupt name seen better was Collins & Aikman Corp. A trader speculated that the Troy, Mich.-based automotive interior components supplier would be announcing its reorganization plans.

In that same auto supplier sector, though, Delphi Corp.'s bank debt continued to slide lower on Wednesday, consistent with its performance all week, and its bonds were also down a point or so for yet another session amid generalized weakness in the sector and investors concerns over whether Delphi will get its hoped-for financial bailout to stay out of Chapter 11.

A trader saw Mirant's busted 2½% convertible notes two points better Wednesday at 90 bid, 92 offered, while its 7.40% notes that were to have matured last year were likewise up a pair, at 101 bid, 103 offered, as were its 7.90% notes due 2009 at 102 bid, 104 offered.

Another trader saw the 7.90s "moving up pretty good" to 102.25 bid, 103.25 offered from 100.75 bid, 101.75 offered. He said that he had seen no real news about the company, but said he had heard that the bankruptcy court overseeing the energy company's reorganization had okayed a collateral transfer agreement.

Also in the bankruptcy courts, Collins & Aikman Products Co.'s 10¾% senior notes due 2011 were seen by a trader having moved up to 37 bid, 38 offered from 35 bid, 37 offered previously, while the company's 12 7/8% subordinated notes due 2012 stayed at 8.5 bid, 9.5 offered.

Another trader, who saw the 101/2s at that same 37 bid, 38 offered level, up 2 points, attributed the rise to investor expectations that Collins & Aikman will announce its business reorganization plans. The company had said some weeks ago that it would announce its reorganization strategy on Aug. 31. As of Wednesday evening, no announcement had yet been seen.

The first trader saw bankrupt Novi, Mich.-based vehicle frame maker Tower Automotive Inc.'s 12% notes due 2013 unchanged at 92 bid, 94 offered, while troubled Linwood, Pa.-based foam rubber maker Foamex International's senior notes were at 87 bid, 89 offered and its subordinated bonds were at 14 bid, 17 offered, "both down a little on the day."

Delphi loans, notes lower again

Bank debt traders said Delphi's term loan was quoted at 102 bid, 102.5 offered, off from levels of 102.375 bid, 102.75 offered on Tuesday, and its revolver was quoted at 94.5 bid 95 offered, compared to levels of 95 bid, 95.5 offered on Tuesday.

The bank debt had opened on Monday around 103 bid, 104 offered on the term loan and around 95.5 bid, 96.5 offered on the revolver.

Over in the bond market, a trader quoting the Troy, Mich.-based automotive electronics supplier's benchmark 6.55 % notes due 2006 down a point on the day at 85 bid, 86 offered, "continuing their slow, steady decline from around 91-92 at the end of last week."

He also saw Delphi's 6½% notes due 2013 likewise down a point on the day, to 75.5 bid, 76.5 offered.

Another trader saw the Delphi 6.55s a point down at 84 bid, 86 offered, while the 2013 61/2s lost a point to end at 75 bid, 77 offered. He also saw the company's 2009 61/2s at 79 bid, 81 offered, and its 7 1/8% notes due 2029 at 70 bid, 72 offered, both off a point.

Delphi is currently looking to former corporate parent General Motors Corp. for some sort of financial bailout and has warned that it could be forced into Chapter 11 if it does not get concessions from the United Auto Workers union and help from GM.

The company's bank debt has been under pressure all week because media reports emerged over the weekend saying that UAW wouldn't support all the concessions being sought by the companies.

Delphi's fortunes are closely linked to GM - which is still its best customer, even if it is no longer Delphi's corporate parent - but GM, like rival Ford Motor Co., is singing the blues these days, with high gasoline prices cutting into the sales of its high-margin SUVs and light trucks. GM also has its own labor cost problems that it is seeking to resolve with the UAW - which so far has expressed skepticism about GM's demands for cost concessions.

On Wednesday, GM bonds were lower, with the giant automaker's flagship 8 3/8% notes due 2033 down 1¼ points on the session to 83.75 bid, 84.25 offered. A trader said that the bonds' spread over comparable Treasury notes "moved over 600 again on the bid side, the first time they were over 600 since July 8. That wasn't good."

Except for companies having significant news - or being expected to have some, like Collins & Aikman - automotive sector bonds in general were on the downside on Wednesday due to sharp spikes in gasoline prices in the wake of Hurricane Katrina's disruption of oil production in the Gulf of Mexico.

Even as crude prices fell six cents per barrel of light sweet crude for October delivery on the Nymex, to $69.75, gasoline futures spiked above $2.90 a gallon on Wednesday - up a dollar from last Friday's settlement. Prices at the pumps soared above $3 per gallon in many parts of the country, pushed upward by fears of the hurricane's impact on production in Louisiana and the Gulf, from which the United States gets about a quarter of its vast daily petroleum needs. When the 150 mile per hour storm slammed into the Gulf on Monday, it shut down nearly all of the area's drilling output, and closed down eight refineries and several pipelines along the coast, according to government figures.

President George Bush's decision to release crude oil from the federal government's Strategic Petroleum Reserve to make up for the disruptions in the crude supply from the hurricane were seen having helped to bring down the crude price, but had little or no impact on the gasoline price, since the sharp rise in the price of distillates like gasoline and aviation fuel over the past few months is seen as more of a function of tight domestic refinery capacity amid soaring gas demand - the last new U.S. refinery opened back in 1976 - rather than as a function of crude supply.

Airlines lower as oil rises

Also feeling the pinch are the airlines, whose fuel costs have been climbing steadily skyward, and dragging their bottom lines steadily downward.

On Wednesday a trader saw Northwest Airlines Corp.'s 8 7/8% notes due 2006 off a point at 62 bid, 64 offered. Its 9 7/8% notes due 2009 were also off a point at 50 bid, 52 offered and its 10% notes due 2009 lost a point to 44 bid, 46 offered.

A trader saw troubled Delta Air Lines Inc.'s 7.90% notes due 2009 fall to 17 bid, 18 offered from 18.25 bid, 19.25 offered. Delta's 8.30% notes due 2029 eased to 16 bid, 17 offered from 17.5 bid, 18.5 offered.

Standard & Poor's warned on Wednesday that higher fuel prices, as well as disrupted service in its important Southeastern region in the wake of the giant storm will likely only worsen Delta's precarious financial state, and the ratings agency predicted that Atlanta-based Delta will probably file for bankruptcy in a matter of weeks. Delta had no immediate comment.

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