AK Steel weakens further on third-quarter guidance; Adelphia, HealthSouth active; airlines firmer

By Carlise Newman

Chicago, Oct. 2 - AK Steel Holding Corp. stumbled Thursday after the company issued third-quarter earnings guidance.

AK Steel said as a result of a less favorable product mix and higher raw material and energy costs, it expects its third quarter results to be lower than current estimates by industry analysts. The company said it now expects to report a net loss between $0.82 and $0.86 per share.

The company also said it is analyzing goodwill and deferred tax assets, and estimates that it will incur third quarter non-cash charges of $190 million after tax, or $1.75 per diluted share.

AK's 7¾% notes due 2012 were down 1 point at 68 bid. Its 7 7/8% notes due 2009 were seen at 67 bid, 69 offered, down 3 points, a trader said.

"It is possible with the way the bonds were reacting this week that this got out somewhere," he added.

AK Steel had been falling steadily after chairman and chief Executive Richard Wardrop and president John Hritz resigned on Sept. 18, as the company's share price sank to historically low levels.

Elsewhere, Adelphia Communication Corp.'s debt was stronger Thursday. One trader attributed the firming to Wednesday's report that Adelphia had released better performance numbers to bank lenders in a private conference call, but others said the sector is simply "booming."

Adelphia's 9 7/8% notes due 2007 were up 1½ points to 72 bid, 73 offered, a trader said.

"The cable sector overall has been hot this week, but Adelphia led the rally. Adelphia's been pretty steady of late," he said.

In other news, HealthSouth Corp. announced it paid the $39.8 million in semi-annual interest due Oct. 1 to its bondholders.

The Birmingham, Ala.-based healthcare provider said it presently intends to remain current on all upcoming interest payments.

HealthSouth's benchmark 7 5/8% notes due 2012 were up 2 points on the news, to 87½ bid, 88 offered, a trader said.

"Anything positive from that company will move the bonds. They need all the help they can get. But volume was pretty light today too," he said.

Also on Thursday, two major airlines reported traffic for September, and the paper of both responded accordingly.

In September, AMR Corp.'s American Airlines, the world's largest airline, saw domestic traffic fall 2.5% to 6.2 million revenue passenger miles. Domestic load factor rose 3.8 percentage points to 65.6%.

AMR's discount airline, American Eagle, said regional airline unit traffic rose 19.1% to 374,010 revenue passenger miles, as the unit boosted capacity by 14.5%.

AMR's 9.73% notes due 2014 were up 2 points from last week, when they were last seen trading, to end the session at 65 bid, 67 offered.

Continental saw a similar pattern with its regional ExpressJet unit. The main airline's domestic traffic rose 2.7% to 2.7 million revenue passenger miles, as load factor rose 5.1 percentage points to 71.3%. But traffic was much stronger at the ExpressJet Holdings Inc. unit, rising 57% to 483,324 revenue passenger miles.

Continental Airlines' 8% notes due 2005 were up 2 points at 89 bid, a trader said.

"Airline debt is doing so much better these days," he noted.

In the same sector, Delta Airlines Inc.'s bonds were "slightly better," a trader said, its 8.30% notes due 2029 advancing to 62 bid, 64.5 offered Thursday from last Friday's 61 bid, 64 offered

Elsewhere, New York-based cosmetics company Revlon Inc. was all over the map. The 9% notes due 2006 were up ½ point to 71 bid, while the 8 1/8% notes due 2006 were down 1 point at 69 bid.

Revlon's 8 5/8% notes due 2008 were down 2 points at 54½ bid.

Princeton, N.J.-based RCN Corp. was seen up 1½ points across the board. The cable company's 9.80% and 11% notes due 2008 were quoted at 46½ bid, 47½ offered, while the 10% notes were seen in the 47-48 bid area.

Troy, Mich.-based Collins & Aikman's 11½% notes due 2006 were up 1 point at 78½ bid, 79½ offered, while its 10¾% notes due 2011 were unchanged at 87 bid.

(Paul Deckelman and Sara Rosenberg contributed to this report.)

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.