Collins & Aikman bonds seen firmer, but other autos aren't; Mirant loans edge up again

By Paul Deckelman and Sara Rosenberg

New York, March 4 - Collins & Aikman Products Co. bonds were seen a bit higher on Friday as the Troy, Mich.-based automotive components supplier seemed to try to regain some of the bounce-back momentum it had showed in each of the previous two sessions. However, other names in the troubled automotive supply sector languished on the downside.

In bank debt trading, Mirant Corp.'s paper was up modestly yet again, capping a week-long rally which has been attributed to positive market technical factors.

Collins & Aikman's bonds "were actually up," even as many of its peers in the automotive supplier sector were lower.

The trader quoted the Collins & Aikman 10¾% senior notes due 2011 at 93 bid, 93.75 offered, up half a point on the day, while he saw the company's 12 7/8% subordinated notes due 2012 "pretty much were they were" previously at 69 bid, 70 offered.

A trader at a distressed-debt shop concurred that "they bounced a little," quoting the bonds at those same 93 and 69 bid levels.

There was no fresh news seen out on the company, whose shares and bonds had been getting smacked around during several previous sessions following a recent article in Collins & Aikman's hometown newspaper, the Detroit Free Press, that warned that the maker of plastic automotive interior and exterior components might be badly impacted by continuing high oil prices, since these translate into higher plastics prices.

While Collins & Aikman's bonds were seen better on the session - perhaps in reaction to having been oversold in previous sessions prior to Wednesday's - that failed to tow the other distressed auto names higher.

A market source quoted Visteon Corp.'s 7% notes due 2014 down a point at 88.5 bid, while at another desk those bonds were seen at 88 - which they called down a full point - and its 8¼% notes due 2010 were likewise down a point at 97.25 bid, 98.25 offered.

Dearborn, Mich.-based Visteon - formerly a unit of Ford Motor Co. - still does much of its business with the Number-2 U.S. carmaker, and news of the latter's recent announcement of output cuts have thrown it for a loop.

Another automotive name, RJ Tower Corp. - a subsidiary of the bankrupt Novi, Mich.-based vehicle frame maker Tower Automotive Inc. - was seen unchanged at 60.75. The 9¾% notes due 2009 of bankrupt Rochester Hills, Mich. Intermet Corp. were seen hanging in there at 66.25.

The malaise affecting the auto suppliers isn't just seen in the depressed precincts, as illustrated by Friday's activity in split-rated Delphi Corp.'s bonds, which fell several points - although they bounced most of the way back from their losses after Standard & Poor's and Moody's Investors Service threatened to demote them to junk status after heads rolled in the executive suite at the Troy, Mich.-based supplier of vehicle electronic components amid an internal accounting investigation.

Delphi "was the most active issue in crossover land," a trader said, quoting its 6½% notes due 2009 down a point to 97 bid, 97.5 offered, while its 6½% notes due 2013 lost two points to finish at 90.25 bid, 91.25 offered, and its 7 1/8% notes due 2029 were nearly three points lower at 85.5 bid, 86.5 offered.

The bonds declined after the company announced in a filing with the Securities and Exchange Commission that Alan Dawes had resigned as CFO and was also stepping down as vice chairman and giving up his seat on the company's board. Delphi's chief accountant and controller, Paul Free, also left the company, while John Blahnik, up till now its vice president of treasury, mergers and acquisitions, was demoted.

The executive bloodletting comes in the midst of an internal accounting probe. A special audit committee scrutinizing the company's accounting practices found that Delphi had overstated its cash flow by $200 million in 2000 and overstated its pretax income by about $61 million in 2001. The committee said that investors ought not to rely upon independent auditors' reports for 2001 and subsequent periods because of extent of the problems.

The company plans to restate its earnings by June 30.

Mirant loans keep rising

Elsewhere, Mirant's '03 and '04 bank loan paper was called a touch stronger on Friday, with levels up about a quarter of a point to 77.75 bid, 78 .25 offered from 77.5 bid, 78 offered, according to a trader.

The Atlanta energy company's paper has been on the rise since the start of the week, gaining about a point every day essentially on market technicals.

The strengthening has also been attributed to increased investor focus on the name due to a research report that came out earlier in the week that claimed Mirant's EBITDA may be understated, a different trader previously explained to Prospect News.

While Mirant's bank paper was a bit firmer, the recent companion trend of a rise in the company's bonds "sort of stopped today." a trader said. He quoted its 2½% convertibles unchanged at 78 bid, 80 offered, while its 7.40% notes due 2004 and 7.90% notes due 2009 were "holding steady" at 83 bid 84 offered.

Winn-Dixie gains

Winn-Dixie Stores Inc.'s bonds were seen higher, although there was no fresh news about the bankrupt Jacksonville, Fla.-based supermarket chain operator.

Its 8 7/8% notes due 2008 were a point better than recent levels at 60 bid, 62 offered, while its real estate-secured pass-through notes were a point up at 80 bid, 82 offered.

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