Asbestos bank debt up on USG statement OK; Delphi bonds off highs

By Paul Deckelman and Sara Rosenberg

New York, April 10 - Bank debt of asbestos names generally got a lift on Monday as USG Corp.'s disclosure statement received court approval.

However, the news did not do much for the bonds of either the bankrupt Chicago-based building materials maker or those of such other bankrupt asbestos-challenged companies as Owens Corning or Armstrong World Industries Inc.

Elsewhere, the bonds of Delphi Corp. - which had gone on an upside ride on Friday after the bankruptcy judge overseeing its restructuring approved the company's plan to offer buyouts to thousands of its hourly employees to get them to take early retirement - fell back from those highs.

Bank debt traders saw USG's paper quoted at 141 bid, 143 offered, up about a quarter to a half a point, the trader said.

Also inching higher by a quarter to a half Monday was the bankrupt Toledo, Ohio-based insulation maker Owens Corning, with its bank debt quoted at 153.75 bid, 154.75 offered, and bankrupt Columbia, Md.-based chemical manufacturer W.R. Grace & Co., with its bank debt quoted at 142.5 bid, 143.5 offered, the trader added.

Over in the junk bond market, however, a trader said that Owens Corning's bonds held steady at previous levels around 88 bid, while those of the bankrupt Lancaster, Pa.-based floorcovering maker Armstrong were stable at 73 bid, 74 offered.

The trader also saw USG's 9¼% notes that were to have come due in 2001 at 148 bid, while its 8½% notes that were to have matured last year at 146. "Nobody trades them," he said, "because everyone knows they're money good."

On Monday morning, USG announced that its disclosure statement and plan voting procedures got the judge's okay, paving the way for the company to solicit votes from asbestos personal injury claimants on its plan of reorganization.

The company had already announced on Jan. 30 an agreement to resolve the asbestos personal injury claims in its Chapter 11 reorganization case. Under the proposal, a personal injury trust would be established to pay asbestos personal injury claims. USG's bank lenders, bondholders and trade suppliers would be paid in full, with interest. Stockholders would retain their shares in the company.

Under the court's order, voting on the plan runs until June 2 and any objections to the plan must be filed by May 26. Confirmation hearings are scheduled for June 15 and 16 in Pittsburgh.

Movie Gallery, Adelphia higher

Elsewhere, a trader saw Movie Gallery Inc.'s bonds up about three points on the session, the 11% notes due 2012 rising to 47 bid, 49 offered. He saw no fresh positive news on the Dothan, Ala.-based Number-Two U.S. home video rental and sales chain operator that might explain the rise, chalking it up instead to just "more Street trading."

And he saw Adelphia Communications Corp.'s 10¼% notes due 2011 up two points on the session, at 62 bid, 64 offered, while its 10¼% notes due 2006 were three points better at 58 bid, 60 offered.

However, here again, there was no news seen out on the bankrupt Greenwood Village, Colo.-based cable operator that might explain the firmness.

Charter up on earnings forecast

In that same industry, a trader said that Charter Communications Inc. bonds rise as the debt-laden St. Louis-based cable operator was "basking in the warm afterglow" of earnings projections it released late Friday. He saw Charter's 11 1/8% notes due 2011 up two points to 56.5 bid.

Charter said on Friday that it expects its first-quarter revenue to come in ahead of Wall Street expectations, citing increased marketing efforts and higher customer subscriber numbers.

Charter predicted first-quarter revenue will range between $1.37 billion and $1.38 billion, up about 8% to 9% over last year's $1.27 billion, and somewhat above the consensus analysts' revenue estimates of $1.35 billion in revenue. It said EBITDA will be flat versus last year at $475 million.

Delphi slips back

In the automotive area, Delphi's bonds "gave back all of Friday's gains," a trader said, quoting them down about three points on the day to 62 bid, 63 offered.

That, in turn, "caused most of the other auto parts guys, Visteon and the like, to go about a point lower across the board," he said.

Another trader saw Delphi's bonds, such as its 6.55% notes due 2006 and its 7 1/8% notes due 2029, dip as low as 62 bid, 63 offered, before coming slightly up from that nadir to finish at 63 bid, 64 offered, which he called down three points from Friday's levels.

The bonds had firmed on Friday on the news that, as expected, judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York, which is overseeing Delphi's restructuring, had given the company the green light to proceed with its buyout plan, which is to be funded by the bankrupt Troy, Mich.-based auto components company's former parent, General Motors Corp. Besides funding Delphi's buyouts to up to 13,000 of the latter company's 34,000 hourly workers, GM will also accept transfers of up to 5,000 additional Delphi employees back to GM, which owned Delphi until the latter's 1999 spin off.

But all is not well in Delphi-land, despite the buyout agreement with GM, which the United Auto Workers union has also signed off on. Delphi said it needs more help from GM and the UAW in cutting its heavy labor costs, inherited from GM, and after months of negotiations filed motions with the bankruptcy court at the end of March asking the court to allow it to void its union contracts and unprofitable supply contracts that it has with GM, still its largest customer. The union has threatened a strike if Delphi tries to void the labor agreements.

GM little moved

Neither the good news about the judge permitting the buyout plan to go forward, nor the continued bad news about the labor situation had much impact on GM's bonds on Monday, with its benchmark 8 3/8% notes due 2033 seen little changed around 70.25 bid, 71.25 offered, and GMAC's 8% notes due 2031 around 92 bid, 93 offered.

Elsewhere in the automotive area, a trader saw GM rival Ford Motor Co.'s 7.45% notes due 2031 down a quarter at 71.25 bid, 72.25 offered, and saw its Ford Credit financing subsidiary's 7% notes due 2013 unchanged at 87.25 bid, 87.75 offered.

Dana lower

The trader saw Dana Corp.'s bonds all down ¾ point to a full point across the board, in line with a generally easier automotive area. The bankrupt Toledo, Ohio-based parts maker's 6½% notes due 2008 fell to 78.25 bid, 79.25 offered, its 5.85% notes due 2015 were at 73.75 bid, 74.75 offered, while its 7% notes due 2028 lost a point at 74.75 bid, 75.75 offered.

Dura Automotive Systems Inc.'s bonds were little changed on the session, its 9% notes due 2009 steady at 48.5 bid, 50.5 offered, while its 8 5/8% notes due 2012 continued to hover around 83.325 bid, 84.425 offered.

During a presentation at Morgan Stanley's annual Automotive Conference in New York, Dura's chief financial officer, Keith R. Marchaindo, said that the Rochester Hills, Minn.-based maker of transmission shift levers, door modules, window systems and other component parts has adequate liquidity - especially since it did a $75 million bank facility add-on last month - faces no serious debt maturities before May, 2009, when $524 million of 9% notes are slated to come due, and is proceeding on schedule with a global restructuring plan that he and chief executive officer Larry Denton announced in early February (see report elsewhere in this issue).

Other than the autos, Delta Air Lines Inc.'s bonds were seen down a point, to 24 bid, 25 offered, while rival bankrupt air carrier Northwest Airlines Corp.'s notes were steady at 43 bid, 45 offered.

And Refco's 9% notes due 2012 were a point lower at 61 bid, 63 offered, several traders said.

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