Winn-Dixie bonds improve; Adelphia bank debt busy

By Paul Deckelman and Sara Rosenberg

New York, March 9 - Winn-Dixie Stores Inc. bonds were seen improved by about two points on Tuesday, helped by investor response to management changes and an upgrade in the company's stock by a major brokerage house.

In bank loan trading, Adelphia Communications Corp.'s debt was once again a focus in the secondary market, as the company's Century TCI paper headed lower by about a half to three quarters of a point and its FrontierVision paper headed up by about three quarters of a point.

The Century TCI paper was quoted at 96.5 bid, 97.25 offered compared to previous levels around 97 bid, 97.75 offered.

FrontierVision bank debt was quoted at 99.75 bid, up from previous levels of 99 bid, par offered, a trader said.

"I think it's technical because the rest of the Adelphia stuff is basically unchanged," the trader explained. "There's no new news out on the plan [of reorganization]. It seems like it's just going to be a long drawn-out process."

The bankrupt Greenwood Village, Colo. cable television operator's plan of emergence has been a hot topic of conversation ever since it was revealed primarily due to the proposal that banks would be paid out of an escrow account that will be established while litigation on the Rigas situation - Adelphia's claims against its founder and former chairman and his family members - is ongoing. Adelphia has accused the Rigas clan of having diverted hundreds of millions of dollars of company assets into other projects, and patriarch John Rigas and several of his sons and other relatives are currently facing federal trial on similar charges.

In response to this notion, non-agent banks representing over $3 billion of debt have organized a group to oppose the plan, according to various market sources.

Adelphia and substantially all of its debtor subsidiaries filed for Chapter 11 on June 25, 2002.

Mirant loans sink

Meanwhile, Mirant Corp.'s bank debt was lower on Tuesday, also probably due to market technicals, according to a trader.

The Atlanta energy company's 2003 paper was quoted at 55.5 bid, 57 offered compared to previous levels of 56.5 bid, 57.5 offered and the 2004 paper was quoted at 56.5 bid, 57 offered.

"I think there's just a lot of sellers out there or one big one," the trader explained.

Winn Dixie notes "pretty firm"

Back among the bond investors, Winn Dixie's 8 7/8% notes due 2008 "were pretty firm," a distressed-debt trader said, quoting them at 88 bid, 89 offered, "up a point or two."

Another trader noted that the Jacksonville, Fla.-based supermarket operator's shares had been upgraded to "neutral" from "sell" by Merrill Lynch & Co.

The shares were up 66 cents on the day (9.94%) to $7.30 in NYSE trading of 7 million shares, more than three times the norm.

Winn Dixie - whose bonds, formerly trading above par, were beaten down to the high 70s a few weeks ago after Winn-Dixie reported an unexpected quarterly loss - have been gradually coming back since hitting their lows after the company announced plans to tighten its belt and try to improve operations.

On Monday, it announced the abrupt resignation of chief financial officer Richard McCook and his replacement by former Burger King Corp. CFO Bennett Nussbaum.

Weirton Steel off recent lows

Elsewhere in distressed land, a trader noted that Weirton Steel's bonds - which had fallen as low as the 10 bid, 14 offered area recently - were now trading at 12 bid, 18 offered.

Even so, he said, the bonds had been as good as 60-70 a month ago and even a few days ago were seen around 30 bid before having tumbled, first to around 20 bid, and from there down to 10 bid.

"Everyone is afraid of what the judge [overseeing the Weirton, W.Va.-based steelmaker's bankruptcy court reorganization] is going to do. He's destroying value for the bondholders," by letting financier Wilbur Ross "have a high buyout. If anybody else comes in to try to buy the company, they have to pay him a $7 million breakup fee."

In fact the judge lowered the break-up fee somewhat to $4.74 million from $6.375 million but left the up to $500,000 expenses reimbursement and most other terms of the auction unchanged (see report elsewhere in this issue).

Ross's International Steel Group has offered to buy Weirton for $255 million in a deal that includes cash and the assumption of various liabilities. ISG has already bought out of bankruptcy the assets of such once-familiar steel names as Bethlehem Steel, LTV Corp. and Acme Metals. It has thus become the No. 2 player in a considerably shrunken and restructured U.S. steel industry in only two years, and consummating the deal with Weirton would allow ISG to surpass long-time industry leader U.S. Steel Corp. in domestic production.

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