Federal-Mogul ticked up from the mid-to-low 60s into the 67 1/2 to 68 1/2 range with more than $20 million in trades this week. The paper climbed after the Official Committee of Unsecured Creditors and the Official Committee of Asbestos Claimants filed a motion to terminate Federal-Mogul's exclusive right to file a plan of reorganization. "Serious negotiations are going on," said Michael Lynch, Federal Mogul cfo. "It's a sign that the process is proceeding," he added, declining to comment further citing the private nature of the negotiations. The hearing to discuss this motion will be held on Jan. 29.
Kmart's bank debt, meanwhile, got a boost from the announcement that the company was close to filing a reorganization plan. The company's three-year credit facility was said to have traded into the 32-33 range, up from the mid-20s, where it has been languishing since before the holiday season. Kmart also reported that it has secured $2 billion in exit financing via GE Commercial Finance, Fleet Retail Finance, and Bank of America. The company is now looking to emerge from bankruptcy in late April. Calls to Albert Koch, Kmart cfo, were not returned by press time.
Small pieces of Charter Communications traded down in the 85 1/8 to 85 1/2 range after Moody's Investors Service came out with a report that downgraded the bank debt from B1 to B2. The report cited the need for the company to restructure in the near-to-intermediate term. "They are basically going to run out of time," said Russell Solomon, Moody's analyst, explaining the company's ability to generate cash flow is not keeping up with its debt service. The bank debt had been quoted in the 86 1/2 to 87 1/2 context prior to the downgrade, according to LoanX. Company officials could not be reached by press time.
On the people end of the business, Credit Lyonnais, which is currently being bought by Credit Agricole Indosuez, lost two of its bank loan players in a pre-emptive round of layoffs late Tuesday. The desk was said to have lost a structurer and a salesperson in a sweep that left about 80 people out of work. The names of the individuals could not be determined Wednesday. Calls to Credit Lyonnais were not returned.