Global Crossing gains on extension of sale review, AK Steel firms after recent plunge

By Carlise Newman

Chicago, July 17 - Global Crossing Ltd. debt escalated Monday in distressed debt trading, buoyed by reports last week that the Committee on Foreign Investment will extend its review of the company's plan to sell a 61.5 % stake to Singapore Technologies Telemedia for an additional 45 days.

Global Crossing's bonds opened at 4¾ bid, 5¼ offered, and closed the session at 5 bid, 6 offered, a trader said.

Following its review, the panel will forward a recommendation to President George W. Bush, who will then have 15 days to decide whether to allow the transaction to move forward. U.S. economic and defense officials have been divided on whether to allow the deal to proceed, Reuters reported.

Last week, 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.

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.

"Aside from today, the [45-day] extension will pretty much squash any activity in Global Crossing until it's over," a trader said.

AK Steel Corp. was "a bit firmer" Monday after releasing disappointing second-quarter earnings Friday. AK said that it lost $78.2 million (72 cents per share), in the second quarter, a far cry from its year-ago profit of $16.2 million (15 cents a share).

AK's 7 7/8% notes due 2009 were seen 77 bid, 79 offered, up from 75 bid, 77 offered at Friday's close. The Middleton, Ohio-based steelmaker's 7¼% notes due 2012 were seen at 75 bid, 76 offered, "mostly unchanged" a trader said. The debt had been trading in the 80s prior to the report.

Wall Street was expecting a loss from the report, but it was worse than expected; analysts were forecasting a 43-cent loss.

AK "really flipped on Friday," a trader said. "It was a huge drop."

AK also said that steel shipments slid 7% from a year ago to 1.4 million tons. At the same time, its average price per ton of flat rolled steel fell to $682 from $708 last year.

The company blamed the revenue decline in part on weaker demand from Detroit for AK's steels in auto production.

WorldCom Inc. bonds were lower after a prolonged rally for the past few weeks. The bonds, which were trading around the 31 bid area for "a week or so," weakened Monday, closing at 30½ bid, 30¾ offered.

The Ashburn, Va.-based telephone company said Friday it will pay $60 million to settle certain fee disputes with Verizon Communications Inc. The $60 million fee will not be paid unless WorldCom's reorganization plan is confirmed by the courts, according to news reports.

Verizon agreed not to oppose the reorganization plan, the reports said.

Airlines "either plateaued or were down a point or so," a trader said.

Last Thursday, 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 down one point to 91 bid.

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.

Bankrupt Chicago-based United Airlines Inc.'s 9¾% notes due 2021 were down 3/8 of a point to "below 9" a trader said.

Conseco Inc. bonds were boosted Monday. The finance and insurance firm's exchanged bonds rose to 62 bid, 64 offered from 60 bid, 61 offered, while its unexchanged bonds were up a point at 35½ bid, 37½ offered from 34½ bid Friday.

Last Wednesday Conseco filed its fourth amended plan of reorganization with the bankruptcy court. Creditors have been wrangling with the firm over the restructuring plan, which will leave the company as an insurance-only business after selling its loan operations in bankruptcy.

"Maybe this is the one that will get them out (of bankruptcy)," a trader said of the reorganization plan.

The new amendments reflect minor modifications to the non-debtor release provision and related components of the plan, the company said.

Mirant Corp. debt was unchanged from last week, 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.

"Mirant didn't have much momentum, but it's a Monday, so wait and see," said the trader.

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.

Meanwhile, Greenwood Village, Colo.-based Adelphia was seen rising "mildly," a trader said, its 8 7/8% notes due 2007 quoted up a ½ point to 74 bid.

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