Liquidity troubles weigh on ResCap; Tyson bird flu hurts Pilgrim's Pride; Primus, Charter gain

By Stephanie N. Rotondo

Portland, Ore., June 3 - It was the same old song and dance for Residential Capital LLC on Tuesday as the company warned yet again of liquidity issues.

The news put some pressure on the mortgage lender's debt - corporate and bank - even though both GMAC LLC and Cerberus Capital came to the company's rescue - again.

Meanwhile, a trader called Pilgrim's Pride Corp.'s bonds lower on the day after news that a strain of bird flu was found at rival Tyson Foods. However, another trader saw the bonds inching higher during the session.

After a seemingly successful debt exchange, Primus Telecommunications Group Inc.'s bonds have been "creeping up," a trader said. The bonds were further boosted on the announcement that Primus had received a long-awaited refund from Australia. Elsewhere in the sector, Charter Communications Inc.'s paper continues to gain ground.

Liquidity troubles weigh on ResCap

Residential Capital saw its debt get "beat up a little," in the words of one trader, after the company said it would need additional liquidity to last through the month.

The trader quoted the 6½% notes due 2013 at 48 bid, 49 offered, the 9 5/8% notes due 2015 at 62 bid, 63 offered and the 6 3/8% notes due 2010 at 50.5 bid, 51.5 offered.

Another source called the 8 7/8% notes due 2015 down a deuce at 49 bid.

ResCap's term loan also inched its way lower, a trader said. The term loan was quoted at 97¼ bid, 98¼ offered, down from 97½ bid, 98½ offered, the trader said.

In a regulatory filing, GMAC LLC's struggling offspring said that it would need around $2 billion in cash by the end of June to meet liquidity needs - about three times more than the company had originally estimated.

To help ResCap stay afloat, both GMAC and Cerberus Capital have taken action. GMAC increased the size of its recent credit line for ResCap to $1.2 billion from $750 million. ResCap reportedly drew $450 million of the additional funds Tuesday.

Meanwhile, both GMAC and Cerberus are buying some of ResCap's assets. GMAC will purchase the resort funding business, while Cerberus will take on ResCap's model home assets, as well as $300 million in mortgages and mortgage-backed securities.

This is not the first time ResCap has needed a bailout. Recently, GMAC initiated a new credit facility for the lending company - the same one that is being increased this time around - to help with liquidity problems. Also, ResCap recently began a debt exchange offer for about $14 billion in debt.

Residential Capital is a Bloomington, Minn.-based mortgage lender.

Tyson bird flu hurts Pilgrim's Pride

A trader said Pilgrim's Pride debt fell slightly, only to regain some losses by the end of the day, on news that rival Tyson Foods had found strains of bird flu in some of its poultry.

"They seemed to trade off, then seemed to rebound in the afternoon," the trader said of the 8 3/8% notes due 2017. He said the paper opened trading around 86, "then drifted down 1 to 1.5 points," ending up from its daily low at 85.5.

Another trader, however, saw the bonds trading up, starting the day at 84 bid, 85 offered, then closing at 85.75 bid, 86.25 offered.

On Tuesday, Tyson Foods said it would put down 15,000 of its chickens in Arkansas that were exposed to a mild strain of the bird flu. During a pre-slaughter check-up, the birds were found to have antibodies for the H7N3 virus.

On the news, Tyson's stock fell as much as 9% during the session. By close of business, the stock rallied some to close down $1.47, or 7.97%, to $16.98.

Pilgrim's Pride is a Pittsburg, Texas-based poultry company.

Primus, Charter gain ground

Primus Telecommunications' paper was "creeping up," a trader said, as the company received a recovery payment from Australia.

The trader pegged the 3¾% notes due 2010 at 42 bid, 44 offered, the 8% notes due 2014 at 38.5 bid, 39.5 offered and the 14% notes due 2011 at 91 bid, 93 offered.

The McLean, Va.-based telecommunications company announced Tuesday that it had received a long-awaited refund from Telstra Corp. for excessive rate charges. The payment totaled A$7.8 million.

"We knew it was coming," the trader said. "But it is always nice to get paid."

"Maybe they have a bit more [cash] to do some more bond deals with," he added, noting that investors have been "fairly positive" about the company since the most recent debt exchange offer.

Meanwhile, St. Louis-based Charter Communications was "holding up," a trader said, as "better buyers of CIH paper" enter the marketplace.

The trader called the 11¾% notes due 2014 "up a little bit" around 69.

Elsewhere, a trader saw Charter's 10% subordinated notes due 2014 a point better at 63 bid, while the company's 8 3/8% senior notes due 2014 were half a point lower at 98 bid.

Broad market mixed

Ply Gem Industries Inc.'s new 11¾% notes were trading around 99, according to a trader, close to the original issue price.

Trump Entertainment Resorts Inc.'s 8½% notes due 2015 ended "probably unchanged but remains active," the trader added. He quoted the bonds at 66 bid, 66.5 offered.

At another desk, a trader saw the debt end at 66.25 bid, 66.75 offered, which he also called unchanged.

"At least they moved around today," he said.

Insight Health Services Corp.'s floating-rate notes due 2011 "continue to trade down," a source stated, calling the bonds 46 bid, 47 offered.

"They just restructured last year and the bonds have just gone straight down," he said.

Spectrum Brands Inc.'s 7 3/8% notes due 2015 gained 1 point to 68.5, while bankrupt air-conditioner maker Fedders' 9 7/8% notes due 2014 eased to 1.25 bid, 2.25 offered from prior levels at 2 bid, 3 offered.

Idearc Inc.'s 8% notes due 2016 were seen up 1 point to 71 bid. At another desk, the bonds were quoted at 72 but were only up slightly.

Sara Rosenberg and Paul Deckelman contributed to this article.

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