Mirant strengthens further; Loral Space ends rally; AK Steel obtains new credit facility

By Carlise Newman

Chicago, July 25 - Mirant Corp. was stronger Friday, despite news that it received court approval to prevent big claims holders from trading without 10 days' notice.

Mirant's 8.3% notes due 2011 were quoted at 80 bid, 81 offered, two points higher than Thursday, a trader said.

The bankruptcy court on Thursday approved the interim procedure, which requires certain holders of claims, preferred securities, and common stock to provide at least 10 days notice of their intent to buy or sell claims against Mirant Corp. (see story this issue).

Mirant said the procedure applies to claims of more than $250 million and shareholders who own or seek to own at least 4.75% of Mirant's stock

The court's order also provides for expedited procedures to impose sanctions for a violation of its order, including monetary damages and the avoidance of any transactions that violate the order. A hearing to consider a final order regarding the notice has been set for 9:00 a.m. ET on Aug. 8.

"Whether or not the news on Mirant had any impact, I don't know. They've been active since they filed for bankruptcy," a trader said.

The relief was sought to prevent potential trades of claims or stock that could negatively impact Mirant's net operating losses for tax purposes, which are currently $1 billion and could reach $2.5 billion by the end of 2003. The tax attributes may result in potential future tax savings of as much as $200-$400 million, Mirant said.

New York satellite operator Loral Space & Communications Inc., which filed for Chapter 11 last week, fell further Friday, a trader said. The 10% notes due 2006 were down 1 point to 61½ bid, 63 offered. Meanwhile, a market source said he saw HealthSouth Corp. bonds "slipping a little" after news that the federal probe of the Birmingham, Ala.-based hospital operator may widen came out on Thursday.

Healthsouth's 7 5/8% dropped to 80 bid, 82 offered from 82.5 bid 83.5 offered earlier in the week, while its subordinated bonds dipped to 75.5 bid, 77 offered from 77 bid, 79 offered.

The Justice Department said it has uncovered what it says are new crimes related to the alleged $2.5 billion accounting fraud at HealthSouth and is investigating dozens of individuals and corporations. More plea agreements are also forthcoming, reports cited federal prosecutors as saying.

A trader who moves a lot of distressed or busted converts said the market got "spooked a little bit" by the HealthSouth headlines and after trading at 82 earlier in the week the convertibles dropped to 79 bid, 80 offered on Friday.

Elsewhere, AK Steel's 7 7/8% notes due 2009 were "a point better" at 78½ bid, 79½ offered, a trader said, citing reports of the company's new credit facility.

"They were doing well all week. I thought we'd see some profit-taking today but the credit facility news put a stop to that," he said.

AK Steel Holdings closed on a $400 million, five-year senior secured revolving credit facility with a syndicate of lenders. The Middletown, Ohio-based steelmaker said the new facility, which is secured by the company's inventory and borrowings, would be used for general corporate purposes. The company also has a $300 million revolving credit facility secured by accounts receivable.

Credit Suisse First Boston LLC acted as lead arranger and book running manager and is serving as administrative agent for the new facility.

Last Friday, AK Steel reported a second-quarter net loss on a combination of lower selling prices for flat-rolled steel and higher costs for maintenance and raw materials. The supplier of steel for auto makers reported a net loss of $78.2 million, or 72 cents a share, in contrast to net income of $ 16.2 million, or 15 cents a share, a year earlier.

Analysts were expecting a loss of 43 cents a share.

Global Crossing Inc.'s bonds closed Wednesday's session at 3½ bid, 4 offered, unchanged from Thursday.

A trader said Friday's trading was "all odds and ends, bits and pieces of things that happened early in the week."

He said WorldCom Inc.'s 7½% notes due 2011 were seen at 30¾ bid, up ¼ of a point, apparently undaunted by news Friday that the Pension Benefit Guarantee Corp. objected to the telecommunications company's pension plan because it does not explicitly say the reorganized company will maintain the pension funds and attempts to exclude some beneficiaries.

"No bad news seems to hurt them lately. If they do anything at all, the bonds move within a range of a half point or so," he said.

Meanwhile, Adelphia Communications Inc., which has been "really active" this week, saw its 9 7/8% notes due 2007 rise 1.5 points to 71 bid.

And Westpoint Stevens Inc.'s 7 7/8% notes due 2008 were quoted up half a point 23 bid. The Westpoint, Ga.-based home furnishings company filed for bankruptcy protection in early June.

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