Movie Gallery bonds, shares seen up solidly; Metaldyne gyrates

By Paul Deckelman and Sara Rosenberg

New York, Aug. 23 - Movie Gallery Inc.'s bonds and shares were seen solidly better on Wednesday - even though no one in the market had seen any news out about the Dothan, Ala.-based video rental chain store operator that might explain that tandem rise.

A trader in distressed notes saw the company's 11% notes due 2012 two points better at 66 bid, 67 offered. A second saw them at 66.5 bid, 67.5 offered, which he called a 3 point gain on the session.

Another trader who pegged the bonds up a pair at 66-67, noted that "those bonds had been moving up yesterday [Tuesday] afternoon, and they just kept going."

That movement was also evident in the equity market, where the company's Nasdaq-traded shares were seen up 31 cents (15.12%) to $2.36. Volume of 2.9 million shares was only slightly busier than usual.

In the auto realm, Metaldyne Corp.'s bonds "were volatile," said a trader, who pegged the Plymouth, Mich.-based metal parts manufacturing company's 11% notes due 2012 at 76 bid, 77 offered, up ½ point on the day. Those bonds "were up two points in the morning, but later fell back" on the news that Metaldyne's biggest customer, DaimlerChrysler AG's Chrysler Group, will cut fourth-quarter production of its Dodge Durango sport-utility vehicles and its Dodge Ram pickup trucks.

The trader also saw Metaldyne's 10¼% notes due 2014 at 95 bid, 96 offered, pretty much unchanged, adding "I don't know if any really traded. I'm not sure if it's as active as the 11s."

Those Metaldyne bonds were getting hammered so far this week in reaction to Friday's big announcement by Ford Motor Co. of coming output cuts, and Monday's warning from Standard & Poor's that Ford's move could harm the finances of a number of supplier companies, including Metaldyne.

While the bonds were first seen firming smartly from their recently oversold levels in the morning, they retreated later on the news of the Chrysler cutbacks, as the Number-Three domestic vehicle maker follows the example of larger rivals General Motors Corp. and Ford in trying to balance sagging sales and bloated inventories.

Collins & Aikman rises

Elsewhere in the automotive area, a trader in distressed bonds saw Collins & Aikman Corp.'s nearly valueless bonds "actually going up a little" after a lengthy slide which had brought the bankrupt Troy, Mich., interior components maker's 10¾% senior notes due 2011 down to levels of just 5 cents on the dollar, versus levels around 30 bid just two months previously. The trader saw the bonds having jumped to 7 bid, 8 offered on Wednesday.

However, traders in the sleepy distressed bank loan market said that Collins' pro rata debt - which has been sliding, sometimes even multiple points, along with the bonds - was pretty much unchanged, quoted straddling the 50 level. Two months ago, those bonds were in the upper 90s. They have since fallen as market hopes that a credible bidder would come forward and buy the company's domestic assets out of bankruptcy came and went.

Elsewhere among the auto names, a trader saw Delphi Corp.'s bonds down a point on the session at 87 bid, 89 offered for its 6½% notes due 2009, and saw Dana Corp.'s 6½% notes due 2008 down a point at 80 bid, 82 offered.

Apart from those bankrupt parts makers, a trader saw Dura Automotive Systems Inc.'s badly beaten 9% notes due 2009 holding steady at 15 bid, 17 offered. They also knew that its 8 7/8% senior notes due 2012 were down a point at 72 bid, 74 offered.

Among bankrupt asbestos-challenged companies, Owens Corning's 7½% notes due 2018 were down a point at 54 bid, 56 offered, while Armstrong World Industries Inc.'s were unchanged at 65 bid, 67 offered.

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