Adelphia bonds firm as vote on sale nears; Collins & Aikman bank debt busy

By Paul Deckelman and Sara Rosenberg

New York, July 7 - Adelphia Communications Corp.'s bonds were seen continuing to firm on Friday as investors look ahead to the scheduled July 13 Federal Communications Commission meeting at which the panel is expected to give final regulatory hurdle to the sale of Adelphia's assets to rival cable operators TimeWarner Cable and Comcast Corp.

In the bank debt market, Collins & Aikman Corp.'s paper saw what traders considered a decent amount of volume, although not much actual price movement. Market participants cited expectations that clarity on bids for the bankrupt Troy, Mich.-based automotive interior components company will surface in the near future.

Also in the auto sector, bonds of another bankrupt Troy-based automotive supplier, Delphi Corp. - a former General Motors Corp. subsidiary - were seen a bit higher. The company said that it won court approval for certain modifications to its buyout program for unionized hourly workers, a key cost-cutting element in Delphi's turnaround plan.

A trader saw Adelphia's 10¼% notes due 2011 move up to 58 bid, 60 offered on Friday, a 1 point gain.

At another desk, a market source saw those bonds at 59, though that was just a ½ point rise from where that shop had seen the bonds close on Thursday night. Adelphia's 10¼% 2006 notes were ¼ point better, at 54.

However, yet another trader said that while the 2011s were around 59, that was actually lower than some levels around 61 seen on Thursday. "They pretty much made their move upward on Thursday," he added.

The bankrupt Greenwood Village, Colo.-based cable operator's bonds have been rising for some time now, with traders citing positive investor feeling about Adelphia, now that the U.S. Bankruptcy Court for the Southern District of New York has approved the notion of going through with the sale of Adelphia's assets even before the company's official reorganization plan has been approved.

That plan has been stymied by inter-creditor disputes over who is getting what from the $17 billion of anticipated proceeds from the sale of Adelphia's far-flung systems and their 5 million customers to Time Warner Cable and Comcast. With the court having taken the relatively unusual step of okaying the sale even without a ratified and confirmed plan of reorganization, at the company's request, the FCC remains the final potential roadblock - but the commission is expected to act quickly to greenlight that sale and bring the long-running Adelphia saga to a close soon. Both Comcast and Time Warner have said they expect the deal to close by the end of July. The company has been in Chapter 11 since 2002.

Collins & Aikman trades

Elsewhere, Collins & Aikman bonds were seen actively moving around Friday, as increased attention has been directed towards the paper with the expectation that clarity on bids for the company will surface in the near future, according to a trader.

The bank debt, although active, continued to trade in the 94 to 94.5 context, unchanged from previous trading levels, the trader said.

"There are a couple of interested parties to buy the company. The market has been waiting on what type of bids will come out on this thing. Need a bid of about $1 billion to get the bank debt out at par. People are playing the probability that they may not get that high of an amount, that's why it's trading in the 94's. But it's not like it's expected to tank either," the trader explained.

"Details are expected to come out next week or so. That's why there's been this pick up of activity," the trader added.

Delphi higher

Also in the automotive world, a trader saw Delphi's 6.55% notes due 2001 a point better at 84 bid, 85 offered. The company's 6½% notes due 2013 were ½ point better at 78 bid, 79 offered, and its 7 1/8% notes due 2029 were ¼ point up, at 77.75 bid, 78.75 offered.

According to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York, Delphi got the approval of the bankruptcy court overseeing its reorganization for a supplement to its employee buyout program with the United Auto Workers and GM, and a program for employees represented by the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers-Communications Workers of America.

Delphi is counting on the buyout program - funded by former corporate parent GM - to sharply bring down the number of hourly employees, a key initiative in its efforts to cut costs and try to recover its financial health.

GM firm

GM's bonds were meantime seen little changed to up perhaps ½ point, with the company's 8 3/8% notes due 2033 marginally better at 80.5 bid, 81.5 offered, and its 7 1/8% notes due 2013 up ¼ point, around 84. The giant automaker's General Motors Acceptance Corp. financing unit's 8% notes due 2031 were quoted up ¾ point at 96 bid, 96.5 offered, although its 6 7/8% notes due 2012 were up only ½ point at 95.

GM's board members voted Friday during a teleconference to pursue preliminary talks with French automaker Renault SA and Japanese car manufacturer Nissan Motor Co. on the possibility of a three-way alliance. Such a combination envisions GM joining the existing linkup between Renault and Nissan, with those carmakers buying about a 20% stake in the struggling American automotive giant. Renault and Nissan each already own sizable stakes in one another.

The board said that GM's chairman and chief executive officer, G. Richard "Rick" Wagoner, would manage GM's participation in the talks, including negotiations with his counterpart, Carlos Ghosn, who is the CEO of both Renault and Nissan. The two auto chieftains are expected to meet this coming Friday in Detroit. Wagoner said in a statement he would start talks "with an open mind - eager to hear their ideas of how an alliance between our companies might work to our mutual benefit".

That, however, is not good enough for the man who is the strongest proponent of a three-way alliance, billionaire investor Kirk Kerkorian, whose Tracinda Corp. investment vehicle owns 9.9% of GM's shares, making him the largest individual GM shareholder. Kerkorian first talked up the idea of an alliance in an SEC filing a week ago, saying that such a combination could help the financially troubled GM capture savings by sharing the costs of developing new products and buying components with its partners.

Kerkorian had wanted the board to appoint a committee with access to independent financial and legal advice to run the talks, rather than leaving them in the hands of the Wagoner-led management, and reiterated his stand on Friday. Kerkorian has been highly critical of management in the past for allegedly being slow to move to turn GM's sagging fortunes around, and some news reports indicate that the cantankerous tycoon may be using the would-be alliance with Renault and Nissan to gain leverage to force Wagoner out and replace him with Ghosn, who is widely credited with saving Nissan from insolvency several years ago.

However, Tracinda issued a statement describing the forthcoming meeting of Wagoner and Ghosen as "a good first step."

While the board said that it was open to looking at new options - and hence endorsed the idea of talks with Ghosen - it also asserted Friday that was vital that GM "stay focused" on its year-old turnaround plan, the centerpiece of Wagoner's program.

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