Delphi bonds lose ground; Exide debt dips despite good numbers; SIDE up slightly; Charter notes weaker

By Stephanie N. Rotondo

Portland, Ore., Nov. 9 - A day before a long holiday weekend, the distressed bond market was generally weaker yet again on Friday.

"The market is getting walloped," a trader said.

"When anything has traded, it has traded down," remarked another trader.

Leading that trend was Delphi Corp., whose bonds slipped as much as 6 points on the news that Appaloosa Management LP was having second thoughts about an amended investment plan.

"It was all Delphi today," a trader said.

The amended investment plan was slated to go to court on Thursday, but Delphi asked the court to push the hearing back to give them more time to negotiate. According to Appaloosa, Delphi has not met certain terms of the deal.

Elsewhere in that sector, even healthy earnings could not help Exide Technologies Inc.'s bonds - at least not in the current market, a trader said.

But another trader said that, while the debt was down in relation to its last print over a week ago, it might not be fair to call them "down."

AMH Holdings Inc., better known in the market as SIDE, also posted better numbers. Its bonds attempted to rally but only managed to end the week a point higher.

Trading in Charter Communications Inc.'s bonds was "not nearly as active" as had been in the previous session, a trader said, though the notes were still lower on the day. The cable operator's debt lost as much as 7 points on Thursday after posting a wider quarterly loss.

Delphi bonds slide

Delphi's bonds were cracking under the pressure as the market learned that a key investor was backing away from its investment deal.

A trader called the 6½% notes due 2013 down 6 points at 74 bid, 74.5 offered and the 6.55% notes that were to have matured last year down 4 points at 76 bid, 77 offered. The trader used such terms as "terrible," "awful," "nightmare" and "ugly" to describe the turn of events.

Another trader quoted the 7 1/8% notes due 2029 at 76 bid, 77 offered, while at another desk, a trader pegged that issue at 75.5. The trader also saw the 2013 issue at 74 and the 6½% notes due 2009 at 74.5.

Another trader called Delphi the "name of the day," quoting its 6.55% notes going all the way down to 69 bid, 71 offered before coming off that low to end at 74 bid, 76 offered - down from Thursday's 79.5 bid, 80.5 offered.

According to a spokesperson for Appaloosa, the original investment deal - which calls for an equity infusion of $2.55 billion - is still on. The courts approved that deal in August. What is up for grabs is an amended plan, which was filed in October. Appaloosa is not bound by that plan, as the hearing to approve it was pushed back to later this month.

But Appaloosas claims that Delphi has not met certain terms of that deal, and therefore it is back to the drawing board.

"[Delphi] could hold them to it," said one trader. "They have that option. But whatever it was that caused Appaloosa to do that is probably listed as a material change, so [Appaloosa] feels they have an out."

The parties have until Nov. 29 to iron out their issues.

Exide dips despite good numbers

Elsewhere in the autosphere, Exide Technologies posted "healthy numbers," according to one trader - but the bonds fell 2 points anyway.

The trader quoted the 11½% notes due 2013 lower at 96.5 bid, 97 offered.

"That's the market," he said, citing weakness in the market as a whole. "Everything is being thrown out."

Still, another trader was not sure that it was fair to say that the debt was weaker.

"There have been no trades in a week," he said. "So it is hard to say it's down. It's down relative to the last print [at 98 bid, 98.5 offered], but not necessarily lower in general."

The automotive parts manufacturer reported a net loss of $14.8 million, compared to a net loss of $35.1 million for the same period the previous fiscal year. Adjusted EBITDA was $50 million, 50% better than $33.4 million posted a year ago.

"They had a good quarter," a trader said.

SIDE notes rally

Associated Materials, more commonly referred to as SIDE, also posted better quarterly numbers, following Exide's lead.

Still, a trader said the bonds attempted to rally but gained only a point before getting hit.

The trader pegged the notes due 2014 at 65.5.

"Good earnings are coming out and then there is the weaker market," he said of the positive figures not being much help to corporate debt.

The company posted a net income of $17.4 million for the third quarter of 2007, compared to a net income of $14.6 million the previous year. Net sales increased 1.8% to $349.6 million.

Charter slips

After taking a beating in the previous session on active trading, activity in Charter Communications' debt slowed down, though the notes remained softer.

A trader placed the 11% notes due 2015 lower at 89.

The 9.92% notes due 2014, which were in "freefall" Thursday, a trader said, were down an additional 2 points Friday, ending at 68 bid, 70 offered.

Charter's 8% notes due 2012 were down 1 point at 97.5.

The bonds fell as much as 7 points on Thursday after the cable operator posted disappointing numbers that came in well below analysts expectations.

Retailers heavier

Retail names continued to slide Friday, just one day after a report was released that showed sales slowing for October.

A trader quoted Bon-Ton Stores Inc.'s 10¼% notes due 2014 heavier at 81.5, while Burlington Coat Factory Warehouse Corp.'s 11 1/8% notes due 2014 were likewise lower at 86.5 bid, 87 offered. The trader pegged Linens n'Things' floating-rate notes at 61 bid, 62 offered.

Another trader quoted Burlington's bonds at 86.75.

Broad market mostly weaker

Calpine Corp.'s 8½% notes due 2011 were down 2 points at 108 bid, 110 offered. A trader saw Calpine's 4¾% convertible notes due 2023 down 1 point at 99 bid, 101 offered and said its 8½% notes due 2008 dipped to 105.5 bid, 107.5 offered from 107 bid, 109 offered.

Sea Containers Ltd.'s 10¾% notes that were to have come due in 2006 closed down 2 points at 68 bid, 70 offered, while its 7 7/8% notes due 2008 were also 2 points lower at 65 bid, 70 offered.

Swift Transportation Co. Inc.'s 12½% notes lost 2 points at 61 bid, 62 offered.

Buffets Holding Inc.'s 12¼% notes due 2014 firmed another point to 51 bid, 63 offered.

In the housing sector, Standard Pacific Corp.'s 7% notes due 2015 lost 2 points to 66.5 bid, 67.5 offered. Another trader saw them down 1 point at 66 bid, 68 offered.

Technical Olympic USA Inc.'s 8¼% notes due 2011 bucked the generally negative trend and were seen up 2 points at 44 bid, 46 offered.

WCI loan lower

WCI Communities Inc.'s term loan dropped in trading again as investors continued to react to the third-quarter numbers that were recently released and as an unbalance in supply and demand for the paper has emerged, according to a trader.

The term loan was quoted at 92½ bid, 93½ offered in light trading, down from previous levels of 94 bid, 95 offered, the trader said.

On Thursday, WCI announced third-quarter results that included a net loss of $69.7 million, or $1.66 per share, compared with net income of $10.7 million, or $0.24 per share, in the third quarter of 2006, and revenues decreased 61% to $166 million, compared with $425.6 million last year.

For the nine month period ended Sept. 30, the company reported a net loss of $118.8 million, or $3.17 per share, compared with net income of $73.6 million, or $1.64 per share, during the first nine months of 2006, and revenues decreased 51% to $746.5 million from $1.52 billion last year.

WCI also said on Thursday that, following the filing of its quarterly report, it expects to submit an amendment to loan lenders that would provide financial flexibility, including suspension of the fixed charge coverage covenant.

The company was unable to comply with the fixed charge coverage covenant for the quarter ended Sept. 30. This problem was fixed for the short term by a limited waiver that was obtained on Nov. 7 and is effective through Dec. 7.

The company went on to say that the amendment would be expensive and that there is no assurance that it will able to comply with the amended covenants and other requirements.

WCI is a Bonita Springs, Fla.-based builder of traditional and tower residences in highly amenitized lifestyle communities.

Sara Rosenberg and Paul Deckelman contributed to this article.

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