American Axle Bonds Rise, Suggesting Interest Payment Met
11 Agosto 2009 - 10:22PM
Dow Jones News
American Axle & Manufacturing Holdings Inc.'s (AXL) debt
rose sharply Tuesday, suggesting investors are confident the auto
parts supplier will meet a chunky interest payment deadline on its
bonds.
The company has a $6.6 million payment due on its 5.25% bonds
Tuesday, while it continues to negotiate with its lenders over its
revolving credit facility. Analysts have previously expressed doubt
about the company's ability to make this payment, but investors
appear to have more faith.
The 5.25% bonds were recently quoted at about 60 cents on the
dollar, according to James Lee, senior fixed-income analyst at
Calvert Asset Management Co. That's compared with around 56 cents
earlier in the session and 34 cents last week, according to online
trading platform MarketAxess.
The cost of protecting American Axle's senior bonds against a
default also fell, although it still reflects a severe level of
distress. It was last quoted at $3.9 million upfront plus a
$500,000 annual fee to insure $10 million of the bonds for five
years, according to CMA DataVision. That's against $4.45 million
upfront earlier Tuesday.
American Axle shares were down 6 cents at $3.34 in recent trade,
off an earlier high of $3.83 Tuesday.
The company has yet to make an announcement on the interest
payment. A spokesman for American Axle couldn't be reached for
comment.
American Axle Chief Executive Dick Dauch said Aug. 5 that his
primary objective is to complete the company's restructuring
outside of bankruptcy, although he could give no assurance that
would happen.
Other suppliers, including Lear Corp. (LEAR), Metaldyne Corp.
and Visteon Corp. (VSTN), filed for bankruptcy after failing to
secure more money to fund their operations.
American Axle's lenders, including JPMorgan Chase & Co. and
Bank Of America, granted the company a waiver extension on its
revolving credit facility at the end of July, giving it until Aug.
20 to continue negotiations with its banks. Justin Perras, a
spokesman for JPMorgan, declined to comment.
American Axle is the largest axle supplier to General Motors Co.
(GM) and relies on the auto maker for most of its revenue.
The Detroit-based company said its second-quarter loss narrowed
to $288.6 million, or $5.20 a share, from $644.3 million, or $11.89
a share. The latest results included $3.46 in restructuring and
other charges. Net sales plunged 50% to $245.6 million.
American Axle hasn't posted a quarterly profit since the three
months ended Sept. 30, 2007.
The company has about $1.1 billion of debt on its balance sheet
and about $770 million of retiree-related liabilities as at the end
of December 2008, according to Kip Penniman, an analyst at KDP
Investment Advisors.
-By Jeff Bennett and Kate Haywood, Dow Jones Newswires;
248-204-5542; jeff.bennett@dowjones.com