Adelphia debt up as company hires advisors; J.L. French up on tender news

By Paul Deckelman and Sara Rosenberg

New York, July 14 - Adelphia Communications Corp. was a big focus in Wednesday's distressed bank loan market, traders said, as the company announced that it had retained advisors to assist in a potential sale. That is a move that many creditors had been urging and that the market seemed pleased with.

Among bond investors, J.L. French Automotive Casting Inc.'s bonds jumped nearly 10 points as the Sheboygan, Wis.-based automotive components manufacturer said that it would tender for those bonds using a portion of the proceeds from a new financing effort.

Parmalat Finanzaria SpA bonds were "on a real roller coaster" Wednesday, a trader said, after the bankrupt Italian-based dairy products company unveiled its reorganization plan - which makes some creditors whole, but gives others as little as 11 cents on the dollar for their claims.

Adelphia's New Century bank debt was quoted at 96.5 bid, 97.5 offered and the Old Century bank debt was quoted at 97 bid, 98 offered, with both tranches said to be up about half a point on the day, a trader said.

On Wednesday morning, the bankrupt Greenwood Village, Colo.-based cable operator announced that it hired UBS Investment Bank LLC and Allen & Co. LLC as its financial advisors and Sullivan & Cromwell LLP as its legal advisors for the sale of the company. The selections are still subject to review and approval by the U.S. Bankruptcy Court for the Southern District of New York.

"The selection of these outstanding advisors paves the way for a robust and organized sale process," said Bill Schleyer, chairman and chief executive officer of Adelphia, in a company news release.

"Although the selection was slowed somewhat by the constraints of the bankruptcy process, the company has been working diligently for the past several months preparing all the necessary information and documentation to facilitate the sale and accelerate the auction process. Under the leadership of this advisory group, we will continue to prepare the company to be sold. Once court approval for their retention is obtained, we will launch the official sale process."

Willkie Farr & Gallagher LLP will continue as Adelphia's lead legal counsel for the Chapter 11 process. Lazard Freres & Co. LLC will continue to provide financial advice to the Colorado cabler on its potential reorganization.

Adelphia's bonds were meantime seen little changed, with its 10 7/8% notes due 2010 at 97 bid, 98 offered, while its 10¼% notes due 2011 were steady at 98.25 bid, 99.25 offered, a trader said.

Pegasus jumps higher

Also in the communications constellation, traders saw the bonds of bankrupt Bala Cynwyd, Pa.-based satellite TV programming distributor Pegasus Satellite & Communications Inc. up by as much as four or five points on the session, with its various senior issues, like the 11¼% notes, rising to 57 bid, 58 offered from prior levels at 52-3.

There was no fresh news seen out on the company, which filed for Chapter 11 protections from its junk bond holders and other creditors in early June before the U.S. Bankruptcy Court in Portland, Me., after long-time partner-turned adversary DirecTV Group Inc. attempted to end the company's rights to exclusively distribute DirecTV's programming to its 1.1 million mostly rural customers.

Parmalat down, then up

Another bond name making news was Parmalat, which "was on a little roller coaster today," a trader said, quoting the company's bonds as having fallen as low as 12 bid, 15 offered, from previous levels at 16 bid, 18 offered. By the end of the trading day, however, Parmalat had recouped most of that lost ground, ending at 15.5 bid, 17.5 offered.

Parmalat unveiled its complex reorganization plan Wednesday - a plan that gives most creditors much less of a recovery than expected.

Parmalat confirmed that privileged creditors and those with debts incurred since the group almost collapsed - mostly suppliers - would be paid back fully in cash.

However, creditors of the holding company, Parmalat Finanziaria SpA, were offered a recovery ratio of 11.3%, while people owed money by smaller units would recover between 7.3% and 100%.

Creditors would also be given one warrant per share, up to a maximum of 500.

The restructuring plan, including the debt-for-equity swap, must be approved by Italy's Industry Ministry and creditors before it can go into effect.

J.L. French up on tender plan

News that J.L. French will tender for its outstanding 11½% notes due 2009 using the proceeds from its planned new deal and some concurrent new bank debt sent the 111/2s sharply higher in late-day trading.

Those bonds were quoted as high as 74 bid at the end of the session, well up from levels about eight to 10 points lower before the news.

A trader who saw the bonds make a 10 point move up to around the tender-offer consideration level at 75 (early-tendering holders get a three point consent fee on top of that), cautioned that "there's still a lot of 'what ifs?' attached to this, a lot of moving parts that must fall into place" before the 111/2s are taken out. Key is the Goldman Sachs-arranged financing, which includes $165 million of new preferred equity and, it is believed, $440 million of bank debt.

Mirant loans trade

Back among bank debt investors, some Mirant Corp. 2003 debt traded on Wednesday at unchanged levels of 54 bid, 55 offered, according to a trader.

The paper had moved down a point to those levels during the previous session after the restructuring Atlanta-based energy company released disappointing monthly numbers.

According to the numbers released Tuesday, for the month ended May 31, Mirant had about $1.3 billion in cash and cash equivalents, down from about $1.5 billion at the end of April.

It also showed about $395 million in net revenues versus about $336 million in net revenues for April and a net loss of about $52 million - wider than the net loss of about $35 million for April.

For the quarter ended May 31, Mirant had a net loss of about $17.4 million and net revenues of $730.8 million.

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