More Transeastern trouble; Sea Containers bounces despite looming bond deadline

By Paul Deckelman and Sara Rosenberg

New York, Oct. 4 - Transeastern's term loan started to slide again on Wednesday, with levels on the homebuilder's paper continuing the drastic plunge that it has taken since last week when information about its financial condition and the deteriorating state of its market rattled investors.

Automotive investors were meantime rattled as parts supplier Metaldyne Corp., retreated after the Plymouth, Mich.-based manufacturer issued an earnings warning - raising concerns that the news could undermine plans for the company to be acquired.

On the other hand, troubled Sea Containers Ltd.'s bonds were seen moving higher - as it disclosed that there has been an expression of potential buyer interest in a valuable property the company holds - although it doesn't seem to want to talk about such a possible sale.

Transaeastern lower again

Transeastern's term loan tumbled to 67.5 bid, 68.5 offered, according to a fund manager. By comparison, on Tuesday the loan had been quoted at 69 bid, 73 offered - and a trader at another shop had the loan quoted at 70 bid, 71 offered.

All last week, the bank debt had been tumbling, dropping from trading levels around the 98/99 context to as low as 66 bid, 68 offered this past Friday on worries over the company's financials and the weak Florida housing market.

Transeastern, a joint venture between Technical Olympic USA, Inc. and Falcone Group, announced last week that it can not support its existing capital structure and that it is exploring various options to fix the liquidity problem, including requesting waivers from its lenders regarding potential defaults and permitting future advances under the revolver, and restructuring land bank obligations.

Technical Olympic is a Hollywood, Fla.-based builder and seller of single family homes.

Metaldyne moves lower

Metaldyne's bonds slid Wednesday, after the company warned that third-quarter results will be lower than expected due to production cutbacks by its car manufacturer customers, such as GM , Ford Motor Co., and the Chrysler Group unit of DaimlerChrysler AG.

A trader saw the company's 11% notes due 2012, which had been trading around an 89-90 context recently, nosedive down to 83.75 bid, before coming off that low to finish at 86.5 bid, 87.5 offered, still lower by 3 points on the day.

Its 10% notes due 2013 meantime moved down 2 points on the session to 99 bid, 100.5 offered.

Metaldyne did not give out any revised numbers - but it warned that its "actual financial results for the third quarter of 2006 will be lower than indicated in the preliminary outlook provided in early August."

The company also raised the possibility that the lower results could affect its pending acquisition by Japanese partsmaker Asahi Tec Corp., which agreed to pay $1.2 billion for the U.S. firm. Metaldyne said the lower projections could affect whether it meets the conditions to close the proposed takeover.

Auto names firm

Elsewhere in autoland, a trader in distressed notes said that Dana Corp's bonds were about 2 points better on the session at 72 bid, 74 offered for its 6½% notes due 2008, while fellow bankrupt partsmaker Delphi Corp.'s 6½% notes due 2009 were also up a deuce, at 95 bid, 97 offered.

Dura Automotive Systems Inc.'s 8 5/8% notes due 2012 were down a point at 37 bid, 38 offered, while its 9% notes due 2009 firmed a little to 4 bid, 4.5 offered, up a point.

GM weathers talks end

General Motors Corp.'s bonds were not adversely affected by the news that the company's talks with potential alliance partners Renault SA and Nissan Motor Co. came up empty.

The company's 8 3/8% notes due 2033 were seen, if anything, up about a point at 87 bid, 88 offered, while the 8% notes due 2031 of its General Motors Acceptance Corp. financial arm were also firmer at 105.5 bid, 106.5 offered.

GM said that the talks, which had been going on since mid-summer, and which could have continued, foundered over GM's insistence that the two overseas carmakers pay the U.S. company a premium for reaping what GM said would have been a disproportionate share of the benefits from a link up - and their refusal to entertain the idea.

GM was also not keen on Renault's desire to take a major stake in the American company - and said further that under the structure the two foreign carmakers wanted, GM would have been barred from entering into joint ventures with other companies.

The alliance talks had been the brainchild of major GM shareholder Kirk Kerkorian - a vigorous critic of current management - who said that GM had to link up with other partners to cut its cost and revitalize its business.

GM has held out the possibility that it could seek out other potential partners for talks.

Sea Containers buoyed

There isn't even real assurance that the company welcomes the latest development.

Sea Containers' 10¾% notes slated to come due on Oct. 15, were seen up 5 points at 79 bid, 81 offered, several traders said. Its 10½% notes due 2012, which generally trade in tandem with the '06 bonds, were also up 5 points at that same 79 bid, 81 offered level, while its 7 7/8% notes due 2008 moved up about 5 points on the day to 81 bid, 82 offered.

The bonds had recently been battered down into the low-to-mid 70s as participants worried about whether the company would be able to redeem those bonds at their maturity, now only 10 days away.

The Bermuda-based maritime and railroad transportation company's Pink Sheets-traded shares - de-listed this week by the NYSE for failure to file financial reports - jumped 14 cents (15.91%) to $1.02, on volume of 3.6 million.

With all of those bad vibes floating around, the bonds and shares still went up, a trader said, after the company filed an 8-K notice with the SEC in which it disclosed that General Electric Capital Corp. - its partner in GE SeaCo America LLC, the two companies' 50-50 cargo container shipping venture "indicated an interest in buying them out" on GE SeaCo.

Sea Containers said that GE Capital sent it letters last week asserting that the resignation in March of long-time Sea Containers chairman James B. Sherwood constituted a "change of control" under the terms of the joint venture agreement, and it was therefore exercising its right to purchase Sea Containers' half of the valuable company at a "fair market value." It said that if the two sides could not agree on a price, "the determination will be made by either a nationally recognized investment banking firm or a nationally recognized independent public accounting firm."

However, Sea Containers is, for the moment, not having any of it. The company said in its filing that it rejects GE Capital's contention that a "change of control" occurred, and said that it will "contest vigorously" such claims. The company may really mean it - or the language may represent posturing ahead of negotiations to set a price on its share of GE SeaCo.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.