Mirant rallies on bondholder support; Global Crossing active; Enron lower despite extension

By Carlise Newman

Chicago, June 30 - Mirant Corp. bonds traded in full force Monday in distressed debt activity, soaring after the company announced a majority of bondholder support for its exchange offer.

"Mirant was raging, really moving today," a trader said.

Mirant Corp. said that an ad hoc committee, representing holders of the company's 2.5% convertible senior debentures due 2021 and its 7.4% senior notes due 2004, informed Mirant of the bondholders' support. About 66.67% of the holders whose debt is covered by the exchange offer have indicated their support, the company said.

Mirant's 7.9% notes due 2009 were seen trading at 53.5, a trader said, and closed at 53.5 bid, 55.5 offered, up 4 points from Friday and 6 points from Wednesday. He said Mirant Americas Generation's 7 5/8% notes due 2006 were quoted up 1 point at 77 bid, 79 offered. Mirant's bank debt was seen rising "three or four" points to 75 bid, 77 offered.

Under the amended exchange offers, Mirant would provide $1,000 in senior secured notes due 2008, warrants to acquire 22.47 common shares and $5 cash, for every $1,000 of the currently outstanding bonds.

Assuming 100% acceptance of the exchange offers, the warrants would represent 4% of the company's stock and would be priced six months after the closing of the exchange offers at 120% of the 30-day average closing price of Mirant's common shares on the Big Board.

The Atlanta-based energy company also said its Mirant Americas Generation LLC unit is now included in the offer. The unit would pay $1,000 of new secured debt at 8.25% interest as well as $10 cash, in exchange for every $1,000 of $500 million 7.625% senior notes due 2006. Mirant Americas can't offer Mirant Corp. warrants under securities laws.

Meanwhile, "Global was active again," a distressed trader said. "They traded at 5, then fell back to about 4.5 bid by the end of the day, but a half-point is a big move for that one."

XO Communications Inc. said it will own about $790 million of Global Crossing Ltd.'s senior secured loans after the tender offer it announced last week.

Last week, XO offered $200 million in cash to certain Global Crossing Ltd. bondholders to encourage them to back its takeover offer for the bankrupt telephone company.

Global Crossing's bonds "were up a half-point across the board" to 4.5 bid, 5 offered, a trader said.

XO said about $495 million in principal amount of loans were tendered. Including previously acquired debt, XO said it would own about $790 million in principal amount of the $2.214 billion of such loans outstanding.

XO has increased its offer to acquire Global Crossing's assets or debt four times. XO's offers have been backed by senior secured lenders, but criticized by unsecured creditors.

Reston, Virginia-based XO aims to allure Global Crossing away from its current deal to sell a 61.5 percent majority stake to Singapore Technologies Telemedia.

A trader said UAL Corp.'s bonds were "active, but unchanged" on Monday. Last week, UAL released a better-than-expected May monthly operating report, and said that it met the requirements of its debtor-in-possession financing for the fourth straight month.

The Chicago-based parent of United Airlines' 8 ¼% notes due 2008 were unchanged at 14 bid, 19 offered.

As part of its DIP financing agreements, UAL's lenders required the company to achieve a cumulative EBITDAR loss of no more than $738 million between Dec. 1, 2002 and May 31, 2003.

UAL reported a loss from operations of $155 million in May, and non-operating income of $219 million, which included $300 million that the company received from the U.S. government under the terms of the Emergency Wartime Supplemental Appropriations Act in recompense for costs due to the war in Iraq.

Elsewhere, Reuters reported that Enron Corp.'s request to delay filing its reorganization plan until July 11 was granted Monday by the judge overseeing its bankruptcy case.

Despite the good news for the bankrupt Houston company, Enron's 7.97% notes due 2006 fell 1.5 point to 14 bid, 17 offered, a trader said.

"I don't know what's going on there. They've been sinking for a couple of days," the trader said.

Enron, in conjunction with its unsecured creditors and creditors of its Enron North America Corp. affiliate, asked for the delay last Friday, three days before the plan was due, saying they had reached a tentative agreement over how to distribute funds to those owed money by Enron but needed more time to finalize the accord.

Enron will likely pay the vast majority of its creditors less than 20 cents per dollar of debt, according to Monday's edition of The Wall Street Journal.

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