Finova continues retreat; Weirton continues wait

By Paul Deckelman and Sara Rosenberg

New York, April 14 - Traders characterized distressed debt trading Wednesday as slow and uneventful, although here and there pockets of activity stood out. While there was some trading in distressed bonds, traders in the bank-debt market reported very little interest in distressed paper Wednesday.

Finova Group Inc.'s bonds, which had eased on Tuesday in reaction to the Scottsdale, Ariz.-based financial services company's less-than-inspiring warning to its bondholders that they likely would not get a full recovery on their stakes, continued to head south of Wednesday.

A distressed bond trader pegged the bonds as having fallen to 61 bid, 63 offered, down from 63 bid, 65 offered on Tuesday; not long ago, the bonds were trading at least in the upper 60s.

The company warned in a letter to its stakeholders that after having paid off a $6.5 billion loan to Berkadia LLC - a joint venture of Leucadia National Corp. and billionaire investor Warren Buffet's Berkshire Hathaway - there wasn't very much left in the company's cupboard due to a shortfall in the value of Finova's remaining assets and the $1.2 billion of still outstanding debt.

Elsewhere, the trader saw Trico Marine's notes down a point at 55 bid, 56 offered and estimated Mississippi Chemical's 7¼% notes due 2017 notes "down a couple of points" at 38 bid, 40 offered.

At another desk, a market observer estimated the Mississippi bonds had fallen to around 39.5 bid from prior levels at 42. No news was seen out on the troubled company.

He also saw the bonds of another bankrupt chemicals firm Solutia Inc. continuing to dissolve, the St. Louis-based company's 7 3/8% notes due 2027 losing two points to close at 43.

Weirton steady

And he quoted Weirton Steel Corp.'s 10¾% notes due 2005 continuing to languish around 11 bid.

At another desk, the Weirton, W.Va.-based steelmaker's 10% notes due 2008 were seen tethered around the 40 bid, 45 offered level as bondholders await the latest chapter in the company's saga.

Weirton asked for, and received, a delay in the bankruptcy court hearing that was expected to decide which of two competing bids for the company's assets would be the winner following Tuesday's auction.

Weirton sought the week's delay to April 20 to give it more time to decide between the two bids - one from financier Wilbur Ross's International Steel Group Inc. and the other from a dissident investors' group led by some of the senior bondholders.

Asbestos bonds lower

A trader in distressed bonds said that some of the asbestos-related names were easier, with floor covering maker Armstrong World Industries' notes dipping to 52 bid, 54 offered from prior levels around 55 bid, 57 offered. Bankrupt insulation maker Owens-Corning's bonds were down two points at 40 bid, 42 offered, although reorganizing automotive brakemaker Federal-Mogul Corp.'s bonds continued to hold in the same 25-26 bid context they've recently occupied.

The trader saw the recently bankrupted FiberMark Corp.'s notes at 53 bid, 54 offered, unchanged.

And he saw Holley Performance Products' notes at 77 bid, 80 offered, well up from recent levels around 70, but he wondered whether it was just because "nobody cared about it for the last three months," letting the automotive parts maker's normally little-traded bonds slip in under the radar.

News of a sizable first-quarter loss for Delta Air Lines Inc. - the first of the major air carriers to report earnings this quarter - had little fallout on the already deeply distressed bonds of Delta's bankrupt rival, United Airlines; UAL "remained quiet" around 13 bid, 13.25 offered, the trader said.

Winn-Dixie Stores Inc.'s 8 7/8% notes due 2008 were seen up nearly a point at 90.75 bid.

Levi firms more

Levi Strauss & Co. bonds "continued strong," a trader said, with the 11 5/8% notes due 2008 trading "up in the 86.5-87 range on all kinds of rumors floating around," including one tale that the San Francisco-based apparel maker might be looking to sell its popular Dockers brand of khaki pants, or even that retailing giant Wal-Mart might swallow the company up.

At another desk, a trader saw Levi as having "kind of calmed down" after having been up "five, six, seven points the past couple of days."

He saw the 11 5/8% notes little changed at 86 bid, 87 offered, while Levis' 12¼% notes due 2012 were at 85 bid, 86 offered and the 7% notes due 2006 at 84 bid, 85 offered.

Even though not much happened in the name Wednesday, he said, "from last week, a week ago Wednesday, I'd say they're up a good 10 points on the bid."

The company's numbers "were good. They're revenue was up, and even though they lost $2 million for the quarter net, they lost $58 million a year ago, so that was a positive. The paper was moving higher."

Will Levi paper "ever get to 101 again, like the 11 5/8s and the 121/4s a few months ago?" he asked rhetorically. "I don't know. Sure they have their problems going forward - but there definitely was some activity there."

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