Collins & Aikman's $470 million "B" loan inched up to the 90-92 context from 87-89 after the company filed for Chapter 11 last week. The move takes some guesswork out of the equation, market players said. "There is more certainty now that the company will be better," a buysider said. The 92 quote shows recovery, a trader said, who expects the debt to be repaid at par. A Collin's & Aikman's spokesman did not return calls.
The plastic auto-parts manufacturer and its subsidiaries cited increasing liquidity issues and immediate cash for operation needs as it filed bankruptcy. More auto-part makers are expected to follow.
JPMorgan has provided a $300 million debtor-in-possession financing. The DIP has an interim approval of $150 million. Collins & Aikman has retained Kroll Zolfo Cooper as its financial advisor. Kirkland & Ellis and Lazard Freres & Co. remain its restructuring counsel and investment bank, respectively.
JPMorgan, Credit Suisse First Boston and Deutsche Bank lead the plastic auto-parts manufacturer's pre-petition bank debt, which also includes a $105 million revolver and a $170 million supplementary revolver.
The company has also $915 million in senior and subordinate bonds. After the filing, the company's 10 3/4 '11 sub notes were trading at 5-7 cents on the dollar, while the 12 7/8 12 senior bonds traded at 40-41. The $415 million sub notes were issued by parent Collins & Aikman Products Co., the $500 million senior notes belong to the operating Collins & Aikman. A value of 40 implies holders of the senior debt would receive equity while the sub bond holders would not surprisingly be wiped out, another trader noted. Two weeks ago, David Stockman resigned as Collins & Aikman ceo and was replaced by interim ceo Charles Becker. Standard & Poor's downgraded the company's credit into "junk," to D from a CCC- rating.