Werner Holdings rebounds; Loral higher as more satellites sell; American Airlines sees profit

By Carlise Newman

Chicago, Oct. 22 - Werner Holding Co. rebounded Wednesday from the very low levels it touched after the company disclosed that its biggest customer, Home Depot Inc., will discontinue buying stepladders from the Greenville, Pa.-based ladder manufacturer and will review purchases of extension ladders.

The 10% notes due 2007, which had been trading in the 90s at the beginning of the week and were in the low 60s on Tuesday, rebounded to the 74 bid, 75 offered area.

Werner's bank debt rebounded to 94 from 91 where it had fallen from the par or above prior to Friday's disclosure. A fund manager speculated that the situation might not be so bad for Werner, since it still supplies 100% of Home Depot competitor Lowe's metal ladders and Lowe's might take some market share from Home Depot if it cuts out the Werner ladders - extension and step - altogether.

Elsewhere, Loral Space & Communications Inc. was "doing a bit better" on Wednesday after being pummeled Tuesday.

Although the news came out after the close, anticipation over whether the company would sell its remaining satellites to Echostar Communications Corp. or DirecTV brought the bonds higher during the session.

On Monday the company announced that Intelsat Ltd. won a bidding auction for 5 satellites for $1.1 billion.

After the close Wednesday, the U.S. Bankruptcy Court for the Southern District of New York authorized Loral subsidiary Space Systems/Loral to sell other satellites to DirecTV Inc.

Loral's 10% notes due 2006 were down 3 points on the session at 76 bid, 77 offered, one trader said.

"I think we'll see the paper even higher tomorrow, but today was just kind of mess in all issues. It was tough to tell what direction they were headed," he said.

The court approved the construction of two satellites for DirecTV and one satellite for PanAmSat Corp. PanAmSat also has an option to order an in-orbit spare for one of its existing satellites from Loral.

The value of the three new awards is more than $320 million. DirecTV will make advance payments of $25 million on each of its two new satellite orders and PanAmSat will make an advance payment of $25 million on its new satellite order, for a combined cash advance of $75 million.

EchoStar sought to purchase the nearly complete DirecTV satellites, a transaction to which Loral was opposed.

DirecTV agreed to increase the total contract value for the satellites by $25 million to $165 million.

Elsewhere, AMR Corp. got a lift after posting a profit, although slim, in the third quarter.

AMR's 9.73% notes due 2014 were up 4 points at 62 bid, 64 offered

The parent of American Airlines said it earned about $1 million in the July-September period, break-even on a per-share basis, on revenue of $4.60 billion, topping expectations. AMR lost $924 million in last year's third quarter.

The tiny profit marked a stunning turnaround for the world's largest airline, which has lost $6.4 billion in the past 2½ years and nearly filed for bankruptcy in April.

Excluding one-time gains and losses from downsizing, Fort Worth, Texas-based AMR said it would have lost $23 million or 15 cents per share in the most recent quarter. Analysts had expected a loss of 41 cents per share.

UAL Inc., parent of United Airlines, rose in accordance with American's good news. United's unsecured bonds were 1 point higher at 15 bid, 17 offered, a trader said.

"Good news from the airlines always gives the whole sector somewhat of a boost," he said.

America West, ATA, and Alaska Air all posted third-quarter profits Tuesday. US Airways Inc., which emerged from bankruptcy last March, did not.

In other news, WorldCom Inc. paper was slightly weaker Wednesday. The bonds were seen at 36 bid, 37 offered, a drop of 1 point, a trader said.

Elsewhere, Adelphia Communications Corp.'s 10¼% notes due 2011 were seen at 85½ bid, 86 offered, "pretty much sideways," a market source said.

Solutia Inc. bonds fell about 1½ to 2 points Tuesday, and fell another 2 points Wednesday; its 11¼% notes due 2009 were seen at 86 bid, 86¾ offered, while its 7 3/8% notes due 2027 were seen at 54 bid, 57 offered.

Solutia said late last week that it has hired restructuring experts and attorneys to assist the company in its discussions with bondholders. No proposals have been outlined to date.

In other news, Revlon Inc.'s 8 5/8% notes due 2008 were down 1 point at 57 bid after steadily rising for the past week or so.

(Paul Deckelman contributed to this report)

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