Collins & Aikman bank debt up, bonds off on plan; Metaldyne jumps on buyout report, other autos up also

By Paul Deckelman and Sara Rosenberg

New York, Aug. 31- Collins & Aikman Corp.'s pro rata bank debt headed higher by about 1½ points as the company filed its plan of reorganization.

However, the bankrupt Troy, Mich.-based automotive interior components maker's badly battered junk bonds retreated on the news.

Also coming out of the automotive sector was a news report - unconfirmed as of Thursday evening - that Metaldyne Corp. will be acquired by a Japanese parts maker for as much as $1.28 billion.

That caused the Plymouth, Mich.-based auto parts maker's bonds - which have been on a firmer trend for the past week on merger and acquisition speculation - to zoom on Thursday, and was also seen as having given a lift to such other names in the auto parts parking lot as Visteon Corp. and Lear Corp., traders said.

Collins paper pops on plan

Bank debt traders also cited the Metaldyne news as having helped Collins & Aikman's paper, noting that the stories made the auto sector as a whole feel a touch better.

The traders saw Collins & Aikman's pro rata paper closing out the day at 50 bid, 52 offered, up from Wednesday's levels of 48.5 bid, 50.5 offered.

However, a junk bond trader quoted the company's 10¾ senior notes due 2011 as having retreated to 5 bid, 6 offered from prior levels around 7 bid, 8 offered, suggesting with some understatement that bond investors "must not have liked the plan."

Another trader also saw the bonds fall a point or so to 5 bid, with still others seeing no levels on it in generally light pre-holiday dealings on the last full trading session before the Labor Day break.

Under the newly announced Collins & Aikman reorganization plan, secured bank debt will be converted into common stock in reorganized company.

Unsecured creditors who vote in favor of the plan will receive warrants and interests in a litigation trust.

The hope is that the company, which slid into bankruptcy last year, will be able to emerge from Chapter 11 early next year.

Metaldyne motors upward

Elsewhere in the automotive arena, the standout issue of the day was Metaldyne, particularly its 11% subordinated notes due 2012, which zoomed into the mid-90s from prior levels in the mid-to-upper 70s, propelled by a report on the widely seen Bloomberg news service - which, in turn, quoted a report on Nikkei English News, a Japan-based newswire - indicating that Metaldyne will be bought by Asahi Tec Corp. for as much as $1.28 billion. Asahi is controlled by New York investment firm Ripplewood Holdings, LLC.

A spokeswoman for Metaldyne, Tina Kozak, the company's manager of communications and public relations, told Prospect News that "it is a news story - it is not a press release" and that there had been no official word on such a deal from Metaldyne or either of the other two companies, Asahi or Ripplewood.

"We're always looking for opportunities to grow the business," she said - but added that Metaldyne does not comment on financial market speculation or on M&A activities.

While acknowledging the company's disclaimer, a trader said that "the company did not announce it - but it's apparently true."

He quoted the 11s as being "up big" at 91.5 bid, 93.5 offered, which he called a 17-point leap from Wednesday's closing levels, while Metaldyne's 10% senior notes due 2013 were 5 points better on the day at 99.5 bid, 100.5 offered.

"Buy the rumor, sell the fact," he said, invoking the traditional market adage about speculative activity. "Both issues have change-of-control puts at 101," which would require the company to buy those bonds back at that price in the event of a change-of-control, he said. However, he raised the possibility that the company might "try to get around" the language.

Another trader, who saw the 11s jump as high as 96 bid from their prior levels in the 70s, before settling in around 94 bid, 95 offered late in the day, while the 10s went to par, also said that "there are issues over this change-of-control put - whether the wording [of the indentures mean that such a deal] will trip the covenants that would allow you to put the bonds."

He didn't know specifically "if the wording allows them to structure the deal to not have to put the bonds, or leave them outstanding. I'm sure that there's some dialogue in trading going around about that."

He added that "right now, everyone's thinking that the predominant thought is that these bonds have a change-of-control put that would allow the bondholders to put them to the company," although he acknowledged that the covenants might be worded in such a way that the company might be able to avoid tripping them.

At another desk, Metaldyne's subordinated bonds were seen having closed Wednesday around 79, and then having opened a few points down from that level on Thursday, and having traded in a mid to upper 70s context on only moderate activity until around 3 p.m. ET, when the Bloomberg news report hit the tape - and right after that the bonds jumped into the 90s, with heavy volume for the remainder of the session, swinging from lows around 90 to highs at 96 before finally settling in around 94 - although there was some light activity, with smaller trades in the 80s very late in the day, a source indicated. The 10s meanwhile had spent most of the day in the mid-90s before jumping to levels in the par area around 3 p.m. ET and then staying there.

Yet another trader pegged the bonds at 92.5 bid, 94.5 late in the day, up from 79.25, calling it a 13 to 15 point rise, while seeing the 10s at 99 bid, 100.5 offered, up from 93.5 bid, 94.5 offered.

Metaldyne tows auto names up

The trader opined that the Metaldyne news - or speculation, if you prefer - "seemed to spark buying in the other auto parts names." Specifically, he said "Visteon and Dana [Corp.] might have moved up on this."

He saw Visteon's 8¼% notes due 2010 at 99 bid, par offered, up 1½ points on the day, while the Van Buren Township, Mich.-based former Ford parts unit's 7% notes due 2014 were up 1½ points "or maybe even a bit more" at 91 bid, 92 offered.

He calculated Dana's 6½% notes due 2008 at 80 bid, 81 offered, up 1¼ points on the session, while the bankrupt Toledo, Ohio-based auto components maker's 5.85% notes due 2015 were ¼ point better at 70 bid, 71 offered, while its 7% notes due 2028 rose ½ point to 74 bid, 75 offered.

And he saw Lear's 8.11% notes due 2009 at 97.75 bid, 98.75 offered, a 1 point gain, while the Southfield, Mich.-based automotive interior and seating components manufacturer's 5¾% notes due 2014 were up 1 point to 1¼ points at 82.5 bid, 83.5 offered.

The rise was by no means universal; the trader saw bankrupt Troy, Mich.-based automotive electronics manufacturer Delphi Corp.'s 7 1/8% notes due 2029 unchanged at 79.75 bid, 80.75 offered, while its 6½% notes due 2009 were actually down ¼ point at 87.75 bid, 88.75 offered.

Another trader agreed that many auto parts names were "up a point on the Metaldyne news."

He singled out Visteon's 7s, quoting them at 90 bid, 91 offered, and also seeing Lear and Dura Automotive Systems Inc. a point better.

The bonds of the latter company, a Rochester Hills, Mich.-based auto parts maker, were seen up between ½ point and 1½ points, with its 8 5/8% senior notes due 2012 rising to 73.5 bid, 74.5 offered from prior levels at 72 bid, 73 offered, a trader said, while its 9% subordinated notes due 2009 firmed to 15 bid, 16 offered, a ½ point gain.

Ford spins wheels

An automotive name seen having traveled little or no distance on the day was Ford, whose 7.45% notes due 2031 were essentially unchanged at 78 bid, 78.5 offered.

Ford's bonds, and those of its financing arm, Ford Motor Credit Co., have been firming over the past week on news stories that have fueled speculation that the carmaker may make major moves to get itself out of the money-losing ditch into which it has driven - among them, the possible sale of a stake in Ford Credit, the possible sale of its money-losing Jaguar operation, Ford possibly partnering up with European and/or Japanese rivals like General Motors Corp. is trying to do, and the controlling Ford family possibly taking the company private, giving it more flexibility to address its problems without having to report to public shareholders. However, the company announcement Friday that it would seek to sell part or all of its Aston-Martin operation to raise capital for its other divisions did little or nothing for the bonds.

While the sporty Aston-Martin gained world-wide fame as the dependable vehicle in which legendary movie spy James Bond sped away from danger in films such as Goldfinger, Thunderball and, more recently, Die Another Day, a trader said selling it would not do very much to let Ford speed away from its current financial danger.

"It's too small. They need to sell a bigger piece," he insisted.

The Ford announcement made no mention of possibly selling Jaguar, a prestigious, but money-losing part of the company's Premier group, which also includes Aston-Martin, Land Rover and Volvo. News reports last week indicated that Ford was in talks to sell Jaguar to an investment group headed by former Ford CEO Jacques Nasser - the man who got Ford to buy the pricy European brands in the first place when he ran the company from 1999 to 2001 - but there has been no official confirmation of such negotiations.

Ford Motor Credit's 7 % notes due 2013 were down ¼ point Thursday at 92.5 bid, 93 offered. Ford arch-rival GM's 8 3/8% benchmark notes due 2033 were meantime unchanged at 83 bid, 83.75 offered, while its General Motors Acceptance Corp. financial unit's 8% notes due 2031 were down ½ point at par bid, 100.5 offered.

Charter up - but not much else

Apart from the autos, a trader saw Charter Communications Inc.'s bonds - which firmed on Wednesday on news that the debt-laden St. Louis cable operator had extended and expanded its previously announced bond exchange offer - as continuing to firm, quoting its 8 5/8% notes due 2009 and 10% notes due 2011, each of which is included in the exchange offer, as having gained a point to 90 bid, 91 offered and 73 bid, 75 offered, respectively. He saw the cabler's 8 3/8% notes due 2014 - not included in the exchange offer - as unchanged at 101 bid, 102 offered.

He also saw Movie Gallery Inc.'s 11% notes due 2012, which had firmed Wednesday, along with its stock, on a mixture of short covering, M&A rumors and speculation about other positive developments, unchanged Thursday, at 66 bid, 68 offered.

Adelphia Communications Corp. was up a point.

Otherwise, he said, there was "nothing doing" in such familiar distressed names as Northwest Airlines Corp., Delta Air Lines Inc. or the asbestos-challenged Owens Corning or Armstrong World Industries Inc.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.