WorldCom trades in quiet session after judge approves plan; Nova Chemical higher

By Carlise Newman

Chicago, May 23 - WorldCom Inc.'s debt broke free of its rangebound trading Friday after the company's reorganization plan was finally approved by a judge late Thursday night.

Despite objections from some creditors, the judge gave WorldCom the go-ahead to send all its creditors the plan for the reorganized company's new ownership structure and operations.

WorldCom said 90% of the members of its creditors committee are in favor of the plan.

WorldCom's bonds, having been stuck at levels around 29 bid all week, moved higher to end Friday's holiday-shortened session at 32 bid/33 offered.

A confirmation hearing for the plan will be held August 25.

Under the reorganization plan, holders of WorldCom senior debt - both bank debt and notes - may choose to receive 14.36 shares of new common stock for each $1,000 of the holder's allowed claim, or new notes at the rate of 35.9 cents on the dollar.

Unsecured claim holders will receive 7.2 shares of new common stock for each $1,000 of the holder's allowed claim and cash at the rate of 17.9 cents on the dollar. Holders of WorldCom's subordinated claims and equity interests will receive nothing.

Holders of subsidiary MCI Communications Corp.'s senior debt will receive new notes at the rate of 80 cents on the dollar.

Intermedia senior debtholders will receive 37.4 shares of new common stock for each $1,000 of the holder's claim or new notes at the rate of 93.5 cents on the dollar. Intermedia unsecured claims holders will receive 16.64 shares of new common stock for each $1,000 of allowed claim and cash at 41.6 cents on the dollar.

In total, WorldCom will issue between $4.5 billion and $5.5 billion of new notes.

"There wasn't much trading going on today but we did see WorldCom trade at 32 bid," said a distressed debt trader. "There was that trade and then everyone went home!"

He said that Nova Chemicals also crossed the desks, its 7% notes due 2005 at 41 bid/43 offered, one point higher than Thursday when it was seen trading at 40 bid/42 offered.

Although perhaps not related to the move, on Thursday Nova began the roadshow for an offering of $200 million senior notes due 2011. The deal is expected to price on June 2. Citigroup is the bookrunner. TD Securities, CIBC World Markets, RBC, Scotia and BCM are co-managers. Proceeds will be used to fund the put of the company's 7% debentures due 2026 in August 23, to repay its revolver and for general corporate purposes.

The Calgary, Alta.-based company produces chemicals used in the making of plastic and foam products.

Northwestern Corp.'s 7 7/8% notes due 2007 were seen moving up a "about a half point" Friday to end the session at 79 bid/81 offered.

"Not a lot of big moves today but Northwestern was something we looked at," said the trader.

NorthWestern said it deferred payment of distributions on its trust preferred securities.

NorthWestern has the right to defer interest payments on the subordinated debentures underlying the trust preferreds for up to 20 quarters unless a default under occurs. During the deferment period, distributions will continue to accumulate on the trust preferred securities as will interest on the distributions.

The Sioux Falls, S.D. electricity and natural gas provider previously announced that it is implementing a turnaround plan to reduce the company's debt by applying net proceeds from the sale of noncore businesses and assets. The deferral of interest on the subordinated debentures and deferral of cash distributions on the trust preferred securities, builds upon the company's actions to preserve cash and pay down debt.

"Hayes is worth mentioning. The debt didn't move Friday but before close Thursday it got a lift," said a distressed debt trader.

Hayes Lemmerz International Inc.'s bank debt had risen a half point Thursday to 84.5 bid/86 offered, the trader said, and remained at those levels Friday.

The Northfield, Mich.-based auto parts maker Thursday priced $250 million of senior unsecured notes. The 10½% 7-year notes were priced to yield 105/8%. The company expects to complete the sale of the notes and emerge from Chapter 11 in early June.

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