Collins & Aikman tumble continues; Dura rise over; Visteon up on sale possibility

By Paul Deckelman and Sara Rosenberg

New York, Aug. 3 - Collins & Aikman Corp. saw another one to two points shaved off its bank debt levels on Thursday with traders continuing to attribute this week's massive fall to private-side information. The bankrupt Troy, Mich.-based automotive interior components maker's junk bonds continued to erode as well.

Also in that junk automotive sector, investors in troubled Rochester Hills, Mich.-based vehicle components manufacturer Dura Automotive Systems Inc., whose bonds had been heading back upward over the past several sessions from previously oversold levels, slammed on the brakes and went into reverse on Thursday.

But the auto area also saw Visteon Corp.'s bonds heading upward in response to news reports that the Van Buren Township-based components maker had hired J.P. Morgan Chase - some also mentioned Citigroup - to explore a possible sale of the company.

Collins & Aikman's bank debt closed out the day quoted at 70 bid, 72 offered, down from Wednesday's closing levels of 72 bid, 73 offered, and bringing this week's total losses so far to the area of 15 to 16 points, one trader remarked.

The other day, a source said that the company released some financial numbers to private lenders earlier on in the week that were not very good, which in turn helped bring bank debt levels lower.

However, as to whether those financials are the only impetus behind this week's disastrous performance is unclear since the information is not public.

Collins & Aikman's 10¾% notes due 2011 meanwhile also continued to retreat, falling a point to levels around 14.5 to 15. Its 12 7/8% notes due 2011 continued to languish in the low single digits.

Elsewhere in the realm of troubled automotive issues, a trader noted that Dana Corp.'s bonds remained the same, with the bankrupt Toledo, Ohio-based vehicle components maker's 5.85% notes due 2015 at 74.5. But he said that Dana Credit Corp.'s 8 3/8% notes due 2007 fell to 85 bid, 87 offered, down 2 points on the session. "Two days ago, they were trading at 96-98, so they're right in line with the rest of the bonds," he said.

Dura bounce halts

Dura's bonds, a trader said "seem to have settled down," its recent rebound having apparently run its course.

Dura's bonds got solidly drubbed over two sessions a week ago when the company reported a large quarterly loss, versus a year-earlier profit. That knocked its Dura Operating Corp. 9% notes due 2009 down from levels around 50 to the mid-20s, while its 8 5/8% notes due 2012 fell from the mid-80s to the lower 70s. After having been oversold, each series of bonds moved back up in the front part of this week, the 9s getting back to nearly 30 and the 8 5/8s to 80. However, on Thursday, the 9s were back down 2 points to 27 bid, 28 offered, while the 8 5/8s retreated a point to 79 bid, 80 offered.

Another market source saw the subordinated bonds at 28.5 and the seniors at 79, both down ½ point.

Visteon jumps on advisor report

Moving in the opposite direction, a trader saw Visteon as one of the day's "big winners, " its 8¼% notes due 2010 were up 2 points at 96 bid, 97 offered. Those bonds, he said, "had a steady bid to them all afternoon." The company's 7¼% notes due 2014 were up even more, at 85.5 bid, 86 offered, a 2¼ point rise on the day.

Visteon's New York Stock Exchange-traded shares meantime zoomed $1.92 (28.11%), to $8.75. Volume of 14.3 million shares was about six times the usual turnover.

Investors were reacting with some degree of excitement to news reports that the problem-plagued former Ford subsidiary had hired J.P. Morgan Chase & Co. to explore strategic options, possibly including the sale of the entire company. Some of the reports also indicated that Visteon had also retained Citigroup. Visteon was said to have actually received a first round of bids. Neither investment bank was commenting on those stories, and Visteon itself also said that it would have no comment on what it termed "speculation." However, the trader said, "that definitely helped to explain why there's buying in it [Thursday]."

Ford, GM mixed

The trader also saw Ford Motor Credit Co.'s outstanding 7% notes due 2013 up ¼ point at 89.25 bid, 89.75 offered. The Ford Motor Co. financing unit was meantime making big news in the primary arena, where it priced a $2.25 billion two-part drive-by offering. Final terms emerged on Thursday evening, well after the close.

Parent Ford's benchmark 7.45% notes due 2031 were off ½ point at 75 bid, 75.5 offered. Ford arch-rival General Motors Corp.'s 8 3/8% notes due 2033 and its General Motors Acceptance Corp. 8% notes due 2031 were each down ¼ point, at 82.25 bid, 82.75 offered, and 98.25 bid, 98.75 offered, respectively.

Owens Corning loan trades

Apart from the auto names, Owens Corning's bank debt headed up by about half a point during Thursday's market hours, as a big block of around $50 million traded just north of 158, according to a trader.

The bank debt closed out the session quoted at 158½ bid, 159 offered, the trader added.

A trader in distressed notes said that the bankrupt Toledo, Ohio-based insulation maker's bonds, such as its 7½% notes due 2018, were "up a couple" of points, 2 points better at 65 bid, 67 offered. Another market source saw the Owens bonds ½ point higher across the board, and said that bankrupt Lancaster, Pa.-based floorcovering maker Armstrong World Industries Inc.'s bonds were down by about the same amount, also across the board, at 68.5 bid.

The first trader also saw Solo Cup Co.'s bonds about 3 points lower at 84 bid, 86 offered, but had not seen any fresh news out on the Highland Park, Ill.-based packaging company.

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