Collins & Aikman bonds, bank debt continue fall; other auto names weaker

By Paul Deckelman and Sara Rosenberg

New York, July 21- Traders in distressed automotive bonds credits said that Collins & Aikman Corp.'s bonds continued to erode, dropping several more points on Friday. Bank debt traders also saw the bankrupt Troy, Mich.-based automotive interior components maker's paper lower.

That, in turn, had a negative impact on many of the automotive names. One big loser in the group was Dura Automotive Systems Inc.

But Detroit bellwether General Motors Corp. and its General Motors Acceptance Corp. financing unit's bonds were higher for a second straight session, on the news that pension considerations will not throw a wrench in the gears as GM moves to complete its $14 billion sale of a majority stake in GMAC.

Elsewhere, news that talks are progressing between the various creditor classes at Adelphia Communications Corp. was seen giving a boost to the bankrupt Greenwood Village, Colo.-based cable television operator's bonds.

Bank debt traders said Collins & Aikman's paper saw levels soften a bit and bid-offer spreads tighten up during Friday's market hours, according to one.

The bank debt closed out the day quoted at 84.75 bid, 85.75 offered, compared to Thursday's yawningly wide closing levels of 85 bid, 90 offered, the trader said.

"Monthly numbers came out today. They kind of sucked. But this thing shouldn't even be trading in the mid-80s," the trader remarked.

For June, the company reported a $23.34 million operating loss on sales of $172.29 million, compared to a $15.76 million operating loss on sales of $144.21 million in May.

Over in the junk bond market, one trader declared that "the name du jour and the disaster du jour was Collins & Aikman - with the emphasis on 'ache'."

"They were the major casualty of the day."

He saw the company's 10¾% notes due 2011 "down three or four points on the session, to either side of 16 going out." He characterized the activity level in the credit as "very high."

He meantime saw Collins' nearly worthless subordinated 12 7/8% notes due 2011 quoted at levels between a penny and three cents on the dollar.

Collins & Aikman "was actively lower," another trader said, although he saw somewhat less decline, with the 103/4s dipping to about 17-18 from previous levels around 19 bid, 20 offered.

The bonds and bank debt had been trading at solidly firmer levels earlier in the month, boosted by speculation that buyers might emerge for the company's assets - but when that speculation failed to pan out, the bonds began their slide.

Other auto names lower

Traders said that Collins seemed to be having a negative impact on pretty much the whole of the distressed automotive sector, perhaps nowhere more so than in the notes of the not-bankrupt but certainly struggling Dura Automotive Systems .

A trader quoted the Rochester Hills, Mich.-based parts company's Dura Operating 9% notes due 2009 at 46 bid, 47.5 offered, while its 8 5/8% notes due 2008 were at 81 bid, 82 offered, down 1¼ points on the session.

He saw other auto components makers likewise struggling, with bankrupt Toledo, Ohio-based components maker Dana Corp.'s 6½% notes due 2008 dipping ¾ point to 81.5 bid, 82.5 offered, while its 5.85% notes due 2015 were down ½ point at 73.25.

Bankrupt Troy-based components maker Delphi Corp.'s 7 1/8% notes due 2029 were down 1¼ points at 75 bid, 76 offered while its 6½% notes slated to come due this year were ½ point lower at 80 bid, 81 offered.

And the trader further said bankrupt Novi, Mich.-based vehicle frame maker Tower Automotive "did get hit today," with its 12% notes due 2013 down 2 points at 55 bid, 56 offered.

GM gains

But GM's 8 3/8% notes due 20 were being quoted up as much as half a point to a point, at 80.75 bid, 81.25 offered, while GMAC's 8% notes due 2031 were 1 point better at 97.75 bid, 98.25 offered.

Traders cited the impact of the world's largest carmaker's announcement that the federal government's Pension Benefit Guaranty Corp. has assured it that the buyer of a majority stake in GMAC won't be held responsible for GM's pension plan. That removes one potential hurdle to the pending $14 billion sale of a 51% stake in GMAC to a Cerberus Capital Management-led consortium, which also includes Citigroup Inc., Aozora Bank Ltd. and a unit of PNC Financial Services Group Inc.

Adelphia higher

Outside of the auto names, Adelphia's bonds were better, with the 10¼% notes due 2011 rising to 60.5 bid from 59. Its 10 7/8% notes due 2010 were also 1½ points to 57.5

Adelphia was no doubt helped by a Wall Street Journal story indicating that the heated settlement talks among Adelphi's creditors seem to be showing signs of progress.

The federal judge overseeing the bankruptcy restructuring Adelphia is going through ruled earlier in the month that the company could proceed with the sale of its assets to Comcast Corp. and Time Warner Cable for $17 billion, even though creditors have not yet approved a reorganization plan.

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