Global Crossing debt happy as creditors back plan; Enron files restructuring; asbestos falls

By Carlise Newman

Chicago, July 11 - Global Crossing Ltd. and Enron Corp. were the leaders of the pack in terms of activity in distressed debt trading Friday after the former said its creditors support a takeover from Singapore Technologies and the latter filed its long-awaited disclosure statement and reorganization plan. In addition, asbestos names were still being quoted lower.

Global Crossing's unsecured creditors committee reaffirmed its support for the company's reorganization plan, in which Singapore Technologies Telemedia will acquire a majority stake in the reorganized telecom firm (see story elsewhere in this issue).

Global Crossing's 9½% notes due 2009 were seen up a point at 5 bid, 6 offered, a trader said.

"They'd been at the same levels for a few weeks, around 4¾ bid," he said. "I don't know what makes that paper move anymore."

The creditors' committee said it believes that the transaction provides the Florham Park, N.J.-based telecom carrier's unsecured creditors with the best means to recoup some of their losses. Under the ST Telemedia transaction, unsecured creditors collectively will be receiving a "substantial" equity interest in a reorganized Global Crossing, the company said in a news release.

The creditors' committee has reviewed proposals from other parties such as XO Communications and IDT Corp. but does not believe any of them provides a greater value for creditors or is a viable alternative to the ST Telemedia transaction.

Enron filed its Chapter 11 reorganization plan and disclosure statement with the U.S. Bankruptcy Court Friday, in which the estimated recoveries are 14.4% for unsecured claims against Enron Corp., 18.3% against Enron North America and 21.3% against Enron Power Marketing, Inc. (see story on page 1 of this issue).

Enron's 7 1/8% notes due 2007 were seen at 15 bid, 18 offered, a drop of "about three points" from Tuesday, a trader said.

"We saw them trading at 17 early in the day," he added.

Holders of unsecured claims will receive stock in the three companies that will emerge from Chapter 11.

These are "InternationalCo", which will be named Prisma Energy International Inc. and will make up Enron's international operations; CrossCountry Energy Corp., which will hold Enron's interests in Transwestern Pipeline Co., Citrus Corp., and Northern Plains Natural Gas Co.; and Portland General Electric Co., an Oregon-based electric utility.

Under the terms of the plan, holders of general unsecured claims, which includes noteholders, will share 3 million litigation trust interests and 3 million special litigation trust interests.

Elsewhere, buildings manufacturer Owens Corning was last seen at 47 bid, 49 offered, down from 49 bid, 50 offered Thursday. Flooring manufacturer Armstrong World Industries was "56 bid looking" for an offer a trader said, down from 58 bid, 60 offered Thursday.

"Asbestos just keeps going down, down, down," a trader said.

WorldCom Inc. "finally rallied today," a trader noted. He said the Ashburn, Va.-based telecom company's 7½% notes due 2011 traded up to 30¼ bid in early trading, and soon after "traded up to 30 5/8, which left them going out at 30½ bid, 31 offered" from 29¾ bid, 30¼ offered Thursday.

Elsewhere, Adelphia Communications Corp.'s bonds were "up big," a trader said, adding that the 10 7/8% notes due 2010 rose to 65½ bid, 67½ offered from 60¾ bid, 61¾ offered Thursday. He saw the 2008 notes also go to 65 bid, 67 offered from 60 bid, 62 offered and the 2003 notes to 64½ bid, 66½ offered from 60½ bid 62½ offered.

"They're really going strong, really moving up there," a trader said.

At another desk, the 9 5/8% notes due 2007 were seen up two and a half points to 70½ bid. In addition, Adelphia subsidiary Arahova Communications bonds were up one point to 70 bid.

Reports surfaced Wednesday that the bankrupt cable company said it had paid the city of Los Angeles $2.6 million in back franchise fees dating to 1995. Adelphia said the payment covers unpaid fees from 1995 to 1999, before it owned the systems in question, as well as unpaid fees from 1999 to 2002, after Adelphia took ownership of the franchises.

On Sunday, reports circulated that Adelphia's unsecured creditors' committee sued hundreds of banks for providing loans to the Rigas family that controlled the company.

In addition, Conseco Inc.'s extended bonds were seen at 67 bid and its unextended bonds at 39 bid, 40 offered. A market source said the bonds had "been moving up."

He speculated the rise may be linked to Warren Buffet's $1.7 billion bid to buy pre-fab home maker Clayton Homes Inc. and the possibility that Cerberus Capital Management LP may start a bidding war for the company. Analysts have said the situation shows there may be more value in the troubled mobile/manufactured home sector that previously thought. Conseco, a bankrupt insurance and lending company, owns a lot of mobile/manufactured home loans, the source added.

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