Delphi bonds up despite loss; Adelphia bank debt moving around

By Paul Deckelman and Sara Rosenberg

New York, May 31 - Despite the fact that it reported a loss of $192 million in April, Delphi Corp.'s junk bonds were seen solidly higher Wednesday, perhaps helped by its announcement on Tuesday that it plans to cut sales and administrative expenses by $450 million per year.

In the bank loan market, Adelphia Communications Corp.'s debt was relatively active, with levels seen higher in the morning hours before settling in to end the day unchanged, according to a trader.

The bankrupt Greenwood Village, Colo.-based cable company's Century Old bank debt and its Century New bank debt both got as high as 97.75 bid, before reverting back to the 97.5 bid, 98 offered context that they were quoted in at the close of business Tuesday, the trader said.

No specific news was seen behind the early-day momentum, the trader added.

A junk bond trader meanwhile saw Adelphia's bonds - which on Tuesday had retreated on the news that the company was seeking bankruptcy court permission to complete the sale of almost all of its assets to Time Warner Cable and Comcast Communications Corp. before the company's reorganization plan is voted upon by shareholders and other stakeholders and confirmed - rebounding modestly from Tuesday's losses.

The trader saw Adelphia's 10¼% notes due 2006 at 46 bid, 48 offered and its 10¼% notes due 2011 at 51 bid, 53 offered, each up a point on the session.

However a market source at another shop said that the company's 9 7/8% notes due 2007 were down a point at 48 bid.

Delphi rises

In the automotive arena, traders saw Delphi Corp.'s bonds all trading higher, apparently pushed up by investor optimism that former corporate parent General Motors Corp. will continue to help out its troubled offspring, and in response to the success of Delphi's own cost cutting initiatives.

A trader saw Delphi's bonds up three points on the session, with the 6.55% notes due 2006 up at 82 bid, 83 offered, while its 6½% notes due 2013 and 7 1/8% notes due 2029 were each at 80 bid, 82 offered.

The bonds were no doubt helped by Delphi's announcement that it plans to cut sales and administrative expenses by $450 million per year.

Judge Robert Drain approved a Delphi request to hire Booz Allen Hamilton Inc., a well known consulting firm, to help Delphi cut its administrative costs in three phases.

Delphi expects implementation of the plan to extend at least into the first quarter of 2007.

Delphi's Pink Sheets-traded shares jumped 24 cents (16.22%) to $1.72 on volume of 19.8 million shares, about double the norm.

Dana gains

Among other bankrupt automotive names, the trader saw Dana Corp.'s bonds "higher, but not as much as Delphi."

The Toledo, Ohio-based components manufacturer's 6½% notes due 2008 were up a point at 86 bid, 88 offered, and its 7% notes due 2028 were up a point at 80 bid, 81 offered.

Delta rises on pilot concessions

Apart from the autos, traders saw Delta Air Lines Inc.'s bonds up, after the bankrupt Atlanta-based Number-Three U.S. airline carrier's unionized pilots overwhelmingly approved a package of concessions which the airline says should save it $280 million annually. The concessions were also approved by the bankruptcy judge overseeing its reorganizations.

Delta, a trader said, "moved up," but later "leveled off" to still end up a point. He saw its 7.70% notes due 2005 up a point at 26 bid, 27 offered, while its 8.30% notes due 2029 and 7.90% notes due 2009 were each also up a point to 27.5 bid, 28.5 offered.

A trader at another desk also saw the bonds of Eagan Minn.-based Northwest Air Lines Inc., the bankrupt Number-Four carrier, up a point in tandem with the Delta rise, at 51 bid, 52 offered on its 8 7/8% notes due 2006.

Avondale Mills jumps

Elsewhere, Avondale Mills Inc.'s 10¼% notes due 2013 were seen having jumped to levels around 96 bid, 98 offered - up around eight points from previous levels. The rise followed Tuesday's news that the Monroe, Ga.-based textile maker will cease its operations and liquidate in order to maximize value for its creditors and shareholders, although it does not plan to file for any form of bankruptcy protection. The company also on Tuesday disclosed to Prospect News its plans to repay its creditors, including its bondholders, using proceeds from the liquidation and from a $215 million insurance settlement stemming from a disastrous railroad accident that occurred last year near an Avondale plant in South Carolina. The resulting toxic chemical spill killed nine people, six of them Avondale employees, and made the plant unusable, plunging the already struggling company into further turmoil.

Earlier in May, news of the insurance settlement caused the bonds to shoot up to its prior levels in the upper 80s from the lower 60s.

Calpine higher again

Calpine Corp.'s bonds "moved up" by several points for a second straight session, a trader said, seeing its 7¾% notes due 2009 up two points to 64 bid, 66 offered, and the Calpine Canada Energy Finance II ULC 8½% notes due 2008 likewise up a deuce at 65 bid, 67 offered. However, he said, "the ones that moved the most" were Calpine's 8 5/8% notes due 2010 and 8½% notes due 2011, each up five points at 45 bid, 47 offered.

Calpine, another trader said, was "up another two points [from Tuesday's gains] on the Mirant news, which points to possible sector consolidation, and perhaps even someone going after Calpine's assets."

At that shop, the 8½% notes due 2011 were seen at 46 bid, 47 offered.

Mirant Corp., which emerged from bankruptcy earlier this year, made an unsolicited $8 billion offer to buy NRG Energy Inc. - an offer which NRG rebuffed as inadequate. Nonetheless, observers said it could signal sector consolidation moves by other players.

Yet another trader saw Calpine's 8½% notes due 2008 up 1½ points at 65 bid, 66 offered, the 8½% '11s up two points at 45.5 bid, 46.5 offered, and the 8½% notes due 2010 up ¾ point at 95 bid, 96 offered.

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