Calpine, Mirant lead distressed trading; Adelphia and Fleming back in the picture

By Carlise Newman

Chicago, June 24 - The energy sector revved up again Tuesday, led by Calpine Corp., which on Monday afternoon said it received bank approval for a $950 million two-year secured revolving credit facility to provide working capital.

San Jose, California-based Calpine said it agreed to a term sheet with its bank group that also provided the company with an automatic extension of its existing $950 million revolving credit facilities to July 16 while the new loan is finalized.

Calpine's 8¼% notes due 2008 were quoted at 87.5 bid, 89.5 offered, down a point and a half from Monday, a distressed debt trader said. Its 10½% notes due 2006 were unchanged at 90.5 bid, 91.5 offered.

"Energy was hot today. Calpine started off strong, then dropped almost two points by the end of the day for some reason," a trader said.

Standard & Poor's Ratings Services said the announcement is positive for Calpine's credit but not sufficiently positive for a change in the outlook or the rating.

Last week Calpine's subsidiaries priced an $802 million offering of senior secured notes.

The two-part offering, via the Power Contract Financing LLC unit of Calpine Energy Services, reduced some investor concerns over the San Jose, Calif. company's cash position.

The notes are secured by cash flow from two contracts - an existing, long-term deal to sell power with the California Department of Water Resources and a new agreement to buy power from a financial institution.

Mirant Corp. was also active, on news Friday that the energy provider had asked its bank lenders to approve a prepackaged bankruptcy plan. In addition, after the close Monday, S&P cut the Atlanta-based energy company's credit rating.

"We didn't watch Mirant last week so I can't say how today compares with that. But they're a lot lower than the last time we saw it trade," a distressed debt trader said.

Mirant said it hoped to restructure its debt through an exchange and without a Chapter 11 filing, but the struggling company has said if it is unable to get enough banks or bondholders to agree to its debt restructuring plan it may be forced to file for bankruptcy protection.

Mirant Americas Generations' 7 5/8% notes due 2006 fell a point to 75 bid, 78 offered from 76 bid, 79 offered Monday.

Earlier this month, the company asked its bondholders to approve a prepackaged reorganization in parallel with an exchange offer for the debt. Friday's filing extends the request to the bank lenders.

On June 10, certain bondholders of a Mirant subsidiary sued Mirant to try to block its plan to exchange $1.45 billion in bonds that are due or putable in the next three years for ones due in five years. A trial on the suit will be held in November or December, Mirant said Friday.

Elsewhere, Fleming Cos. Inc.'s 9¼% notes due 2010 were quoted up a half-point to 14.5 bid, 15.5 offered. The Dallas grocery store operator has been facing restructuring and announced it would sell 40 stores last week.

Adelphia Communications Corp.'s 8 3/8% notes due 2008 were firmer both Monday and Tuesday, a trader said, up two points from Friday at Tuesday's close to 62 bid, 64 offered. On Monday the bonds had traded at 60.5. The Greenwood Village, Colo.-based cable company has been wallowing in Chapter 11, and has faced numerous fraud allegations.

In other news, Toledo, Ohio-based Owens Corning 7.7% notes due 2008 were quoted at 47, "better," according to a trader.

A name not seen often lately - Enron Corp. - passed desks Tuesday. Its 6.95% notes due 2028 were quoted at 19 to 19.125, a distressed trader said. A market source said the notes had "been up the last couple of sessions."

Global Crossing Inc. was also seen active Tuesday. Its 9½% notes due 2009 were quoted at 4½ bid, up ¼ of a point.

The Florham Park, N.J.-based telecommunications company had been active last week after XO Communications Inc. announced it was bidding for the company. XO, controlled by billionaire investor Carl Icahn, offered more than $700 million wholly in cash for Global Crossing's assets or said it would buy any or all of its bank debt at $210 per $1,000 at face value, or a total of $472.5 million for its $2.25 billion in face value of debt.

Kaiser Aluminum and Chemical Corp. was another name not seen often in distressed debt trade. The bankrupt Houston aluminum manufacturer's 10 7/8% notes due 2006 were up one point to 68 bid, a trader said.

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