Despite Turmoil, Some Junk Bond Issuers OK

NEW YORK —  While junk bonds have recently accompanied a succession of companies down the road to ruin, there continues to be evidence that the low-rated, high-yield paper can help build healthy businesses.

Among the junk-funded companies that are looking good to bond analysts:

* Vons Cos., the El Monte-based supermarket chain, is carrying about $839 million in debt but last month reported its first net profit in more than a year and appears to be getting stronger. The company, No. 1 ranked in Southern California with a 25% market share, took on heavy debts when it bought 162 former Safeway Stores 20 months ago.

* McCaw Cellular, one of two big players in the mobile phone business, has $1.7 billion in long-term debt and junk bonds that yield a sobering 17%. But the company’s asset values are high, particularly after its recent acquisition of Lin Broadcasting.

* MCI Communications, the long-distance phone company, used a $3-billion Drexel Burnham Lambert junk issue to raise money to build the world’s first fiber-optic telephone network. It has a 12% share in the long-distance market, and earnings have been at record levels.

* Turner Broadcasting System, Ted Turner’s cable-TV and entertainment company, took on heavy debts during the 1980s to finance the purchase of the MGM movie library. But with the Cable News Network and the TBS cable network doing well, the company has restructured debts so that the average TBS bond interest rate is 10.9%, down from 14.5%.

* Levi Strauss, the jeans maker, was led back to financial health with help from Goldman, Sachs & Co. junk bonds. The San Francisco company’s bonds are today trading above par, in sharp contrast to most of their junk brethren.

* Kroger, the nation’s No. 2 supermarket chain, restructured in 1988 to elude an attempted takeover by the Kohlberg Kravis Roberts & Co. buyout firm. But though it took on debt of $5.5 billion, including $1.9 billion in junk, analysts consider it a more efficient company today.