Adelphia Communications lower as asset auction comes to end

By Paul Deckelman and Sara Rosenberg

New York, Jan. 31 - Adelphia Communications Corp. bonds - which had finished out last week in retreat ahead of the end of the company's bankruptcy auction of its assets - continued to lose ground on Monday amid reports that the final bids were less than the company, and observers, had been expecting.

RJ Tower Corp.'s bonds, which were already skidding lower, were pushed even further into a ditch when fellow automotive components maker Visteon Corp. reported a quarterly loss, largely on a production slowdown by its former corporate parent and largest customer, Ford Motor Co. The company also announced that it had uncovered some accounting issues and was in talks with its auditors.

Bank debt dealings were meanwhile described as very slow, with many participants off at a conference.

Adelphia's bonds "got whacked," a trader said, quoting the bankrupt Greenwood Village, Colo.-based cable TV operator's 10¼% notes fur 2011 as having gone home Friday at around 94 bid, 96 offered, but then having opened up on Monday all the way down at 88 bid, 89 offered. The bonds climbed off their lows on the session, a trader said, ending at 90 bid, 91 offered, still a four-point loss on the session.

Adelphia's 10¼% notes due 2006 were seen having followed a similar pattern, opening at 84 bid, 86 offered, well down from 90 bid, 92 offered on Friday. Those bonds, he said, firmed a little off the lows, but only got as high as 85 bid, 86 offered.

Another market source said that the bonds had been "moving around, bouncing around all over the place," at mostly lower levels.

He saw the 101/4s due 2006 at 84 bid, down from 87, while the 2011 101/4s were down perhaps a point or so in his estimating at 91 bid. The company's 10 7/8% notes due 2010 were pegged down two points, at 86.5, while its 9 7/8% notes due 2007 were heard to have dropped to 83.5 bid from previous levels at 87.

A trader estimated the 2011 10¼% notes were down three points, at 89.5 bid, 90.5 offered, "so they were down pretty good."

Monday was the day that Adelphia was to receive the final bids for its assets, the culmination of a nine-month long sale process. Adelphia had put a $17.5 billion floor on its assets, and observers speculated that the worth of the Number-Five U.S. cable operator's far flung assets at somewhere between $17 billion and $20 billion. News reports, however, indicated that the bids would likely come in below the lower end of that range.

CNBC said late in the day Monday that Time Warner Inc and Comcast Corp., the nation's Number-Two and Number-One cablers, respectively, had teamed up in a joint bid for the whole company and were offering to pay about $17 billion in stock and cash, while leveraged buyout shops Kohlberg Kravis Roberts & Co. and Providence Equity Partners, which also teamed up to try and buy the whole company, had put together a bid of between $15 billion and $16 billion.

A number of other investors and second-tier cable operators had also put in bids for individual assets, which Adelphia packaged in seven regional cluster around the country.

Adelphia has the right to reject all of the bids and continue its original plan - to reorganize as an independent operator - or it might accept either of the two offers for the whole company, or accept offers from other would-be buyers seeking to buy its assets piecemeal.

Tower down again

Elsewhere, RJ Tower's 12% notes due 2013 - which have been falling sharply over the last 10 days or so, from the low 80s into the 50s, after the Novi, Mich. automotive supplier warned of likely liquidity problems due to the longer-than-expected holiday shutdown by some of its carmaker customers of their factories - continued to fall Monday, its 12% notes due 2013 down about two points at 53.25 bid, 54.75, well down from 55.5 bid, 56.5 offered on Friday.

Besides its own problems, Tower was seen carried lower by a trend of general weakness in the automotive names on Monday after Van Buren Township, Mich.-based automotive components supplier Visteon Corp. reported a fourth-quarter net loss of $115 million (92 cents a share), an improvement from its year-earlier net loss of $829 million ($6.60 per share), although most of that was due to a $720 million one-time restructuring charge.

Visteon also announced that it had found errors related to its accounting for retiree health care and pension benefits and income taxes. It said it was consulting with its accounting firm, PricewaterhouseCoopers LLP, to determine if any adjustments or corrections are needed.

"It looks like the autos got hit along with Visteon," a trader said.

Airlines doing better

Airline issues - which had recently been losing altitude as oil prices began turning back upward toward the $50 per barrel mark - were being quoted at firmer levels Monday on a combination of factors, including a retreat in oil prices to $46.85 per barrel following an OPEC decision to hold production at current levels.

The sector was also aided upgrades by some brokerage houses of the shares of the major carriers, which boosted those shares and apparently dragged the bonds along with them.

A market source quoted Delta Air Lines Inc.'s 8.30% notes due 2029 as having firmed to 39 bid from 37.5, while its 9¾% notes due 2021 were a point better at 39.5 and its 7.90% notes due 2009 moved up to 49.25 bid from 47.75. However, he saw the company's benchmark 7.70% notes due 2005 "actually down" at 85 bid, off a point on the day.

However, a trader at another shop said that he "didn't really see" Delta up very much, quoting the 7.70s essentially unchanged at 86 bid, 88 offered.

He also said that while he was seeing higher quotes for American Airlines parent AMR Corp.'s 9% notes due 2012 and 2016, he was skeptical of those bids, which pegged the airline's 9% notes due 2012 up a point on the day, at 72 bid, 74 offered, while its 9% notes due 2016 were at 70 bid, 73 offered.

A market source saw that latter issue of bonds having firmed to 70 bid from 68.5.

Northwest Airlines Corp. 'S 7 7/8% notes due 2008 were seen up two points, at 72 bid.

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