Calpine bank debt, bonds up, Collins & Aikman paper off; Dura junior notes continue slide

By Paul Deckelman and Sara Rosenberg

New York, Aug. 15 - Calpine Corp.'s second-lien bank debt headed up by about ¼ to ½ point on Tuesday, traders said, citing news of the San Jose, Calif.-based power company's better second-quarter operating results, which saw an actual swing to a profit versus a year-earlier loss.

In the automotive arena, Collins & Aikman Corp.'s bank debt dropped off by about a point, although there was no fresh news out about the bankrupt Troy, Mich.-based automotive interior components manufacturer.

That was also the case with Dana Credit Corp.'s bonds, which were up solidly even though there was no news seen out, while all of bankrupt parent company Dana Corp.'s other bonds were pretty much unchanged.

Dura Automotive Systems Inc. confirmed market speculation and news reports that it has hired restructuring firm Miller Buckfire & Co. LLC to advise it on evaluating its capital structure and reducing its debt, even as it struggles to overcome the problems besetting the automotive supplier industry and return to profitability. The Rochester Hills, Mich.-based automotive systems maker's already badly battered 9% subordinated notes due 2009 - which had dropped several points Monday on rumors of the Miller Buckfire hire and speculation about a possible eventual bankruptcy filing, were down another 3 to 4 points Tuesday, traders said.

Calpine's bank debt closed out the day quoted at 101.25 bid, 102.25 offered, according to a trader.

He noted the fact that late in the day on Monday, the company reported second-quarter results, which included $89.51 million in operating income on $1.591 billion in revenues, versus a $78.63 million operating loss on $2.198 billion in revenues for the same period last year, according to a 10-Q filing with the Securities and Exchange Commission.

Calpine's net loss for the second quarter was $817.76 million, up from a $298.46 million net loss in 2005. The net loss reflects an $18.13 million loss from repurchase of debt, compared with income of $129.15 million from debt repurchase in the second quarter of 2005.

A trader in distressed notes meantime said that he saw Calpine's bonds "a little firmer, on better buyers," with its Calpine Canada Energy Finance II ULC 8 ½% notes due 2008 at 65 bid, 67 offered, while the parent company's 7¾% notes due 2009 were also better, at 73 bid, 75 offered.

Winn-Dixie sinks

Elsewhere, the trader saw Winn-Dixie Stores Inc.'s 8 7/8% notes due 2008 having fallen to 75 bid, 77 offered, down a couple of points. "It looks like something is going on there," he said of the bankrupt Jacksonville, Fla.-based supermarket operator, although he could not say what, and no fresh news was seen out.

Collins & Aikman loan off

Collins & Aikman's bank debt dropped off by about a point on Tuesday, with levels on the pro-rata paper quoted at 56 bid, 57.5 offered, according to a trader, who saw no news out on the company that might explain the decline. The company's 10¾% senior notes due 2011 were unchanged at 11 bid.

Dana Credit jumps

Elsewhere among the auto names, a trader said that Dana Credit's 8 3/8% notes due 2007 jumped to 94 bid from prior levels around 91, even though there was no fresh news seen out on the company, the financial arm of bankrupt Toledo, Ohio-based automotive components manufacturer Dana. A market source at another desk saw an even more pronounced upside move - from 90 bid previously to 94, although yet another trader saw the bonds little changed at 91.75 bid, 92.75 offered.

Dana Credit's bonds recently gyrated around before moving higher on the news that Dana Credit had reached a forbearance agreement with its bondholders, who agreed not to take actions to enforce their legal rights, giving the company more time to resolve problem situations.

While the credit unit's bonds were better, Dana's own bonds were little changed, its 6½% notes due 2008 steady at 83 bid, 84 offered, and its 5.85% notes due 2015 likewise little changed, at 73 bid, 74 offered.

Dura subs fall again

Dura Operating Corp.'s 9% notes - which had been knocked down about 2 points on the session on Monday on market buzz that the troubled vehicle components manufacturer had hired a restructuring firm, stoking investor worries about a possible bankruptcy filing soon - were seen down several additional points on Tuesday, as the company confirmed it had hired turnaround specialist Miller Buckfire.

A trader saw the 9s - which had finished Monday's trading around 21-22 bid - "off a couple more" to 18 bid, 19 offered.

A market source at another desk pegged those bonds down 4 points at 19 bid, while yet another trader saw them fall all the way to 18.5 bid, 19.5 offered from prior levels around 22.

However, the company's senior bonds - its 8 5/8% notes due 2012 - were actually seen better on the day, with one trader quoting them up a point at 78 bid, 80 offered, and another one estimating them 1½ points higher at 78.5.

A market source opined that the holders of the senior bonds probably are not too worried about the prospects of a bankruptcy filing - while the holders of the subordinated bonds fear they may be in for a haircut, no matter what shape the coming reorganization takes.

A spokesman for the company maintained that it would be "premature" to take the hiring of Miller Buckfire as a signal of a possible bankruptcy filing down the road - even though the advisory firm has been involved in a number of high-profile Chapter 11 situations of late - and he said the company is in no danger of defaulting on any of its obligations.

He further indicated that Dura is only looking to restructure its financial obligations and that such a restructuring would not include its trade creditors - a possible sign that company management at this point still believes that the restructuring can be accomplished without resort to the bankruptcy courts, where trade creditors have to take their chances with everyone else (see related story elsewhere in this issue).

Delphi rises

Delphi Corp.'s bonds were seen up about a point on the session, a trader said, even though the bankrupt Troy, Mich.-based automotive component's maker's second-quarter numbers showed an ocean of red ink - a yawning $2.3 billion, although most of that loss was due to special one-time items including payments connected with its pending early retirement and buyout offers to its unionized hourly workers.

A trader saw Delphi's 6 ½% notes due 2009 at 85 bid, 86 offered, up a point, while its 7 1/8% notes due 2029 were also up a point, at 78.5 bid, 79.5 offered.

Delphi said that it lost $2.6 billion in the first half of 2006 - more than three times the $741 million that Delphi lost in the first half of 2005. It lost $232 million in the first quarter, and $2.3 billion in the second quarter.

The company - the nation's largest auto supplier - said the wider deficit was largely due to the cost of employee buyout and early retirement packages that are key to its current Chapter 11 reorganization. That first half red ink included about $1.9 billion in charges related to buyouts and early retirements.

Delphi - spun off back in 1999 by its then-parent, General Motors Corp. - is seeking to get out from under the burdensome contractual labor costs it inherited with that spin off - costs which helped to drive the company into bankruptcy last October. One method is trimming a unionized workforce that numbers over 30,000 hourly employees, mostly represented by the United Auto Workers union and the rest by the International Union of Electronic Workers-Communications Workers of America.

Earlier this year, Delphi announced a program of early retirement incentives and buyouts. About 12,500 workers represented by the UAW signed up for early retirement, and more UAW members are eligible for buyout packages, which were offered later. They have until Sept. 15 to decide. The company estimates that the acceptance rate for the early retirement and buyout packages by its more than 20,000 UAW-represented employees should be around 85%.

Meantime, 7,900 hourly workers represented by the IUE-CWA had until last Wednesday to sign up. Delphi is expected to soon announce how many decided to take advantage of the offer.

While Delphi is shouldering some of the costs of the buyouts, which widened its first-half loss from a year ago, the headcount-reduction incentives are being partly paid for by GM, as the automaker wants to keep its largest single parts supplier operating and avoid trouble with the unions, who are dismayed by Delphi's efforts - undertaken separately from the buyouts - to compel them to accept drastic wage and benefit reductions.

Delphi has been in talks since last year with GM and the UAW, aimed at lowering those labor costs - but the union has so far balked at making substantial changes in the contract before its scheduled expiration next year. Delphi has asked the U.S. Bankruptcy Court for the Southern District of New York, which is overseeing its re-organization, to allow it to unilaterally junk the contract - but has gotten several postponements of court hearings on its motion, in order to give the bargainers more time to reach a consensual agreement. A hearing that was to have taken place last Friday has now been rescheduled for Thursday.

The UAW and the IUE-CWA have both threatened to strike if the court gives Delphi the authority to abrogate the contract and the company tries to impose a reduced contract upon them.

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