Global Crossing firmer on extension; Mirant, Enron make appearances

By Carlise Newman

Chicago, July 1 - Global Crossing Ltd.'s debt firmed slightly Tuesday in a trading session weighed by the upcoming Independence Day holiday. The bonds moved higher after bankruptcy court granted a request by the company for an extension, preserving an exclusive agreement to sell a majority stake in the company to Singapore Technologies Telemedia, or STT.

Reuters reported that Global Crossing had sought an extension until October that would preserve STT's exclusive takeover rights so the two companies would have more time to seek U.S. approval for the deal.

Telephone company XO Communications Inc. had launched an unsolicited takeover offer for Global Crossing and had objected to the requested extension.

Global Crossing's bonds were up 0.25 point, to 4 ¾ bid, 5 ¼ offered, a trader said.

"It was just the same old, same old. Same names as yesterday, same as last week. The summer hiatus," a trader said.

XO, Global Crossing's bank lenders and others had contended that Global Crossing should not be exclusively locked into a deal with STT since that pact faces uncertain regulatory approval due to potential concerns about foreign ownership of strategic telecommunications assets. STT is a unit of Temasek Holdings, the investment arm of the Singapore government.

XO said that Global Crossing does not have the luxury of waiting to see if the STT pact wins approval, contending the bankrupt U.S. company faces a cash crunch. But the judge disagreed and said Global Crossing is in talks with various financial firms to secure debtor-in-position funding in the range of $75 million to $150 million.

Without the extension, Global Crossing had warned the deal would likely fall apart since STT would have no protection from rival bids and it would face additional expenses to pursue an uncertain deal. The Philadelphia-based high speed internet contractor also said Monday its consolidated cash balance of $537 million as of May 31 was comprised of $202 million in unrestricted cash and $335 million in restricted cash.

"The market was pretty flat today ahead of the holiday," a distressed debt trader said. "Most issues traded in a pretty narrow range."

In response to what occurred in distressed trading Tuesday, a trader replied: "I thought about golf. That's what went on."

Mirant Corp. bonds were quieter Tuesday, a day after the company announced a majority of bondholder support for its exchange offer.

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 at 53.5 bid, 55.5 offered, unchanged from Monday, as were the Mirant Americas Generation 7 5/8% notes due 2006 at 77 bid, 79 offered.

"I think if it had been anything but a holiday week, you would have seen more action in their [Mirant] paper. But there just isn't anyone around with interest this week," a trader said.

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.

Enron Corp.'s request to delay filing its reorganization plan until July 11 was granted Monday by the judge overseeing its bankruptcy case, but its debt securities lost ground.

Despite the good news for the bankrupt Houston company, Enron's 7.97% notes due 2006 fell "a point or two" to 13 bid, 15 offered, a trader said. The 7 ¾% notes due 2019 fell 0.5 point to 17.5 bid, 18.5 offered. The company's 7 1/8% notes due 2007 fell 1 point to 18 bid.

"Some days it just doesn't seem like there's any hope there. The [Enron] paper has not risen to levels worth anything in months," 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.

Elsewhere, HealthSouth Corp.'s bonds "moved up a bit," with one source saying the 6 7/8% notes due 2005 rose 1 point and a half to 83 bid. The 8 ½% notes due 2008 rose 1 point to 81 bid. Owens-Corning notes fell 4-5 points to 50.

Conseco Inc.'s 9% notes due 2008 extended bond was seen "moving up a couple" to 57 ½ bid, 58 offered, possibly after Moody's Investor Service's affirmed the insurance company's senior debt at Ca with a developing outlook.

WorldCom Inc.'s 7 ½% notes due 2011 were quoted down 0.75 point to 29 bid, "nothing alarming, that's where they've been trading for weeks," a trader said of the beleaguered long-distance company.

Adelphia Communications Corp.'s 9 7/8% notes due 2007 were seen falling 1.25 points to land at 60.5 bid, a trader said. The Greenwood Village, Colo.-based telecommunications firm has been plagued in the last few months with fraud allegations.

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