Adelphia bank debt gains on settlement hopes; auto bonds continue to idle

By Paul Deckelman and Sara Rosenberg

New York, June 21 - Adelphia Communications Corp.'s bank debt headed higher on Wednesday, traders said, as rumors emerged late in the day that there could be a settlement for TCI and Parnassos holders, according to a trader.

The company's bonds were meanwhile mixed and inconclusive, although a trader in that market said that sentiment was "positive. There's a mandatory meeting [in the company's bankruptcy case] at 5 p.m. [ET], and that could be positive for the bondholders."

A trader saw the bankrupt Greenwood Village, Colo.-based cable company's 10½% notes due 2011 at 53 bid, 54 offered, which he called up half a point, while its 10¼% notes slated to come due later this year were at 47.5 bid, 49.5 offered, about unchanged.

Another trader agreed that the '06 bonds "stayed about where they were," at 48 bid, 49 offered. "There was no real change."

Adelphia's TCI and Parnassos bank debt were both stronger by about half a point on the day at 98.5 bid, 99.5 offered, the trader said.

And, Adelphia's Century Old and Century New bank debt were both stronger by about a point on the day at 95.75 bid, 96.75 offered, the trader added.

On a related note, the chairman of the Federal Communications Commission, Kevin Martin, said Wednesday that he expects his agency to complete its review of the sale of Adelphia to Comcast Corp. and Time Warner Inc. by mid-July.

Clearance by the FCC is the last regulatory obstacle to be overcome. Observers said the recent swearing in of a third Republican commissioner gives Martin a majority, which could make it easier to push through controversial matters, such as the Adelphia sale, which promises to shake up the cable landscape due to the sheer size of the deal.

However things might still get hung up in the courts, which are currently overseeing Adelphia's Chapter 11 reorganization. The company recently suggested allowing the sale of the assets to take place, even if the company's reorganization plan has not yet been fully cleared.

Both Comcast and Time Warner have said they expect their transactions formalizing the asset sale to be completed in July.

GM revolver mixed

Elsewhere, General Motors Corp.'s revolver was quoted all over the place on Wednesday, depending on which trader was asked as the market was still reacting to the recent news of a financing amendment.

One trader said that the paper closed out the session at 95 bid, 95.5 offered, unchanged on the bid side but down a quarter on the offer side. This trader also said that an auction block of the revolver debt traded during the session at 95.

A second trader had the bank debt closing out the day at 94.75 bid, 95.75 offered, down a quarter of a point on the bid side but unchanged on the offer side.

And a third trader also had the bank debt closing out around the 94.75 bid, 95.75 offered range, but said that the paper had gotten as low as 94¼ on the bid side early on in the day, which the other traders said they had not seen.

GM bonds down again

GM's bonds, meantime, continued to ease, just as they had done in the previous session on the news of the financing, this after several ratings agencies downgraded GM. The agencies opined that the big new chunk of secured debt hurts the prospects for bondholder recovery in the event of a default.

A trader saw GM's 8 3/8% notes due 2033 off half a point at 75.25 bid, 73.25 offered. He saw the 8% notes due 2035 of General Motors Acceptance Corp. at 93.375 bid, 93.875 offered, down at least 3/8 on the day.

The revolver had come into the spotlight on Tuesday and the bonds moved lower after the Detroit-based automaker revealed plans for an amendment to its existing $5.6 billion unsecured revolving credit facility, under which all existing lenders will receive a 20% reduction in their commitments and have the opportunity to extend to 2011 in return for collateral, pricing and structural enhancements.

Pricing on the amended facility (B2/B+/BB) is expected to fall out in the range of Libor plus 200 to 225 basis points, depending on ratings.

Collateral will consist of certain North American accounts receivable and inventory of General Motors Corp., Saturn Corp. and GM of Canada Ltd., certain plants, property and equipment of GM of Canada Ltd. and a pledge of 65% of the stock of the holding company for GM's indirect subsidiary GM de Mexico.

The amendment, which is anticipated to be completed by the end of July, must be approved by lenders with greater than 50% of the loan commitment.

Autos continue weak

Elsewhere among troubled automotive names, a ripple effect was seen continuing, in the wake of the easier GM bonds.

A trader quoted former GM unit Delphi Corp.'s 6.55% notes due 2006 at 82.5 bid, 83.5 offered, down half a point, while its 7 1/8% notes due 2029 were at 76.25 bid, 77.25 offered, also down half a point.

Tembec down again

Outside of the autos, Tembec Industries Inc.'s 8½% notes due 2011 continued to head downward, losing another point to around 49 bid.

Traders attributed the drop to investor worries that Canada's national legislature might adjourn for the summer Friday before ratifying a trade agreement with the United States which brings an end to a long-running trade dispute over lumber pricing. Cash-strapped Tembec, a Montreal-based forest products company, is in line to receive a refund for over C$300 million of past tariff penalties imposed by the United States - but only if the deal is actually approved.

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