Dana bank loan, bonds steady after Chapter 11; Movie Gallery gains on bank meeting rumor

By Paul Deckelman and Sara Rosenberg

New York, March 6 - Dana Corp.'s bank debt and bonds were seen stabilizing Monday as the dust settled from Friday's Chapter 11 filing by the troubled Toledo, Ohio-based automotive parts manufacturer.

Auto battery maker Exide Technologies' bonds, on the other hand, were on the slide as the Alpharetta, Ga.-based company warned in an SEC filing that its earnings would be less than originally expected, which would land it in covenant trouble.

Outside of the automotive area, Movie Gallery Inc.'s bonds and shares were seen higher - a rise attributed to rumors that the Dothan, Ala.-based video rental chain operator had met with its lenders and had apparently come up with a favorable result.

Dana's revolver came in a little bit Monday as volume in the name slowed down when compared to Friday's post-Chapter 11 filing rush of activity, according to a trader in the bank debt market.

The revolver closed out the day quoted at par bid, 100.34 offered, the trader said. On Friday, the bank debt was seen closing out the session in a 100.25 to 100.375 bid region, and the 100.625 to 100.875 offered context.

"Friday volume was very strong. We didn't see too much volume today. I think people for the most part are where they need to be position wise," the trader added.

On Friday, Dana filed for bankruptcy protection so as to enable it to address financial and operational challenges that have hampered its performance.

The company has received a commitment for a $1.45 billion debtor-in-possession financing facility from Citigroup, Bank of America and JP Morgan Chase Bank.

Dana went on to say that it intends on proceeding with its previously announced divestiture and restructuring plans, which include the sale of several non-core businesses and the closure of several facilities and shift of production to lower-cost locations.

In the junk bond market Monday, a trader in distressed securities saw Dana's bonds "improve a little bit," as bondholders were "starting to figure out" what the parts maker's bonds are worth in the wake of Friday's Chapter 11 filing.

He saw Dana's 6½% notes due 2008 at 70 bid, 72 offered, its 6½% notes due 2009 and its two issues of 7% bonds, due 2028 and 2029, all at 69 bid, 71 offered, and its 5.85% notes due 2015 at 68 bid, 70 offered. All of those bonds were up about 1 to 1½ points, and were trading flat, or without their accrued interest.

At another desk, a trader saw the 09's up a point at 70 bid, 71 offered.

Yet another trader saw the 5.85s as the day's big gainer, up a full 2½ points to 69 bid, 69.75 offered. He saw the '08 bonds at 70.75 bid, 71.75 offered, up ¾ point on the day, and the 7% notes due 2028 and 2029 each up half a point at 69.5 bid, 70 offered.

Auto sector mostly better

Among other bankrupt auto supplier names, the second trader saw Delphi Corp.'s 6.55% notes due 2006 down ¼ point at 56.25 bid, 57.25 offered, while its 7 1/8% notes due 2029 were unchanged at 57.5 bid, 58.5 offered.

Another trader, though, saw the restructuring Troy, Mich.-based components maker's bonds at 57 bid, 59 offered, up two points on the session.

He saw bankrupt Novi, Mich.-based vehicular frames maker Tower Automotive Inc.'s 12% notes due 2013 three points better at 66 bid, 67 offered, while bankrupt Troy, Much.-based auto interior components maker Collins & Aikman Products Co.'s 10¾% notes due 2011 were two points better, at 30 bid, 31 offered.

Among the non-bankrupt auto parts maker names, Visteon Corp.'s 8¼% notes due 2010 were up a point at 78 bid, 79 offered. Dura Automotive Systems Inc.'s 8 5/8% notes due 2012 were half a point up at 78.5 bid, 79.5 offered. The latter's 9% notes due 2009 were also up half a point at 47.5 bid, 48.5 offered, helped by the news that the Rochester Hills, Mich.-based components company was in talks with lenders about $75 million of new financing.

The auto component makers were also helped as a group by renewed investor optimism about industry bellwether General Motors Corp., which announced that it was selling almost all of its 20% stake in Japanese car and motorcycle maker Suzuki back to that company for around $2 billion.

That in turn was seen as a possibly positive development in GM's efforts to sell a controlling stake in its General Motors Acceptance Corp. financing unit, something it has been trying to do since October. GM's benchmark 8 3/8% notes due 2033 were seen at 71 bid, 72 offered, up as much as two points on the session.

Exide down on covenant warning

But Exide Technologies' bonds and shares swooned after it warned in an 8-K filing Monday with the Securities and Exchange Commission that it will likely be in violation of an earnings covenant in its senior credit loan agreement, and that it has begun talks with its lenders on amending or waiving that covenant - and it said ominously that if it can't get such a waiver or amendment on a timely basis, its business "would be significantly and adversely affected."

Traders saw its 10½% notes due 2013 dive to 74.5 bid, 75.5 offered from prior levels around 78 bid, 80 offered, while its Nasdaq traded-shares plummeted $1.18 (29.65%) to $2.80 on volume of 3.9 million, more than eight times the average daily handle.

The Georgia-based maker of car batteries and other electrical energy storage systems said in the filing that it now expects its consolidated EBITDA for the fiscal fourth quarter ending March 31 to be between $105 million and $110 million - well down from its earlier projections of at least $123 million. Exide blamed the anticipated EBITDA shortfall on a drop in North American sales of vehicle batteries due to an unusually warm January, as well as decline in sales at its Industrial Energy Europe division in the wake of recently implemented price hikes.

Owens Corning drops

Outside of the auto area, a trader saw Owens Corning's notes fall as low as 73 bid, 75 offered during the session from prior levels at 78 bid, 79 offered, although he saw no fresh news out on the bankrupt Toledo, Ohio-based insulation maker, one of dozens of companies driven into bankruptcy by numerous asbestos-related medical claims. He saw those bonds firm a point from their low to close at 74 bid, 76 offered.

He saw no movement in bankrupt asbestos-challenged Lancaster, Pa.-based floorcovering maker Armstrong World Industries Inc.'s bonds, which were stable at 67 bid, 68 offered.

Movie Gallery up

A trader said that Movie Gallery's shares and bonds were higher, and he cited talk that the company had a meeting with its lenders Monday afternoon.

He had no details on its outcome, but said: "I assume it went well, since the company's 11% notes due 2012 were up 1½ points to 65.5."

He also saw a half-point rise in the company's term loan to 92.5 bid, 93 offered, though other sources in the bank debt market saw the paper just holding steady at 92 bid, 92.5 offered.

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