Le-Nature's bank debt, bonds bounce; Wolverine up from week's lows

By Paul Deckelman and Sara Rosenberg

New York, Nov. 3 - Le-Nature's, Inc.'s bank debt and its bonds were seen finishing out the week on Friday up from their recent respective lows, after the company asked the U.S. Bankruptcy Court for the Western District of Pennsylvania to convert its involuntary Chapter 7 bankruptcy case to Chapter 11.

Elsewhere, the bonds of Wolverine Tube Inc. - which had lost ground earlier in the week when the company raised the specter of a possible pre-packaged Chapter 11 filing - were also seen on the comeback trail.

Le-Nature's' term loan B ended the Friday session higher, a trader in that market said, after the company sought to the change in the format of its case.

That involuntary Chapter 7 bankruptcy petition was filed against the Latrobe, Pa.-based manufacturer of flavored bottled water and other beverages on Wednesday at the federal bankruptcy court in Pittsburgh by creditors amidst claims that the company falsified documents, showed discrepancies in financial results, diverted funds and destroyed documents.

Kroll Zolfo Cooper had been appointed by the court as custodian for Le-Nature's to preserve the assets and property of the company, but now the company is asking the U.S. Bankruptcy Court to appoint a trustee for its bankruptcy case to replace the custodian.

In response to all this news, the term loan B was seen late in the day at 42 bid, 45 offered, up from 30 bid, 32 offered, the trader said.

Meanwhile, Le-Nature's 9% notes due 2013 - which had been in freefall at mid-week, plummeting down to the single-digits from prior levels around par bid, on the revelations of what observers are terming potential massive fraud - also improved Friday, on the latest bankruptcy court maneuvering.

Those notes were seen having nearly doubled in price - albeit from extremely low beginning levels - with a trader seeing those notes push up to 14.5 bid, 15.5 offered, from day's-low levels at 8.5 bid, 9.5 offered, and from Thursday's finish at 9.25 bid, 10.25 offered.

Another trader saw the bonds at 14.5 bid, 16.5 offered - well up from Thursday's close at 7.5 bid, 8 offered.

Considering that the bonds had been around par earlier in the week, the credit's movements were still "a full-fledged disaster," the second trader said.

Dead cats bouncing around

Also on the comeback trail, the second trader said, was Wolverine Tube, although he attributed the rise in the Huntsville, Ala.-based tubular metal products producer's 10½% notes due 2009 to the proverbial "dead-cat bounce."

While the notes firmed 2 points on the session to 82 bid, 83 offered, they were still down 4 points from where they were at the beginning of the week.

Wolverine's bonds, and its shares as well, fell sharply on Wednesday after the company warned that it might consider a pre-packaged Chapter 11 filing if its current exchange offer and consent solicitation to the holders of those bonds is not completed.

Wolverine said in a filing with the Securities and Exchange Commission that a pre-packaged Chapter 11 filing to facilitate its restructuring plan would be under consideration if some conditions to its planned exchange offer and consent solicitation are not met. Its S-4 registration statement for the exchange offer and consent bid also included a solicitation for a pre-packaged Chapter 11 plan.

It said the pre-packaged plan would provide "substantially the same consideration" to the senior noteholders as the exchange offer and consent solicitation.

The company stressed in its statement that "we are still continuing to explore a range of alternatives, and no decision has been made on which course of action the company will ultimately take."

It also said that its liquidity is "sufficient" to sustain its operations in the near- to mid-term.

Movie Gallery hits plateau; Solo up

In other distressed names on Friday, Movie Gallery Inc.'s 11% notes due 2012 - which had risen in each of the three preceding sessions - seemed to finally run out of gas.

They held steady at 65 bid, 67 offered, unchanged on the day but up 5 points on the week.

The Dothan, Ala.-based video rental chain operator's bonds had risen after the company made the scheduled $17.25 million Nov. 1 coupon interest payment on the notes.

The trader also saw a gain in Solo Cup Co.'s bonds to the 84 bid, 86 offered level from prior levels at 83 bid, 85 offered. He saw no news out on the Highland Park, Ill.-based maker of disposable cups and plates.

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