Movie Gallery rebound progresses; GM revolver up as talks continue; Georgia-Pacific sees good flow

By Sara Rosenberg

New York, Feb. 17 - Movie Gallery Inc.'s term loan continued to rise on Friday, regaining most of the ground that it lost when information of a new rival hit the market earlier in the week.

Also on the trading front, General Motors Corp.'s revolver felt a touch stronger as the market seemed pleased to hear that Delphi Corp. will continue to participate in talks with the company as well as with the unions.

Last of the noticeable names Friday was Georgia-Pacific Corp. as its new bank debt saw a good amount of trading volume in what was otherwise described as a typical, quiet, pre-holiday session.

Movie Gallery's term loan was up by about a half a point to a point, depending on the trader asked, as investors seem to have gotten over the initial panic that came with emergence of MovieBeam Inc. during the early part of this past week, according to a trader.

The term loan was being quoted in the 91 bid, 93 offered context on Friday, the trader said. By comparison, on Thursday, one trader had the bank debt closing the session at 90 bid, 91 offered and another one had it closing the day more like 90¼ bid, 92¼ offered.

Movie Gallery's term loan had dropped by about 2.5 points to the 89 bid, 91 offered region this past Tuesday after The Walt Disney Co., Cisco Systems, Intel Corp., Mayfield Fund, Norwest Venture Partners and VantagePoint Venture Partners announced the newly formed Burbank, Calif.-based venture, MovieBeam.

MovieBeam provides movies-on-demand service, some in high definition, in 29 major metropolitan areas across the United States, including New York, Los Angeles and Chicago.

With the arrival of this new competitor, market players started to fret over the possibility of seeing a weakening in Movie Gallery's bottom line, which in turn created an environment in which bank debt levels were pushed lower.

However, the term loan started to rebound on Thursday and the trend continued into Friday, given that people had time to digest the competition news and put it in perspective, the trader explained.

Movie Gallery is a Dothan, Ala.-based operator of video retail stores.

GM on the rise

General Motor's revolver headed higher on Friday as news emerged that Delphi Corp. has decided to continue contract negotiations, according to a trader.

The revolver was seen quoted at 80¼ bid, 82¼ offered, up about a quarter of a point from previous levels in the 80 bid, 82 offered area, the trader said.

Delphi had previously given its major unions and GM until Friday to come to some sort of agreement on reducing wage and benefit provisions.

The bankrupt Troy, Mich.-based auto components maker had also threatened to go into bankruptcy court and ask the judge overseeing its case to toss out the contract.

In reaction, The United Auto Workers threatened to strike if the judge approved Delphi's request to void its contracts.

A UAW strike would affect Delphi badly as well as GM, being that GM is Delphi's single largest customer and Delphi is GM's largest parts supplier.

However, investors welcomed a bit of good news on Friday when Delphi announced that, based upon progress in discussions with its major unions and GM, it will continue talks in an effort to achieve a comprehensive agreement no later than March 30.

Once again, Delphi threatened that if an agreement is not met by the new deadline, it will promptly file a motion with the bankruptcy court to reject the collective bargaining agreements and terminate hourly post-retirement health care plans and life insurance.

"While major obstacles and difficult issues remain to be resolved, the discussions to date with GM and our major unions helped frame the concerns and objectives of each organization," said Robert S. "Steve" Miller, Delphi chairman and chief executive officer, in a company news release.

"As we have said before, we remain committed to reaching a consensual agreement. This deadline should provide us sufficient time to deal with the complexities inherent in fashioning practical and workable solutions, and an effective agreement that works for all of us," Miller added in the release.

GM is a Detroit-based designer, manufacturer and marketer of cars and light trucks.

Georgia-Pacific active

Georgia-Pacific's new bank debt continued to see good two-way trading flow on Friday, during a session in which most names saw little to no activity because of the shortened hours and upcoming holiday weekend, according to a trader.

The company's first-lien term loan B closed the day unchanged at par 5/8 bid, par 7/8 offered, where it has pretty much been quoted since this past Tuesday, the trader said.

The second-lien term loan also closed the day unchanged with levels seen at 101¾ bid, 102¼ offered, pretty much in line with where the paper has been trading since this past Tuesday as well, the trader added.

Georgia-Pacific's facility freed for trading on Monday, stealing the spotlight for most of that particular session and most of the week, with the term loan B bouncing around on its first day in market between a low of par ½ bid, par ¾ offered and a high of 101 bid, 101¼ offered and the second-lien term loan quoted at 101½ bid, 102 offered for most of its first trading day before making a last minute jump into the 102's.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

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