Collins & Aikman bonds battered; Mirant bank debt bounces around

By Paul Deckelman and Sara Rosenberg

New York, Feb. 24 - Collins & Aikman Products bonds were seen getting hammered Thursday, in line with a steep fall in the Troy, Mich.-based automotive components manufacturer's stock. Collins & Aikman's troubles carried over to some other automotive names, notably Dura Operating, which was likewise lower.

In bank debt dealings, it was a busy day for Mirant Corp.'s paper, traders said, although the bankrupt Atlanta-based energy company's debt eventually settled in essentially unchanged.

Collins & Aikman "was a little weaker," a trader said, quoting the company's 10¾% senior notes due 2011 at 96 bid, 97 offered, down from Wednesday's levels at 97.5 bid, 98.5 offered. In the meantime, its 12 7/8% subordinated notes due 2012 "were even weaker," he said, quoting them 73.5 bid, 74.5 offered, down three points on the session.

Another trader defined Collins & Aikman as "one name that got crushed."

He saw the 10¾% notes at 97.25, "the lowest that I've ever seen them," and characterized the 12 7/8s as "the lowest they've ever been" at 74.25 bid, 74.75 offered.

The company's New York Stock Exchange-traded shares meantime swooned 27 cents (10.34%) to end at $2.34, on volume of 431,000, somewhat above the usual 251,000-share activity level.

There seemed to be no fresh negative news out on the company that would justify such a drop; one of the traders said that the company had made an 8-K filing with the Securities and Exchange Commission - but that filing would seem to be a hopeful sign for the company, announcing that Collins & Aikman had amended its existing receivables transfer agreement related to its off-balance sheet accounts receivable financing facility. The amended terms included the adjustment of certain receivables-related calculations to improve the amount of liquidity available under the facility and modifying the definition of eligible receivables - hardly the stuff out of which three-point bond falls and 10% stock drops would seem to be made.

An alternative explanation might simply be that the company is suffering from the same blues and blahs that other automotive suppliers have suffered from lately - escalating raw materials costs and production cutbacks by its primary customers, Detroit's Big Three automakers.

Those industry-wide problems have already driven several automotive suppliers into the bankruptcy courts, including Intermet Corp., a producer of stamped-metal automotive parts, which filed last fall, and Tower Automotive Inc., which makes automotive frame assemblies. Tower sought Chapter 11 protection last month.

Falling in apparent sympathy with Collins & Aikman, Dura's 9% notes due 2009 dropped more than a point to 92.25 bid, 93.25 offered.

A trader saw yet another automotive-linked name - Foamex, which produces foam rubber used in auto seats and dashboards, among other products - also "under pressure" Thursday, with its 9 7/8% notes down two points at 73.5 bid, 74.5 offered.

Armstrong bonds gain

Apart from autos, a trader in distressed bonds saw Armstrong World Industries' bonds trading up to 71.5 bid, 72.5 offered. Even though there was news out on the company - the bankruptcy judge overseeing the asbestos-challenged Lancaster, Pa.-based floorcovering maker's reorganization rejected its fourth amended plan of reorganization - the trader said he doubted that was the catalyst for the rise.

"Everyone knew they were gonna get nixed" by the judge, he said, declaring that "it had to be something else," although he didn't know what.

Fellow asbestos-challenged manufacturer Owens Corning's bonds were meantime unchanged at 64 bid, 65 offered.

And the trader saw no change in levels for such recently active bankrupt names as Winn-Dixie Stores Inc., whose 8 7/8% notes due 2008 remained tethered to the mid-50s, or Loral Orion, whose 10% notes due 2006 stayed around 76 bid.

In bank debt trading, Mirant's 2003 bank debt traded about a quarter of a point higher at 73.5 on Thursday before settling down at unchanged levels of 73 bid, 73.5 offered, according to a trader.

He saw no fresh news out about the company.

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