Collins & Aikman holding steady after Friday's reports; Allegheny Energy seen on desks

By Carlise Newman

Chicago, Oct. 6 - Collins & Aikman Corp. bank debt was treading water Monday after reports suggested the troubled company may lose contracts from DaimlerChrysler AG's Chrysler Group on Friday.

The Detroit Free Press said Friday that Chrysler Group is ready to rebid all current and future contracts with the auto parts supplier.

Chrysler's current and planned business with Collins & Aikman is worth $1 billion, according to the newspaper.

Collins & Aikman's bank debt was seen "hanging in there" at 98 bid, 98¼ offered, a trader said, about ¼ point lower than Friday's closing price. During that session, the debt fluctuated between levels as low as 97½ bid and 98¼ bid.

"It's steady today but lying low to see what happens," the trader said. "Wait a few days and see where it goes if Chrysler goes through with this."

News reports have said that losing Chrysler's business would be a huge blow to Collins & Aikman, which analysts expect to report a loss this year of $65 million on sales of about $4 billion.

Collins & Aikman chairman and chief executive officer David Stockman was quoted by the Detroit Free Press saying the idea that Chrysler would put most or all of Collins & Aikman's business up for grabs was "flat wrong."

The story also quoted another unidentified executive of the parts supplier as saying that Chrysler could not re-source most of its business with Collins & Aikman - among its 10 largest suppliers - because it has several new models upcoming for which Collins & Aikman is a key supplier of interior component parts on, and throwing those contracts to someone else at this stage of the game would disrupt the rollout of those new Chrysler models.

Also buzzing Monday was Allegheny Energy Inc. bank debt. The second-lien debt was seen at 97 bid, 97¾ offered, a trader said.

"That's not bad, it's pretty firm for all the trouble they're facing," he said. "But they're doing this right...they're heading toward better days."

About a week ago, the bank debt had been dropping after the company said in a conference call it will not have enough cash to pay $350 million in bank debt due next year and that it plans to refinance $1.45 billion in bank debt due in 2004 and 2005.

But the company said it is no longer facing a liquidity crisis and expects to be able to access the public markets once it brings its financial reporting up to date. In the meantime, it will need to obtain waivers from its bank lenders after the current provisions expire at the end of the third quarter.

The Hagerstown, Md.-based energy company said that while it has waivers from bank lenders for financial covenants through the third quarter of 2003, without additional waivers the company could be in default under its credit facility after that.

Allegheny filed its 2002 annual report over a week ago after a delay due to an accounting probe and said it anticipates filing its delayed quarterly results for 2003 by the end of the year.

The company said its liquidity currently consists of $275 million in 11 7/8% convertible trust preferred securities maturing 2008 and callable in 2006; $72 million in tax refunds; $46 million from the sale of its Conemaugh plant and $43 million from the settlement of California Department of Water Resources sale/tolling agreements.

Through Dec. 31, Allegheny is required to make payments including $265 million of scheduled payments under its bank credit facilities; $47 million of other maturing and amortizing debt, which excludes $37 million of securitization debt that will be repaid from a dedicated revenue stream; and $25 million in payments scheduled to be made to trading counterparties through the end of 2003.

Elsewhere, Centerpoint Energy's $925 million term loan B, which is priced at Libor plus 350 basis points and was offered to investors at par was seen at 101 bid Monday, its third day in the secondary bank loan market. The debt was ¼ of a point higher, traders said.

The paper contains call protection of 102 in year one and 101 in year two. The Houston public utility holding company's $2.275 billion credit facility also contains a $1.35 billion revolver with an interest rate of Libor plus 300 basis points.

JPMorgan and Citigroup are the lead banks on the refinancing deal.

"A holiday session is always quiet, and this one is no exception," a trader said of Monday's action, referring to the Yom Kippur holiday.

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