Telecom activity fades; Enron crosses desks at lower levels; Owens Corning's debt lower

By Carlise Newman

Chicago, May 27 - Distressed debt wallowed at unchanged to lower levels Tuesday after an extended holiday weekend that had many traders taking an extra day of vacation, although names such as Adelphia Communications Corp., WorldCom Inc. and Enron Corp. popped up on desks during the session.

Adelphia's debt took a slight hit after the company revealed in a Securities and Exchange Commission filing that it would restate customer statistical data.

Adelphia's 10¼% notes due 2006 were seen at 49 bid/51 offered, according to a trader, from 51 bid/53 offered Thursday. Adelphia's "old" Century term loan debt was bid at 82 and offered at 833/4, and the "new" Century term loan debt was seen bid at 81 3/8 and offered at 83 3/8, both "about a quarter point lower from last week's levels," according to a trader.

The company completed its review of the policies and practices surrounding the reporting of its statistical customer information and restated the customer information that was previously reported in its current report on Form 8-K dated Oct. 25, 2002 for Sept. 30, 2002, June 30, 2002 and March 31, 2002.

For example, in the report Adelphia said its basic customers for Sept. 30, 2002, were 5,350,036 as opposed to the previously reported 5,377,026.

"The telecom sector was firmer last week. There was more going on. Today's move wasn't huge in terms of where Adelphia has gone before," said one trader. "That's to be expected after a holiday."

Adelphia's debt saw better days last week after news reports revealed that private-equity firm Blackstone Group is taking a significant position in the bonds of the Coudersport, Pa.-based bankrupt cable company.

The Wall Street Journal said that Blackstone's stake, the size of which it did not specify, is leading to some market discussion that Blackstone intends to take control of the company by acquiring enough of Adelphia's distressed debt.

The Journal reported that Blackstone confirmed that the company had joined Adelphia's committee of creditors, but would not make further comment.

Enron Corp. debt crossed trading desks Tuesday. The company's bonds were quoted at 16 bid/17 offered.

"We don't see traffic in them that much but last week they were in the 171/2, 18½ range. There isn't really anything to attribute the movement to, there was something out today but I doubt that was it," said a distressed debt trader.

The "something" was a report that a group of former executives for Enron's broadband unit will not face trial until at least next year. A judge set an April 5 trial date for seven Enron Broadband Services officers charged on May 1 for securities fraud, wire fraud and money laundering.

The attorney for former Enron Broadband president and co-chief executive officer Joseph Hirko asked Gilmore to set a trial date for fall 2004 due to the complexity of the case but the judge rebuffed the request.

Other defendants from Enron Broadband include former chief operating officer Kevin Hannon, Scott Yeager, Rex Shelby, Kevin Howard and Michael Krautz. The former executives are accused of inflating the success of Enron Broadband services, allegedly misleading investors.

WorldCom Inc.'s debt was slightly higher Tuesday, with its bonds seen at 33 bid/34 offered, up one point from Friday's levels of 32 bid/33 offered.

WorldCom's reorganization plan was finally approved by a judge late last week. Despite objections from some creditors, the judge gave WorldCom the go-ahead to send a prospectus to all its creditors of 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. A confirmation hearing for the plan will be held August 25.

"It was pretty dry today, your typical day after a holiday, so anything that moved was in low-volume trade," said a trader.

In other news, Owens Corning Inc. filed a second amended plan of reorganization Friday in which recovery for creditors is dependent on whether bank debt holders approve the plan (see story on page one of this issue).

Owens Corning's bonds were quoted at 32.5 bid/34.5 offered, according to a trader, down from levels of 34 bid/36.5 offered. The company's bank debt was unchanged at 57.5 bid/58 7/8 offered.

Under the new plan, bank debt holders, with $1.5 billion in claims, will receive a recovery ranging between 60.2% and 38%. Bondholders, with $1.3 billion in claims, and unsecured claims holders, with $375 million in claims, will receive a recovery ranging between 45.4% and 15.1%.

Toledo-based Owens Corning's asbestos personal injury class A claims holders are estimated to have claims from $3.56 billion to $16 billion with recovery from 47.9% to 15.9% respectively.

Fiberboard Corp. asbestos personal injury claimants were estimated to have claims between $2.3 billion and $7.9 billion, with recovery from 66.3% to 19.3% respectively.

If bank debt holders do not accept the plan, the estimated recovery for bank debt holders, bondholders, and unsecured claims holders ranges between 48.7% and 16.8%.

Toledo-based Owens Corning manufactures building materials systems and composite systems.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.