Collins & Aikman bank debt continues slide; Calpine bonds better

By Paul Deckelman and Sara Rosenberg

New York, July 24- The downward spiral of Collins & Aikman Corp.'s bank debt continued into Monday's session, even though market participants saw they had seen no public news emerging that might explain the sudden fall off in the bankrupt Troy, Mich.-based automotive interior components maker's paper.

Collins & Aikman's bonds, which of late have been sliding along with the bank debt, were meantime seen to have steadied on Monday with no further erosion.

Elsewhere, bond traders saw Calpine Corp.'s notes up around 2 points across the board, although here again there was no direct hard news peg on which one could hang a reason for the rise. However, the bankrupt San Jose, Calif.-based power generating company was seen by some observers as benefiting from record demand for electricity as the mid-summer mercury continues to climb, particularly in such key Calpine markets as its home base of California and in Texas.

A bank loan trader said that Collins & Aikman's debt continued to erode Monday, even though nobody had seen any specific negative news that might explain such movements.

The trader saw the bank debt closing out the day quoted at 84 bid, 85 offered, down from Friday's levels of 84.75 bid, 85.75 offered, after having spent all of last week inching lower as well.

That Collins & Aikman paper dropped all the way from the 92 bid, 93 offered levels that were seen at the close of business on July 14.

Meanwhile, bond traders saw dealings in the company's 10¾% notes due 2011 appear to even out after those bonds had also spent all of last week dropping from the high 20s into the mid-teens. A trader in distressed notes, for instance, quoted those bonds unchanged on the day at levels around 16.5 bid. 17.5 offered. Another trader also saw the bonds steady at those levels.

But yet another trader actually saw the bonds a little firmer, believing that the fall had been overdone. He quoted the 103/4s at 17 bid, 18 offered, up a point. A market source at another desk saw those bonds at 17.125, a gain of more than a point on the session, although the company's nearly worthless 12 7/8% notes due 2012 were seen having fallen to 2 cents on the dollar, down from about 2¾ on Friday.

Collins' bonds and bank debt had been trading at solidly firmer levels earlier in the month, boosted by speculation that buyers might emerge for the company's assets - but when that speculation failed to pan out the bonds and the bank paper both began their slide.

One name which has been bandied about as possible buyer of Collins & Aikman's assets has been that of billionaire financier Wilbur L. Ross, whose International Automotive Components Group has been picking up assets in the embattled automotive components industry at favorable prices in hopes of duplicating the success that Ross found several years ago when he consolidated the beleaguered United States steel industry by buying up mills and other assets, forming them into his International Steel Group.

In March, the tycoon bought a portion of Collins & Aikman's European business for an undisclosed amount, and just last week, Collins & Aikman rival Lear Corp. sold its European car interiors business to International Automotive in exchange for an equity stake.

Looking to further fatten his already formidable war chest in advance of a future shopping spree, Ross agreed over the weekend to sell his investment company, WL Ross & Co. LLC, which he founded six years ago, to British investment company Amvescap plc. The deal is valued at as much as $375 million.

Most auto names quiet

Traders saw little else going on in the distressed automotive sector Monday.

"A lot of these names were unchanged, " one said, in quoting market bellwether General Motors Corp.'s benchmark 8 3/8% notes due 2033 steady at 80.75 bid, 81.25 offered, while its General Motors Acceptance Corp. financing unit's 8% notes due 2031 were likewise unchanged at 97.75 bid, 98.25 offered. GM rival Ford Motor Co.'s flagship 7.45% notes due 2031 were up a point at 73.5 bid, 74 offered, although he remarked that "we didn't see that many quotes in Ford [Monday]." Ford's financing arm's 7% notes due 2013 were ½ point lower at 87.5 bid, 88 offered.

Among the bankrupt automotive names, Novi, Mich.-based vehicular frames maker Tower Automotive Inc.'s 12% notes due 2013 were seen unchanged at 56 bid, 57 offered after having also fallen sharply over the past week or so. Bankrupt Toledo, Ohio-based components company Dana Corp.'s 6.50% notes due 2008 were up perhaps ½ point at 82 bid, 83 offered, while its 5.85% notes due 2015 did better, up a point at 74.5 bid, 75.5 offered.

Calpine higher

A trader saw Calpine's bonds up around 2 points "all around." Its 8½% notes due 2011 rose to 50.5 bid, 51.5 offered.

Calpine's 8¾% notes due 2007 were seen up 2 points on the session around the 74 level. A trader saw Calpine Canada Energy Finance II ULC's 8½% notes due 2008 two points better at 65 bid, 67 offered.

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