Adelphia bank debt, bonds gain; GM bonds off as alliance idea seen hitting potholes

By Paul Deckelman and Sara Rosenberg

New York, July 6 - Adelphia Communications Corp.'s bank debt was stronger across the board Thursday, with traders in that market citing improved investor attitude towards the company's reorganization process.

Junk bond traders also saw some gains in the notes of the bankrupt Greenwood Village, Colo.-based cable company, and suggested that the investors were finally in a position to see a light at the end of the long bankruptcy tunnel.

General Motors Corp.'s notes were lower for a second straight session, a trader said, as the upside momentum seen on Friday and again in Monday's pre-holiday dealings from shareholder Kirk Kerkorian's efforts to get GM into an alliance with French carmaker Renault SA and Japanese manufacturer Nissan Motor Co. was seen to have completely dissipated.

Bank debt traders saw Adelphia's paper up about ¼ to ½ point, with some citing improved investor sentiment as the company's long reorganization process - Adelphia has been in Chapter 11 since 2002 - apparently entering the homestretch.

Adelphia's TCI and Parnassos bank debt closed out the day at 99.25 bid, 99.75 offered and the Century Old and Century New bank debt closed out the day at 96 bid, 97 offered, a trader said.

"There was a status hearing going on today, but I wouldn't say that there was any specific news for the banks that was positive. I think people are just feeling better about the way the process is going," the trader remarked.

Over in the junk bond arena, a trader saw Adelphia as the sole real feature of a generally becalmed post-holiday market, with participants at many shops still not back from the Independence Day break.

With most other names staying within narrow ranges of ¼ to ½ point, Adelphia, one trader said, was up smartly, its 10¼% notes due 2011 pushing up to 59 bid, a 3 point gain from prior levels.

Adelphia, he continued "is coming to closure," having recently gotten bankruptcy court approval for the $17 billion sale of its assets to larger rivals Time Warner Cable NY and Comcast Corp.

One factor behind the surge, he said, was "people are getting unrestricted" - with the agreements for the sales already reached, people who had been serving on the bondholders committee - thus, barred from conducting transactions in the bonds - "are getting unrestricted, so the holders can either buy or sell. Obviously, they're choosing to buy," figuring the bonds will be exchanged for equity in the reorganized company.

A source at another desk saw the 10¼% notes due 2011 up a point at 58.5 bid, while the 10¼% notes coming due on Nov. 1 were half a point better at 54.

GM lower

In the automotive area, traders were quoting General Motors' benchmark 8 3/8% bonds due 2033 at 79 bid, 80 offered, down about a point, as the idea of GM linking up with Renault and Nissan seemed a little less certain than it had been earlier in the week.

While the prospect of such an alliance, outlined Friday in a Securities and Exchange Commission filing by 9.9% GM shareholder Kerkorian, gave the bonds a solid boost on Friday, in tandem with a stock surge, and again on Monday, the idea seemed to hit new obstacles Thursday, with GM chairman and chief executive officer G. Richard "Rick" Wagoner seen as likely to spearhead management's opposition to the alliance plan. The Wall Street Journal's on-line service was reporting that Wagoner and his team would make the case against such an alliance during a Friday conference call among members of GM's board of directors, at which the idea is to be discussed.

Kerkorian - whose Tracinda Corp. investment vehicle is GM's third-largest stockholder - has been critical of GM's Wagoner-led management, feeling it was not moving quickly enough to turn the money-losing company around. Published reports say that should Kerkorian's vision come true, Renault and Nissan - already interlocked via mutual ownership of a percentage of one another's shares - might take as much as a 20% stake in GM, which, combined with Kerkorian's holdings, would give the octogenarian billionaire shareholder activist the leverage to oust Wagoner and replace him with Carlos Ghosn, currently the CEO of both Renault and Nissan. Ghosn is considered responsible for bringing Nissan back from possible insolvency several years ago.

Also among the automotive names, a trader saw General Motors Acceptance Corp.'s 8% notes due 2031 unchanged at 95.25 bid, 95.75 offered.

He saw GM arch-rival Ford Motor Co.'s 7.45% notes due 2031 at 72.5 bid.73 offered and Ford Motor Credit Co.'s 7% notes due 2013 were at 86.25 bid, 86.75 offered, both up ¼ point.

Among the bankrupt auto supplier names, Troy, Mich.-based Delphi Corp. - a former GM subsidiary - was mostly unchanged to slightly lower, its 6.55% notes due later this year at 83 bid, 84 offered, and its 7 1/8% notes due 2029 at 77.5 bid, 78 offered, both down ½ point. Its 6½% notes due 2013 were unchanged at 77.75 bid, 78.25 offered.

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