Autos better, Collins & Aikman bank debt firm; Adelphia up on creditor pact

By Paul Deckelman and Sara Rosenberg

New York, July 25 - Automotive names were firmer on Tuesday as junk bond investors anticipated sector bellwether General Motors Corp.'s release of second-quarter earnings on Wednesday morning. The Detroit giant - which has struggled to overcome sales declines and heavy employee and raw materials costs - is expected to have eked out a profit in the most recent quarter, versus a year-ago loss.

The bank debt of one of the names in that sector, Collins & Aikman Corp., was seen by traders in that market to have finally taken a step forward after spending more than a week spiraling lower.

Outside of the automotive realm, Adelphia Communications Corp.'s bonds were seen mostly higher, helped by news that the bankrupt Greenwood Village, Colo.-based cable operator had reached an accord with some of its creditors, which could speed its path toward its goal of emerging from Chapter 11 sometime this year.

A junk bond trader saw "autos better by ½ point across the board," noting that GM is scheduled to report earnings on Wednesday. GM's benchmark 8 3/8% notes due 2033 were up ½ point at 81.25 bid, 83.25 offered, another trader said, while its 7 1/8% notes due 2013 were up a point at 85.

The second trader also saw the 8% notes due 2031 of GM's financial arm, General Motors Acceptance Corp., likewise about ½ point better, at 98.25 bid, 98.75 offered.

Analysts, on average, are expecting the world's largest carmaker to show earnings of about 52 cents per share in the quarter ended June 30, which would be a big turnaround from a year ago, when it lost 56 cents per share. Wall Street is expecting GM to show sales of about $42.6 billion for the quarter, versus $40.18 billion a year ago.

In the bank debt market, meantime, GM's new credit facility headed higher during its second day of trading, moving to levels of 94.75 bid, 95.25 offered, up from 94.25 bid, 94.75 offered, according to a trader.

GM completed an amendment and restatement of its credit facility last Thursday, providing for a secured extended facility of $4.48 billion due July 20, 2011 with an interest rate of Libor plus 225 basis points and an unsecured non-extended facility of $152 million due June 16, 2008 with an interest rate of Libor plus 160 basis points.

Extending lenders received a consent fee of 40 basis points.

In the event of certain work stoppages, the facility will be temporarily reduced to $3.5 billion.

Collins & Aikman ends slide

Also in the bank debt arena, Collins & Aikman's paper closed out the day quoted at 85 bid, 86 offered, up a point from Monday's levels of 84 bid, 85 offered, a trader said.

"This is just one that's going to be volatile," the trader remarked, when asked whether there was any cause for Tuesday's positive momentum.

A bond trader meanwhile saw the Troy, Mich.-based automotive interior components maker's 10¾% senior notes due 2011 at 18 bid, 19 offered, up a point on the session. Those bonds have recently hit lows around 16, on apparent investor distress that no firm bids for the deeply troubled company's domestic operations has publicly emerged, even though several would-be buyers have been looking it over.

And the trader said that "just when it looks like the senior bonds are getting a little better, and it looks like the junior bonds - its 12 7/8% subordinated notes due 2012 - could get no lower, they went down again. He quoted the latter bonds, virtually worthless, now trading at a wide ½ cent on the dollar to 2½ cents on the dollar - about ½ point lower on the day.

Auto sector strong

Elsewhere among the auto names, the trader saw a firmer trend across the board, probably pushed by optimism about GM's upcoming numbers.

He saw GM rival Ford Motor Co.'s flagship 7.45% notes due 2021 half a point better at 74 bid, 74.5 offered, while its Ford Motor Credit Co. 7% notes due 2013 half a point up at 88 bid, 88.5 offered.

The bonds of bankrupt former GM parts subsidiary Delphi Corp. were about a point higher, he said, with the Troy-based automotive electronics manufacturer's 6.55% notes due 2006 at 82 bid, 82.5 offered, and its 7 1/8% notes due 2029 at 76.75 bid, 77.75 offered.

Bankrupt Toledo, Ohio-based automotive components maker Dana Corp.'s 6½% notes due 2008 were up 1½ point on the day at 83.5 bid, 84.5 offered, while its 7% notes due 2028 were 2 points higher at 78.5 bid, 79.5 offered.

Bankrupt Novi, Mich.-based vehicle frames maker Tower Automotive Inc.'s 12% notes due 2013 were ½ point better at 56.5 bid, 57.5 offered.

Among the non-bankrupt, but still struggling names, Rochester Hills, Mich.-based Dura Automotive Systems Inc.'s 9% notes due 2009 were ½ point better at 47.75 bid, 48.75 offered, while its 8 5/8% notes due 2011 were up a point at 82 bid, 83 offered.

Calpine rises

Apart from the autos, a trader in distressed bonds said that Calpine Corp. was "up a couple of points," although he had not seen any fresh positive news to explain the rise over the past few days in the bankrupt San Jose, Calif.-based power generating company's notes, other than general optimism among utility investors, spurred by the record demand for electricity in many parts of the country with hotter-than-usual weather.

He saw Calpine's 7¾% notes due 2009 at 74 bid, 76 offered, and the Calpine Canada Energy Finance II ULC 8½% notes due 2008 up 2 points at 67 bid, 69 offered.

Adelphia gains creditor deal

Adelphia's bonds were seen mostly better, with its 8¾% notes due 2007 up 2½ points at 103.5 bid, and its 9½% notes that were to have come due last year at 103.5 bid, up 1½ points, a market source said.

The rise was apparently spurred by the news late Monday that Adelphia had come to an agreement with some of its bondholders and other creditors that could pave the way for Adelphia - in Chapter 11 since 2002 - to finally emerge later this year.

The company said the deal "enjoys widespread support" among major unsecured creditors - although it cautioned that that pre-petition bank lenders and some bondholders have not signed on as yet.

The agreement is predicated on Adelphia successfully completing its more than $17 billion sale of its assets to Time Warner Cable and Comcast Corp., with the money being divvied up among the creditors. That deal is expected to close next Monday.

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