Collins & Aikman rises on narrower third-quarter loss; Dan River steady; WestPoint Stevens higher

By Carlise Newman

Chicago, Nov. 13 - Collins & Aikman Corp. bonds were higher after the company reported a narrower third-quarter loss on lower expenses and reaffirmed its 2003 guidance, excluding restructuring and impairment charges.

In a press release Thursday, the auto supplier said its third-quarter loss was $32.1 million, or 38 cents a share, compared with a loss of $45.2 million, or 54 cents a share, last year.

The benchmark 10¾% notes due 2011 firmed 3 points to 87 bid, one trader said. But another source pegged the notes 2 points higher at 86 bid. Yet another had the same issue up 4 points to 88 bid.

The bonds had dropped about 3 points last week on news that DaimlerChrysler AG had dropped two of the company's contracts. Then the paper slowly rebounded as news reports quoted analysts saying the troubled auto parts supplier would weather the loss.

"People were ecstatic about the report," one trader said.

The third quarter, which is typically Collins & Aikman's weakest, according to the release, included impairment and restructuring charges totaling $16 million, or 19 cents a share.

The restructuring charge was related to costs associated with reducing the company's salaried workforce by 14%.

Sales for the quarter fell 2.2% to $902.2 million from $922.5 million a year ago, reflecting reduced North American customer build volumes.

The Detroit-based company, which announced in August it was cutting its work force by 14%, said plant level operations in both Europe and North America were much stronger in the third quarter than last year.

"We are now highly confident that we have completed phase one of our integration program, which was the sweeping consolidation of our global factory footprint by closing a dozen sub-scale or obsolete plants," the company said, "And we are now in the midst of phase two, which is the rightsizing of our salaried work force."

Collins & Aikman said the job-cutting actions coupled with other operational restructuring activities are expected to result in additional cash restructuring charges of about $11 million over the next two quarters and are expected to reduce costs by $75 million per year.

Collins & Aikman said there is no change to its previous 2003 loss estimate, excluding items. In August, the company forecast a loss of 40 cents to 50 cents a share before items.

Elsewhere, Amerco's 7.85% notes due 2003 were seen unchanged at 97 bid after the U-Haul parent said it reached an agreement with its official committee of unsecured creditors regarding the treatment of their claims under the company's reorganization plan, and the committee has agreed to support the plan.

Under the terms of the agreement, the holders of over $700 million of unsecured debt would receive a combination of cash and new notes in full payment of their claims, with no dilution of the company's existing equity.

The Las Vegas-based company is amending its pending plan to incorporate the treatment. The committee has agreed to actively support confirmation of the plan and to recommend that all parties in interest vote in favor of the plan.

Meanwhile Dan River Inc. paper was recovering Thursday after a few days of being weighted by the third-quarter loss that was released late Monday.

The Danville, Va.-based company posted a net loss of $103.5 million, or $4.70 a share, compared with net income of $4.7 million, or 21 cents a share, a year earlier. Net sales for the quarter ended Sept. 27 were $103.7 million, down nearly 30 percent from $147.4 million a year earlier.

The company's 12¾% notes due 2009 were unchanged at 23 bid after a drop of 3 points earlier in the week from the report, and a continued slide of 1 point Wednesday, according to a trader.

"It's not really remarkable that they didn't move today, but it was expected that the momentum of the slide would just push them lower again today," he said.

That issue had dropped several points lower a few weeks ago when the company said it would have difficulty meeting covenant requirements. The bonds had begun to recover last week, then on Friday fell 3 points to 26 bid.

In other news, WestPoint Stevens Inc.'s 7 7/8% notes due 2008 were up 1½ points to 13 bid. The bonds have held relatively steady at those levels for the past few weeks.

The West Point, Ga. bedding and towel maker said in mid-October it is negotiating a new bankruptcy reorganization plan after setting aside a previous agreement with debt holders. That plan has not yet been released.

International Wire Group's 11¾% notes due 2005 were up 1 point to 57 bid. That issue had fallen over 6 points last week for no particular reason, according to traders, but then seemed to recover gains this week with a 2 point rise on Monday.

WorldCom Inc.'s 8% notes due 2006 were up 1 point to 38 bid, according to a trader. The bonds have been rising a point or so each day since the telephone company's reorganization plan was confirmed Oct. 31.

"It was pretty dead today. Some people left early, which is odd for a Thursday," one trader said of the day's activities.

(Paul Deckelman contributed to this report)

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