WorldCom firmer on reports it didn't reroute calls; Hollywood Shreveport reviving

By Carlise Newman

Chicago, Aug. 4 - WorldCom Inc. debt finally had a better day Monday after the company said it found no evidence of improperly routed phone calls.

Last week, AT&T Corp. accused WorldCom of improperly diverting U.S. calls, including those by government agencies, to Canada to avoid connection fees. On Monday, the initial review did not find evidence, the company said, confirming a Wall Street Journal report earlier in the day.

WorldCom's bonds, which had taken a beating after a slew of negative news on the company, rose to 26 3/8 bid, 26¾ offered, a trader said, from 25¼ bid, 25¾ offered. MCI bonds were also "a little better" at 71¾ bid, 72½ offered.

"It was a positive day for WorldCom for a change. The bonds were trading around 25 on Friday and there were a few trades today at about 261/2. They headed higher nearer the end of the session," he said.

Last Thursday the General Services Administration said the bankrupt telephone company could no longer compete for new U.S. government contracts after finding it lacked proper internal controls and business ethics.

The bonds dropped over two points on the news.

The GSA said it would review whether the temporary ban on WorldCom should be extended for up to three years.

The GSA agency said its investigation found the Ashburn, Va.-based company had not adequately addressed its material accounting and business ethics weaknesses.

WorldCom said the decision does not affect its existing government contracts, which draw in about $1 billion in revenue annually. The company has 30 days to respond to GSA, though it can ask for an extension.

Elsewhere, Global Crossing was active on Friday. The bonds rose a ½ point to 3½ bid, 4½ offered, despite reports last week that two U.S. senators urged the government to prevent Singapore Technologies from purchasing the company.

"Global Crossing doesn't have much room for movement at those levels, so a half point is a big deal," a trader said.

The Committee on Foreign Investment in the United States has been reviewing whether the deal would threaten U.S. national security. Global Crossing filed for bankruptcy in January 2002.

The panel is expected to make its recommendation by early September; after that, President George W. Bush would have 15 days to render the final decision.

The Pentagon has been concerned about foreign ownership of a company that owns critical infrastructure. Global Crossing operates high-speed fiber optic telecommunications networks in 27 countries.

Meanwhile, Hollywood Casino Shreveport "seemed to be recovering," a trader said. The 13% notes due 2006 fell 7 points to 58 bid on Friday, and were trading "around those levels" on Monday.

The bonds dropped after news that Hollywood Casino Shreveport did not make the Aug. 1 interest payments of $12.3 million on the 13% notes due 2006 and 13% first mortgage notes due 2006, issued by Hollywood Casino Shreveport and Shreveport Capital Corp.

"It was a huge drop on Friday after the news came out about the note payment. Today was better. Everything was pretty quiet, though. I'd keep an eye on the bonds this week," the trader said.

Hollywood Casino Shreveport is already in default on the notes after receiving a notice on March 14 from a representative of holders of both series of notes that it had failed to make repurchase offers as required by the note indenture.

Hollywood Casino Shreveport is in negotiations with noteholders about a possible restructuring or other resolution.

Conseco Inc. was unchanged from Friday when its unsecured creditors and holders of its trust originated preferred securities holders will support an amended plan of reorganization.

Conseco's extended bonds were seen at 66 bid, while its unextended bonds were quoted at 37½ bid.

If the court approves the settlement, Conseco said it plans to file a fifth amended plan of reorganization that incorporates the settlement terms, and will reflect a $3.8 billion company value.

Elsewhere, Adelphia Communications Corp.'s 8 7/8 % notes due 2007 were seen at 68½ bid, down "more than two points" a trader said.

(Paul Deckelman contributed to this story.)

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