GM bank debt eases; Adelphia active as disclosure amendment filed

By Paul Deckelman and Sara Rosenberg

New York, April 18 - General Motors Corp.'s revolving credit loan paper fell off by about half a point Tuesday, as the paper just seems "to be languishing out there" now that the refinancing buzz has died down a bit, bank debt market traders said.

Over on the junk bond side of the ledger, Adelphia Communications Corp.'s bonds were seen as active, even as the bankrupt Greenwood Village, Colo.-based cable operator's nearly worthless penny stock shares took a major nosedive, with the filing of the company's fourth amended fourth amended disclosure statement with the U.S. Bankruptcy Court for the Southern District of New York.

The amended statement reflects, among other things, a proposed settlement of various inter-creditor disputes, as per an order by the court earlier in the month. Adelphia's bonds, and those of its Arahova Communications subsidiary, had been gyrating in recent weeks on the possibility that any proposed settlement might favor one group of investor claimants over another.

"Adelphia was moving around," a trader said, quoting the company's 8 7/8% notes due 2007 as having fallen to 94.5 bid from prior levels at 96, although its other bonds "didn't really move that much." Adelphia's 10¼% notes were seen holding steady around 52 bid.

At another desk, however, Adelphia's 9 7/8% notes due 2007 were seen up two points to the 51 bid area.

Reflecting the reality that no matter how the inter-creditor disputes among the varying bondholders are resolved, equity holders will realize nothing from the bankruptcy plan, Adelphia's Pink Sheets-traded shares lost more than a quarter of their little remaining value Monday, falling to a bit under 1½ cents.

GM revolver lower, bonds better

Elsewhere, GM's revolver closed out the session quoted at 93.5 bid, 94.5 offered, a bank loan trader said.

The trader noted that for some time there has been speculation that GM might be refinancing its revolver, since there is some doubt as to whether lenders would allow any borrowings under the facility due to the recent restatement of prior financial statements.

However, talk has now turned to the possibility that the underperforming Detroit giant may only seek an amendment to correct the problem as opposed to doing an all-out refinancing, leaving lenders less hopeful of a near-term paydown.

GM's junk bonds and those of its General Motors Acceptance Corp. financing unit were meantime seen firmer on the session, in line with a generally firmer tone in the junk precincts seen in the wake of rises in both the stock and the Treasury markets. Those markets, in turn, had been lifted by release of the minutes from the most recent meeting of the Federal Reserve's policy-making arm, the Federal Open Market Committee, which indicated that most of the Fed decision-makers believe that the long string of interest-rate tightenings that began in June 2004 may soon be coming to an end.

That good news from the Fed boosted the Dow Jones Industrial Average nearly 200 points, and Dow component GM's bonds, and GMAC's, went along for the ride. A trader saw GM's benchmark 8 3/8% notes due 2033 "feeling better" as they moved up to 72 bid, 72.5 offered, which he called a ¾ point gain on the day.

At anther desk, the GM flagship bonds were seen up a point at 72 bid, 73 offered, and GMAC's 8% notes due 2031 were up ¾ point at 94.75 bid, 95.75 offered, while its other issues - its 6¾% notes due 2014 and its 6 7/8% notes due 2011 - were each also up ¾ point at 90.75 bid, 91.75 offered and 93.75 bid, 94.75 offered, respectively.

Traders saw only small movements in the bonds of other automotive-related names, including GM rival Ford Motor Co., whose 7.45% notes due 2031 were unchanged at 72.5 bid, 73 offered, a trader said, while the Ford credit arm's 7% notes due 2013 were ½ point better at 88 bid, 88.5 offered.

Also up ½ point, he said, were the bonds of bankrupt former GM subsidiary Delphi Corp. ,with its 6.55% notes scheduled to come due this year and its 7 1/8% notes due 2029 each at 66.5 bid, 67.5 offered. And he saw Delphi Corp.'s 6½% notes due 2008 also up ½ point at 78.5 bid, 79.5 offered.

Airlines weak as oil surges

Airline sector investors watched with some trepidation as

world crude oil prices - often seen as a reliable leading indicator of future price trends for distillates produced from crude, particularly jet fuel - kept climbing skyward on Tuesday, breaching the $71 per barrel mark. Sharply rising jet fuel prices over the past several years helped to drive several major airlines into bankruptcy, such as UAL Corp.'s United Airlines unit, Delta Air Lines Inc. and Northwest Airlines Corp., and threatened the stability of many others. Some observers had been hoping that recently moderating trends in fuel prices might help the beleaguered major airline names to preserve - or to regain - their financial health.

Traders saw the bonds of bankrupt Delta and Northwest continuing to lose altitude, on top of Monday's retreat when oil price fears more than completely offset positive vibes coming out of the industry after Delta and its reluctant pilots' union agreed on an as-yet-unspecified package of wage and benefit concessions to help Delta cut its costs.

In Tuesday's dealings, Delta's 8.30% notes due 2029 were seen down 1½ points at 25 bid, 26 offered, while Northwest's notes were at 42 bid, 43 offered, down a full two points on the session.

A trader saw industry leader AMR Corp., parent of Fort Worth, Tex.-based top carrier American Airlines - perhaps the largest single user of jet fuel in the world - lower, with its 9% notes due 2012 down ½ point to 96.5 bid, 97.5 offered.

However, another trader quoting the notes at that level called them steady, and declared that "nobody cares. Oil can go up to $100 per barrel - and nobody cares. The Fed's remarks [on the likely coming end to the rate increases] is bullish for the stock."

But that same trader did acknowledge that Delta "was weakening," pegging the Atlanta-based Number-Three carrier's bonds at 24 bid, 25 offered, off half a point on the day, while Eagan, Minn.-based Number-Four operator Northwest's bonds were at 42 bid, 43 offered, "also a member of the 'down ½ point club'."

Back on solid ground, Foamex International Inc.'s bonds were seen solidly higher - quoted up as much as four or five points - apparently on positive news coming out the bankruptcy court overseeing the Linwood, Pa.-based foam rubber manufacturer's restructuring.

A trader quoted the company's 9 7/8% subordinated notes due 2007 as having moved up as much as five points on the session to 50, while its 10¾% senior secured notes due 2009 were three points better at 106 bid, 108 offered.

He noted that it was not so long ago that the junior bonds "were trading as low as 7 or 9, and now they're up to 50 bid." The senior secured bonds' holders, he said, "maybe feel they're going to get the whole ball of wax" - i.e. a fully valued recovery - when the U.S. Bankruptcy Court in Wilmington, Del. decides who gets what.

Another trader saw the 103/4s up perhaps a point to 105 bid, 107 offered, and saw the 9 7/8s at 51 bid, with no offerings, "up roughly six points" from Monday's finish.

Traders said that they had not seen any news out on the company, which sought protection from its junk bond holders and other creditors last September. However, there was news happening in Wilmington, even as they spoke; Foamex sought court approval to assume a key supply agreement for polyester polyols - one of the key ingredients in the manufacturing process.

Foamex currently gets its supplies of polyester polyols from Inolex Chemical Co. - anywhere from 60% to 95% of the chemical, it said in a filing Monday with the court.

Foamex, in arguing for being able to assume the supply contract, called polyester polyols "one of the fundamental building blocks for Foamex's foam products; without it, Foamex's manufacturing operations would grind to a halt."

A hearing on Foamex's motion is set for May 3. It is some $1.22 million behind in its payments to Inolex, which agreed to give Foamex four weeks to cure the amount owed under the contract, and has not asked for assurance of Foamex's future ability to pay under the contract.

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