FiberMark files for Chapter 11, Sbarro, Telewest better; Mirant loan gains

By Paul Deckelman and Sara Rosenberg

New York, March 30 - FiberMark Inc., as expected, filed for Chapter 11 protection from its junk bond holders and other creditors on Tuesday, causing its distressed bonds to begin trading flat, or without their accrued interest. Other notable distressed-bond names included Sbarro Inc. and Telewest plc both of which were seen better on the session.

In the distressed bank loan market, Mirant Corp. and Exide Technologies were being called pretty active, with Mirant's 2005 bank debt heading higher by about two points on the day.

FiberMark's 10¾% notes due 2011, which had recently been firming off their recent lows, possibly in anticipation of such a bankruptcy filing, were being quoted around 55.5 bid, 56.5 offered, and trading flat, without the accrued interest. A trader said that was where the bonds had nominally been trading previously, although the loss of the accrued interest effectively amounts to a drop of "five or six points" in the bonds' real value. He said the bonds had opened at a wide 40 bid, 60 offered on the anticipation that the widely expected bankruptcy filing would come Tuesday and then tightened up as the session wore on to their closing levels.

Another trader saw the bonds move up to about 55 from prior levels at 53, but also noted the changeover to trading flat.

The Brattleboro, Vt.-based maker of fiber products for industry blamed a weak economy and recession in its key markets for forcing it to seek court protection, along with such other factors as acquisition-related debt and declining sales as a result of business divestitures.

The company has gotten a commitment for $30 million of debtor-in-possession financing from GE Commercial Finance.

Haynes higher, Kaiser edges lower

The bonds of Haynes International Inc., which preceded FiberMark into bankruptcy by a day, were seen having firmed slightly from Monday, its 11 5/8% notes scheduled to mature in September moving up to 67 bid from around 66 on Monday. The Kokomo, Ind.-based metal alloys company's bonds are also now trading flat.

Bankrupt Houston-based metals producer Kaiser Aluminum & Chemicals Co. reported a fourth-quarter net loss of $573.2 million ($7.16 a share), considerably wider than its net loss of $270.8 million, ($3.37 a share), a year earlier.

Higher energy costs, and big non-cash charges associated with its ongoing restructuring, such as $368 million to impair the assets of a Louisiana alumina refinery and bauxite mining operation, and another $121 million for the terminating Kaiser's salaried employee pension plan, were the main culprits.

Kaiser's bonds were little affected by the financial data, with the senior notes, such as its 10 7/8% notes due 2006 and its defaulted 9 7/8% notes that were to have come due in 2002, both quoted down just a quarter point at 91 bid. Its subordinated 12¾% notes, which were to have matured last year, remain far down the food chain when it comes to expected recovery; those bonds dipped half a point to 13.5 bid.

Another trader saw the subordinated notes in a "12-ish" kind of context and the other issues in the "lower 90s," but allowed that there was "not much activity" in the bonds of Kaiser, which still hopes to emerge from Chapter 11 later this year.

Mirant, Exide bank debt active

In the bank debt arena, Atlanta-based energy producer Mirant's 2005 paper was seen trading as high as 73.5 and quoted settling in at 73 bid, 74 offered by the end of the day, a trader said.

Mirant filed for Chapter 11 last July.

Meantime, Princeton, N.J.-based battery maker Exide's paper was quoted at 73.5 bid, 74.5 offered, and it "continued to trade actively [Monday and Tuesday]," the trader added.

No specific news has emerged on either Mirant or Exide recently that would have pushed levels higher and increased trading, market participants said.

"There could be some speculation on people trying to mark their books at the end of the month so things might be trading up," the trader explained.

Exide filed for Chapter 11 in April 2002.

Sbarro rises

Back among the bond investors, a trader in distressed issues saw Syosset, N.Y.-based cafeteria-style Italian restaurateur Sbarro Inc.'s 11% notes due 2009 "up a couple of points" to 86 bid, although he saw no news out on the company. However Sbarro did file its 10-K report with the Securities and Exchange Commission Monday.

At another desk, those Sbarro bonds were seen as high as 87 bid, up 2½ points on the session.

Another gainer was Telewest Communications, whose 9 5/8% notes due 2006 were seen up more than two points, around the 63.5 bid area, from recent levels in the 50s.

No news was seen out on the British-based cable operator; however, there has lately been market scuttlebutt heard that rival Eurocabler NTL Inc. might seek to buy its troubled competitor when NTL completes its new financing, including an 800 million (sterling) multi-currency bond issue.

Other problematic names heard around on Tuesday included Levi Strauss & Co. Inc., whose 11 5/8% notes due 2008 were half a point lower in the 76 bid area, and satellite producer Loral, whose 10% notes due 2006 continued to orbit around the 74 level, up a point on the session.

A trader said that the news that the Organization of Petroleum Exporting Countries will likely agree to implement oil output cuts, which will mean higher prices for fuel in general and jet fuel in particular, had little impact on the bonds of bankrupt Chicago-based airline giant UAL; he saw its bonds remaining at 13 bid, 14 offered, "pretty much unchanged."

And he saw no further movement in Italian dairy producer Parmalat's dollar denominated 6 5/8% notes due 2008, "a little quiet and pretty much unchanged" at 13.

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