Collins & Aikman bonds gyrate as earnings delayed; Loral up on examiner's report

By Paul Deckelman and Sara Rosenberg

New York, March 15 - Collins & Aikman Products Co.'s bonds were seen bouncing around at lower levels Tuesday after the Troy, Mich.-based automotive components supplier announced that it would delay release of its fourth-quarter and 2004 results - which had been scheduled for release Tuesday morning - by two days until Thursday.

On the upside, Loral Space & Communications Ltd.'s bonds were seen higher, apparently in response to the findings of independent examiner Harrison Goldin, who said that management may have erred on the low side in its valuation of the New York-based satellite company.

Collins & Aikman's 10¾% senior notes due 2011 "started easier," a trader in distressed securities said, "but then regrouped" later in the session, to end essentially unchanged after the announcement of the delayed earnings announcement, for which the company offered no explanation.

He saw the bonds drop to 89 bid, 91 offered from 91 bid, 93 offered at the close Monday. However, the bonds came back to end pretty much unchanged at 91 bid, 92 offered.

The trader also saw Collins & Aikman's 12 7/8% subordinated notes due 2012 fall as low as 65 bid, 67 offered, from prior levels at 68 bid, 70 offered. However, they ended "unchanged, after being down a couple of points."

Another trader agreed that initially, Collins debt "was lower - but they seemed to regroup as calmer heads prevailed."

He saw the 12 7/8s quoted as low as 65.5 bid, 66.5 offered, well off their opening levels at 69.5 bid, 70.5 offered, "although I don't think any actually traded" at those levels.

The trader saw the 10¾% bonds dip to 90 from 91.5 bid, 92.5 offered, and said that they too recovered and went out at 91.5 bid, 92.5 offered.

Loral higher

Loral debt was going the other way, particularly its Loral Orion 10% notes due 2006, which were seen having gotten as good as 81 bid, up about five or six points from prior levels.

The bonds apparently gained altitude on the news an independent examiner looking at how management valued the company in putting together its reorganization plan concluded that Loral had undervalued itself by up to $463 million.

The report concluded that Loral and its advisors did "not fully capture Loral's value" in its reorganization plan, in effect depriving some creditors of value.

Loral, which sought Chapter 11 bankruptcy protection in July 2003, said it would study the report.

The company's valuation has been a contentious issue that has pitted Loral against its disgruntled shareholders, who are slated to get nothing under the company's proposed reorganization plan. That plan would give all of the stock in a restructured Loral to higher-priority creditors, including the bondholders.

The shareholders responded by petitioning the U.S. Bankruptcy Court for the Southern District of New York, which is overseeing the company's reorganization, to appoint an examiner to look at whether Loral had wrongly undervalued its assets, thus depriving the common shareholders of any recovery in its plan of reorganization. The court responded by commissioning a report by an outside company led by Goldin, the former comptroller of New York City.

Other distressed names quiet

Elsewhere, a trader said that dealings in distressed bonds was quiet. He saw no movement in Delta Air Lines Inc.'s debt, with the troubled Atlanta-based air carrier's benchmark 7.70% notes due 2005 unchanged at 80 bid, 82 offered.

There was also no change in the bonds of aaiPharma Inc., whose 11% notes due 2010 have recently been busy, mostly on the downside. However, the Wilmington, N.C.-based pharmaceuticals maker's bonds on Monday had firmed off their lows by several points to 62 bid, 64 offered, the approximate level at which they stayed on Tuesday.

Spiegel loans up for auction

In bank debt dealings, there was an auction on Tuesday for Spiegel Inc. bank paper, in which an approximately $40 million block of debt that was a combination of bilateral and syndicated pieces traded north of par, according to a trader.

The Downers Grove, Ill.-based specialty retailer's bilateral debt had previously been trading under par and the syndicated debt had previously been trading at par, the trader added.

Mirant gains, sinks back

Meanwhile, Mirant Corp.'s bank debt traded up a little on Tuesday morning after the bankrupt Atlanta-based energy producer filed its 10-K with the Securities and Exchange Commission, but by late in the day levels came back in to close out the session unchanged, a trader said.

The 2003 bank debt got as high as 77.5 bid, 78.25 offered following the filing, before coming back down to 77 bid, 78 offered, the trader said.

In the filing, Mirant reported narrower losses for 2004 than it had the year before - and said it expected to emerge from bankruptcy proceedings around the middle of the year, pending bankruptcy court approval.

Mirant said that 2004 loss from continuing operations was $410 million ($1.01 per share), well down from a loss of $3.6 billion ($8.97 per share) in 2003.

Including discontinued operations, the net loss narrowed to $1.17 per share for 2004 versus a loss of $9.47 per share for 2003.

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