Mississippi Chemical bonds jump; Levi Strauss recovers; Collins & Aikman sees small gains

By Carlise Newman

Chicago, Dec. 3 - Mississippi Chemical Corp. got a decent boost Wednesday after several sessions of mild gains.

Traders said the rise was linked to the news that subsidiaries Mississippi Potash Inc. and Eddy Potash Inc. have entered into an agreement to sell their potash assets to two subsidiaries of Intrepid Mining LLC for $27 million. The agreement represents a stalking horse bid that requires bankruptcy court approval, according to a news release. The next step will be an auction process where other interested parties may submit bids.

Mississippi Chemical's 7¼% notes due 2017 moved up to 18 bid from prior levels at 14, according to a trader, who said he had not seen any offers. The bonds had risen a ½ point both Monday, when the news first broke, and Tuesday.

In addition, Levi Strauss Inc. bonds improved Wednesday after several days of mixed action.

The paper had fallen on Monday's news that chief financial officer Bill Chiasson will leave the company as it looks for ways to cut debt and costs. The San Francisco-based jeans maker named Jim Fogarty of Alvarez & Marsal as interim CFO.

Levi's 11 5/8% notes due 2008 were quoted at 73 bid, 74 offered, up 1 point from Tuesday. The bonds dropped as much as 4 points Monday, then zoomed ahead Tuesday to end 3 points higher. The 7% notes due 2006 were seen at 70 bid, 71 1/8 offered, also 1 point higher. Those bonds had seen mostly lower levels in the last few days; down 3 points Monday, down another point Tuesday.

"It's mixed news. The fact that they hired someone to help restructure means they're in bigger trouble than what some thought. But they got someone in there, which is positive," one trader said.

Assuming stable exchange rates, Levi Strauss said it expected full-year net sales would decline by 2% to 3%. Net debt at year-end is projected to be between $2.1 billion and $2.2 billion, as compared to previous guidance of about $2.1 billion.

Levi Strauss said last month that it would not file its third-quarter earnings report on time because it discovered accounting errors for past years and would have to correct prior earnings reports. The company said it had discovered that in 1998 and 1999 it mistakenly took the same tax deduction twice for losses related to various manufacturing plant closures.

In other news, Collins & Aikman Corp.'s 11½% subordinated notes due 2006 were ½ point lower to 83 bid, according to a trader.

"They got as high as 85 bid and then fell back to close at 83," he said. "This isn't much of a gain but trading was pretty thin."

In mid-November, Collins & Aikman debt soared after the company reported a narrower third-quarter loss on lower expenses and reaffirmed its 2003 guidance, excluding restructuring and impairment charges. The bonds traded as high as 90 bid at the time, but more recently had quieted down a bit, wavering around levels in the mid-80s.

The auto supplier said in November its third-quarter loss was $32.1 million, or 38 cents a share, compared with a loss of $45.2 million, or 54 cents a share, last year.

The third quarter included impairment and restructuring charges totaling $16 million, or 19 cents a share. The restructuring charge was related to costs associated with reducing the company's salaried workforce by 750, or 14%.

Sales for the quarter fell 2.2% to $902.2 million from $922.5 million a year ago, reflecting reduced North American customer build volumes.

In 2002, Collins & Aikman reported a loss of $53.5 million, or $1.18 a share, including $56.9 million in restructuring and impairment charges. Excluding items, the loss was 8 cents a share.

Elsewhere, Telewest Communications plc bonds recovered Tuesday's losses. The 10 5/8% notes were quoted by a trader at 55 bid, 57 offered, 1 point higher than Tuesday, when they had dropped a point. Last week, the bonds were seen trading at 56 bid, according to one trader.

Telewest said recently it plans to implement a financial restructuring that will allow noteholders to exchange notes for 98.5% of the common stock of the company.

Completion of the restructuring will result in, among other things, the cancellation of all of the outstanding notes of Telewest and Telewest Jersey in return for the distribution of 98.5% of the common stock of the new company to the noteholders; and the distribution of the remaining 1.5% of the common stock of the new company to Telewest's eligible shareholders.

This will reduce the total outstanding debt of the business by £3.9 billion to £2.0 billion

Meanwhile, WorldCom Inc. paper was higher after somewhat of a hiatus from trading desks. The bonds were seen at 36 bid, 1 point higher and "the best they've been in ages," according to a trader.

"We haven't seen WorldCom much lately. There's been so little news since last month," he added.

The bonds were last seen trading at 34 bid last Monday. Prior to that, they were at levels in the low-30s after announcing they had experienced a wider loss in September.

WorldCom said it posted a $35 million net loss in September, due to a soft consumer market and competitive business climate. The company blamed the loss on lower operating income that resulted from reduced revenue. The Ashburn, Virginia-based company's revenue dipped slightly to $1.95 billion for September, down from $2.01 billion the previous month.

The loss contrasts with the $132 million in net income posted in August.

(Paul Deckelman 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.