Collins & Aikman paper off as Ross fades as possible buyer; Metaldyne better

By Paul Deckelman and Sara Rosenberg

New York, Aug. 25- Collins & Aikman Corp.'s pro rata bank debt softened up during Friday's session, traders said, on some negative speculation about potential bids for the bankrupt Troy, Mich.-based automotive interior components maker.

That pro rata paper closed out the day quoted at 47 bid, 50 offered, down from previous levels that were wrapped right around 50, a trader said.

"I think it's down a little on the Wilbur Ross story that came out [Thursday] saying that he's not interested in buying any assets in 2006. I think he was considered a candidate," the trader explained.

The billionaire financier, in fact, may have been considered the candidate most likely to come along and scoop up Collins & Aikman, which went bankrupt last year. His newly formed International Automotive Components bought Collins & Aikman's European operations earlier this year for $600 million, and he also bought the company's Brazilian unit as well.

However, a trade publication reported earlier this week that buying Collins & Aikman's operations in North America is "no longer the lynchpin" of Ross' strategy of assembling a super-company out of the ruins of the hard-hit auto supply sector, similar to what he did in the steel industry and the coal industry. Instead, it suggested, the tycoon will sit back and await the shakeout in the domestic auto supplier industry, which has already seen bankruptcies by companies like Collins & Aikman, as well as Dana Corp., Delphi Corp. and Tower Automotive Inc.

A trader in distressed bonds, meantime, saw Collins & Aikman's 10¾% senior notes due 2011 unchanged at 6 bid, 7 offered. Those bonds started the month around 21 bid, and began the year at around 47.

The trader also saw the bonds of Dana, a bankrupt Toledo, Ohio-based parts maker, down a point at 79 bid, 81 offered for its 6½% notes due 2008. He saw bankrupt Troy, Mich.-based Delphi's 6½% notes due 2008 at 87.75 bid, 88.75 offered, unchanged, while Novi, Mich.-based vehicle frames maker Tower's 12% notes due 2013 were unchanged at 38 bid, 40 offered.

Among automotive suppliers not currently in bankruptcy, the trader saw Rochester Hills, Mich.-based Dura Automotive Systems Inc.'s battered 9% subordinated notes due 2009 firm by a point to 15 bid, 16 offered, while its 8 5/8s due 2012 were also a point better 72 bid, 73 offered.

Metaldyne has momentum

One of the better performers in the auto parts sector this week has been Metaldyne Corp., the Plymouth, Mich.-based automotive parts maker, maintaining the momentum seen Thursday on market speculation - spurred by a report on DebtWire - that a buyer might emerge for the company.

On Friday, a market source saw its 11% notes due 2012 move as high as 80 bid from prior levels around 77, although the bonds came off that peak late in the day to end quoted at 78.5. Meantime, its 10% notes due 2013 were seen little changed, around the 95 area.

Another source saw the 11s up 5/8, at 77.125, while the 10s were ½ point better at 95.5.

However, a trader at another shop opined that "they had their run [Thursday]. I don't think they're a whole lot different [Friday]," with the 10s at 95.25 bid, 96.5 offered and the 11s at 76.5 bid, 77.5 offered.

Metaldyne's bonds had gotten clobbered earlier in the week when Standard & Poor's warned that the company was among a number in the sector whose revenues and liquidity could be hurt as a result of production cutbacks announced by Ford Motor Co.

Ford gains on reported moves

Ford's bonds, meantime, were higher Friday on news that management seemed to be taking steps to improve its fortunes, with Ford reportedly in talks on selling the carmaker's money-losing Premier Automotive Group, among other Ford news coming across the screens late Thursday and on Friday.

A trader said Ford was "up a lot," with its signature issue, the 7.45% notes due 2031, up 1½ points on the day, "and maybe a touch more," at 78 bid, 78.5 offered, while the carmaker's Ford Motor Credit Co. financial arm's 7% notes due 2013 were also up 1½ points, at 91.75 bid, 92.25 offered.

A source at another desk saw those bonds having opened Friday at 77.5, up from the previous session's finish at 76, and then push as high as 79.5, before coming off that peak to end at 78.5, up more than 2 points on the session. The Ford Credit bonds, meantime, went out at 91.5, the source said, up about ½ point from Thursday.

The first trader attributed the movement to the slew of news stories about the Number-Two domestic carmaker, which finds itself losing a ton of money - $1.4 billion in the first half of the year - , losing market share to rivals such as Japan's Toyota, which last month passed Ford for the first time ever to take over second place in U.S. vehicle market share, both behind perennial industry leader GM, and losing favor with investors and analysts, who say the venerable company founded by Henry Ford a century ago must seriously re-invent itself if it is to continue to survive.

Those stories, taken collectively, seem to show a Ford management stirring itself to try to pull the company out of the ditch into which it has been driven.

Jaguar to be sold?

For instance, Ford was reported in talks to in talks to sell some luxury auto brands, such as the prestigious but money-losing Jaguar nameplate, and the pricy Land Rover, to an investment group led by the company's former chief executive officer, Jacques Nasser - the man who created Ford's Premier Automotive Group.

Bloomberg news was reporting that the talks do not involve another high-end European brand, Volvo. While the news service quoted several unidentified people close to the talks as saying Ford is looking to sell the brands, it mentioned the possibility that a joint venture of some sort might emerge instead.

Nasser was Ford's CEO from 1999 to 2001 before his ouster - chairman Bill Ford said that the company had "lost focus" under Nasser's leadership - and after that joined JPMorgan Chase & Co.'s One Equity Partners LLC, where Nasser is senior partner for mergers and acquisition, and is heading the reported Jaguar talks, according to the news service.

Possible Citi role

Also making waves on the Ford front was former Treasury secretary Robert Rubin, who resigned from Ford's board of directors to avoid the appearance of a conflict of interest, since Rubin is also a director and prominent executive at Citigroup Inc. - and his departure would seem to clear the way for the banking giant to take an active role in Ford's efforts to right the ship.

"Citigroup's multifaceted relationship with Ford could raise a question whether my relationship with Ford and Citigroup creates an appearance of conflict. Although no conflict currently exists and while I would have liked to remain involved, I have with great regret concluded that I should resign from the board at this time," Rubin said in his letter of resignation from the Ford board.

News reports on Friday raised possibilities such as Citigroup advising Ford on the potential sale of part or all of its credit arm - a step rival GM took some months ago - or providing financing for an alliance with another company or to take the automaker private.

Both of the latter possibilities were being floated around in the news media on Wednesday and Thursday. The Wall Street Journal reported Wednesday that Bill Ford has approached Carlos Ghosn, the CEO of Japanese carmaker Nissan and its French partner, Renault, about the idea of Ford joining their global alliance, should Nissan-Renault's current round of alliance talks with GM not work out.

USA Today meantime reported that members of the struggling auto giant's founding Ford family, including Bill Ford, were considering taking the company private, which would give the CEO and his high command more freedom to move quickly to try to turn the carmaker's fortunes around without having to answer to public shareholders. Henry Ford's heirs currently own 5% of the outstanding shares and control 40% through a separate class of stock.

Ford has declined comment on the stories.

"I guess the people [in the junk market] feel that where there's smoke, there's fire," the trader said of the various stories and speculation about what Ford's doing, "and it looks like there's a little fire over at the Ford campsite."

A trader at another desk saw little, meanwhile, going on in the junk bonds of such non-automotive distressed names as Adelphia Communications Corp., Delta Air Lines Inc., Northwest Airlines Corp., despite positive news on the legal front for the Eagan, Min.-based Number-Four U.S.-based air carrier, and the asbestos-challenged Owens Corning and Armstrong World Industries Inc.

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