Global Crossing higher on clearance to sell to STT; airlines enjoy improved earnings finally

By Carlise Newman

Chicago, July 17 - Global Crossing Ltd. debt rose for a second day, a day after U.S. antitrust enforcers cleared Global Crossing's plan to sell a majority stake to Singapore Technologies Telemedia, a company owned by an arm of the Singapore government.

Global Crossing plans to sell a 61.5% stake.

Global Crossing's bonds opened at 3¾ bid on Wednesday, rose to 4¼ bid by the end of the session and ended Thursday at 4¾ bid, 5¼ offered, a trader said.

"Global was good today. It had been lagging for a few days and it's back up to the same old levels now," he added.

Global Crossing still faces a decision from the Committee on Foreign Investment in the United States. The committee must decide whether to allow the sale of the stake to a foreign government-owned entity.

U.S. defense officials have opposed allowing STT, which is owned by the investment arm of the Singapore government, to acquire the stake because of national security concerns and the Department of Homeland Security also has reservations.

Mirant Corp. debt was seen "a little higher" from Wednesday, a trader said. Mirant Corp.'s 7.9% notes due 2009 and 7.4% notes due 2004 were seen at 44 bid, 46 offered, up from 42 bid, 44 offered Wednesday. Mirant Americas Generation's 7 5/8% notes due 2006 were trading at 76½ bid, about two points higher than Wednesday.

The Atlanta-based energy company filed for Chapter 11 bankruptcy protection Tuesday in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division. Mirant also obtained a commitment, subject to court approval, for $500 million in debtor-in-possession financing.

Some of the nation's largest airlines on Thursday reported net profits in the second quarter partly because they were reimbursed for airport security fees by the federal government. Two, Northwest Airlines Inc. and Continental Airlines Inc., saw gains in distressed debt trading. American Airlines, which reported second quarter figures Wednesday, was also "somewhat active."

Northwest reported a second-quarter net profit of $227 million ($2.45 a share) compared with a loss of $93 million ($1.08 a share) in the same period a year ago.

Northwest Airlines' 7 5/8% notes due 2008 were up nearly two points to 78 bid, a trader said. He noted the airline sector "was active, but we didn't see as much of an effect on the individual bonds as you'd think."

Excluding unusual items, including a $209 million federal security-fee reimbursement and $199 million from the sale of its stake in ticket distributor WorldSpan, Northwest lost $160 million ($1.86 per share). Without the government infusion, it would be the company's worst second-quarter performance ever.

The Eagan, Minn.-based carrier had quarterly revenue of $2.30 billion, down from $2.41 billion a year earlier.

Continental Airlines said it earned $79 million ($1.10 per share) in the April-June quarter, compared with a loss of $139 million ($2.18) a year earlier.

Continental Airlines' 8% notes due 2005 were seen at 85 bid, 88 offered, two points better than when they were last seen trading last week.

Excluding a $111 million after-tax reimbursement for security costs and an $8 million after-tax charge related to deferred plane deliveries, the airline lost $24 million (37 cents per share). Continental's quarterly revenue was $2.2 billion, up from $2.1 billion.

"Are the airlines really ready for recovery? I don't know. We're still trading them on the distressed desk," a trader said. "Wait and see how AMR shakes out, if they end up with PK at the end," referring to the suffix added to a company's stock ticker when it trades on the Pink Sheets, the fate of many bankrupt companies.

On Wednesday, American Airlines' parent company AMR Corp. narrowed its second quarter loss to $75 million with help from war-related federal aid. The carrier also announced Wednesday that it would cut over 2,000 jobs at its St. Louis hub.

AMR's 9% notes due 2012 were up a point at 72½ bid, 74½ offered, a trader said.

The AMR loss was $75 million ($0.47 per share) and compared to a loss of $495 million ($3.19 per share), in the same quarter a year ago. Excluding special items, which included $358 million in emergency aid, primarily in the form of airport-security cost reimbursements, AMR said it lost $357 million ($2.26 a share) in the April-June quarter.

Revenue for the quarter for the Fort Worth-based airline carrier was $4.32 billion, a drop of 4% from $4.50 billion in the same period a year ago.

Elsewhere, HealthSouth Corp.'s bonds were "in a point or two," with the 7 5/8% notes dropping to 80 bid, 82 offered from 82½ bid, 83½ offered. The subordinated bonds dipped to 75½ bid, 77 offered from 77 bid, 79 offered.

On Thursday, the 12th former executive to face criminal charges in from the Birmingham, Ala.-based physical therapy company's accounting scandal pleaded not guilty, "at this time," at an arraignment, according to news reports.

Conseco Inc.'s debt also "came in a little," with its extended bonds dropping to 62 bid, 64 offered from 65 bid, 66 offered on Wednesday, while its unexchanged bonds were off a point at 36½ bid, 38½ offered.

On Wednesday Conseco filed its fourth amended plan of reorganization with the bankruptcy court. The new amendments reflect minor modifications to the non-debtor release provision and related components of the plan.

Also, New York satellite operator Loral Space & Communications Inc., which filed for Chapter 11 on Tuesday, was still "flying off the desks," a trader said. The 10% notes due 2006 were up 3 points to 66 bid, he said.

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