Technical Olympic bonds, shares on rebound; Le-Nature's bank debt off

By Paul Deckelman and Sara Rosenberg

New York, Nov. 8 - Technical Olympic USA Inc.'s bonds - which nosedived on Tuesday when a lender demanded that it put up additional money to bail out a struggling joint venture - were seen to have bounced back Wednesday and recovered at least part of those losses.

In the bank debt market, Le-Nature's, Inc.'s term loan B spiraled lower on Wednesday seemingly on market technicals.

A trader saw the Latrobe, Pa.-based flavored bottled water maker's term loan B closing out the day quoted at 40 bid, 45 offered, down from Tuesday's levels of 47 bid, 50 offered.

"People who bought it don't want to buy it anymore and the bids just kind of dried up," the trader said in explanation of the bank debt's performance.

Le-Nature's is currently in Chapter 11 proceedings after having an involuntary Chapter 7 bankruptcy converted over the past week.

That involuntary Chapter 7 had been filed by creditors amidst claims that the company falsified documents, showed discrepancies in financial results, diverted funds and destroyed documents.

In the junk bond market meantime, Le-Nature's' 9% notes due 2013 were seen at 13.5 bid, 15 offered, down a little for 14 bid, 16 offered on Tuesday, although a trader said that while the bonds were "down a little, there was not much action."

Those bonds began their slide into oblivion from prior levels around par a week ago, swooning badly last Wednesday on the revelations about the company's problems, falling to levels below 10. After an inconclusive Thursday, the bonds moved back up to around the 14 area Friday on news of the effort to change the Chapter 7 proceedings into a Chapter 11 case.

Technical Olympic bonds come back

Also in the junk market, Technical Olympic USA's bonds - which fell as much as 6 points on Tuesday - recovered at least half of that back on Wednesday.

A trader saw the Hollywood, Fla.-based homebuilder's 10 3/8% notes due 2012 as having partially recovered from Tuesday's plunge to end at 86.5 bid, 87.5 offered.

The company's New York Stock Exchange-traded shares, which on Tuesday had nosedived 35% on nearly 20 times the usual turnover, were also on the rebound Wednesday, up 48 cents (6.86%) to end at $7.48. Volume of 6.4 million shares was about eight times the norm.

The bonds and shares had careened downward Tuesday on investor fears that the company might be forced to bail its floundering Florida joint venture and might even face bankruptcy - speculation which at this time is strictly unconfirmed and unofficial.

Deutsche Bank, the lead bank for a group of lenders to Technical Olympic's troubled Transeastern homebuilding venture, said that "TOUSA has an obligation to undertake funding initiatives to stabilize the borrower."

However, Technical Olympic rejected that demand, saying that it is in talks with the lenders about the situation, but does not believe any obligations related to financing the venture have been triggered.

It blamed Transeastern's problems on heavy debt and a weak Florida housing market rather than on anything for which it might be held responsible.

Transeastern's term loan has recently been trading in the 75 bid, 80 offered area.

Movie Gallery off, Adelphia up

Elsewhere in distressedland, Movie Gallery Inc.'s 11% notes due 2012 were seen down 2 points at 63 bid, 65 offered. Traders saw no news on the Dothan, Ala.-based video rental store chain operator.

Adelphia Communications Corp.'s bonds were up about a point, with the bankrupt Greenwood Village, Colo.-based cable operator's 10¼% notes due 2006 firming to 79 bid, 81 offered, and its 10¼% 2011 notes at 82 bid, 85 offered.

Federal-Mogul Corp.'s bonds were seen firming, although traders had seen no fresh news on the bankrupt Southfield, Mich.-based automotive braking systems maker. The bonds moved up to 67.5 bid, 68.5 offered, up from 65 bid, 66 offered earlier.

Also in the automotive realm, Delco Remy's notes were down about 2 points across the board, with the Anderson, Ind.-based electronics parts company's 8 5/8% notes due 2007 at 88 bid, 90 offered, its 11% notes due 2009 at 46 bid, 48 offered, and its 9 3/8% notes due 2012 at 41 bid, 43 offered.

And Dura Automotive Systems Inc.'s 8 5/8% notes due 2012 were down 2 points at 26 bid, 27 offered. The bankrupt Rochester Hills, Mich.-based components maker's 9% subordinated notes retreated to 5.5 bid, 6.5 offered from prior levels at 7 bid, 9 offered.

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