Energy companies still active; Enron higher; Owens Corning rises three points

By Carlise Newman

Chicago, June 25 - Power companies were in the spotlight again Wednesday in an otherwise lightened load for distressed debt traders. Enron Corp., seen active on Tuesday, bustled for a consecutive day after the company announced the organization of CrossCountry Energy Corp., a new company that will hold Enron's interests in Transwestern Pipeline Co., Citrus Corp. and Northern Plains Natural Gas Co. (see story elsewhere in this issue).

Enron's 6.95% notes due 2028 were quoted at 19½ bid, 20 offered, a trader said, about "three quarters of a point" higher. Its 8% notes due 2005 were seen at 28 bid, 29 offered, a half-point higher than Tuesday, he said.

Houston-based Enron filed a motion with the Bankruptcy Court to approve the proposed transfer of Enron's interest in the pipeline businesses to CrossCountry Energy, and the transactions are expected to close after court approval.

"Enron has been active, but it will probably die down this week and next," the trader said. "Actually that's probably true of everything. Everyone tends to take their vacations three weeks before the actual holiday."

Shares of CrossCountry Energy will likely be distributed to creditors in connection with implementation of Enron's Chapter 11 plan, Enron said in a news release.

CrossCountry Energy will hold interests in three major North American natural gas pipeline businesses with 8.5 Bcf/d of capacity and 9,900 miles of pipeline.

Also in the energy sector, Calpine's 8¼% notes due 2008 were quoted at 86.5 bid, 88.5 offered, down a point from Tuesday, a distressed debt trader said. Its 10½% notes due 2006 were unchanged at 90.5 bid, 91.5 offered.

Mirant Corp. was still active, continuing to respond to 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.

Mirant said it hoped to restructure its debt without a Chapter 11 filing, but the struggling company has said if it is unable to get enough banks and noteholders 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 Tuesday.

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.

"Mirant isn't doing so hot. They're stuck. They're not getting the support that Dynegy and some of the other energy companies did," a trader said. "They need their knight in shining armor."

In other news, Toledo, Ohio-based Owens Corning's 7.7% notes due 2008 were quoted at 51.5 bid, 53.5 offered, "a good three points higher" than Tuesday, a trader said.

In the wireless sector, two issues were seen falling. Airgate PCS Inc.'s 13½% notes due 2009 were quoted at 49 bid, 50 offered, a drop of a point from Tuesday.

US Unwired Inc.'s 13 5/8% notes due 2009 were seen at 45 bid, 47 offered, "about a half point" lower than Tuesday.

On Tuesday, the Lake Charles, La. -based owner of five Sprint PCS affiliates said its exchange offer for the notes expired.

US Unwired said certain conditions to the offer were not satisfied as of the expiration time and as a result none of the existing notes tendered in the offer will be accepted for exchange.

As of June 16, $2.25 million of existing notes had been tendered.

"It'll be interesting to see what happens next. Although, a half point drop isn't much of a move," a distressed debt trader said.

As previously reported, under the terms of the offer, US Unwired planned to exchange its 13.375% senior subordinated discount notes due Nov. 1, 2009 for $187.50 in cash and $185 in face amount of new senior notes per $1,000 face amount of existing notes.

On May 29, holders of more than 50% of US Unwired, Inc.'s 13.375% senior subordinated notes said they would not participate in the company's exchange offer. The holders also formed an ad hoc committee, signed a lock-up agreement and hired Chanin Capital Partners as financial advisors and Orrick, Herrington & Sutcliffe as legal advisors.

In other news, UAL, parent of United Airlines Inc. in Chicago, saw a slight droop in its bonds, a trader said. The company's 9.125% bonds due 2012 were quoted one point lower at 6.5 bid, 8.5 offered.

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