Horizon PCS resumes slide; Conseco files fifth reorganization plan, bonds rise accordingly

By Carlise Newman

Chicago, Aug. 19 - Horizon PCS bonds, which were steeply lower after the company filed for bankruptcy Friday, were seen even lower at Tuesday's close on distressed debt trading desks.

The Sprint affiliate's 14% notes due 2010 were seen at 6 bid, down one point from Monday, when they opened at 7 bid and remained unchanged. On Friday, the bonds dropped six points after the announcement of the filing.

"They were 6 bid looking [for offers] at the close (Tuesday)," a trader said of the Horizon paper.

On Aug.15, the Chillicothe, Ohio-based company delivered to the lenders under its senior secured credit facility a certificate that indicated that the company failed to comply with a financial covenant for the second quarter of 2003 as required by the senior secured credit facility. The lenders elected to declare an acceleration of the loans under the credit facility - and the company filed for Chapter 11 in response.

Horizon also released its quarterly earnings on Friday, saying it had posted a net loss of $107.3 million for the second quarter on revenue of $63.5 million, according to its quarterly earnings report filed with the Securities and Exchange Commission.

By filing for bankruptcy, Horizon intends to enter into negotiations with Sprint to adjust the amounts charged by Sprint to the company under the Sprint management agreements to improve the company's cash flow from operations, and enter into negotiations with the lenders under the senior credit facility, among other things.

Conseco Inc. announced that it has filed its fifth amended plan of reorganization with the bankruptcy court (see separate story elsewhere in this issue). The plan is virtually unchanged from the fourth amendment but includes a settlement with holders of the Trust Originated Preferred Securities that clears the way for court approval, said a company spokeswoman.

Conseco's unexchanged bonds rose to 42 bid, 43 offered, two points higher than Monday's prices, while the exchanged bonds rose ½ point to 67 bid, 69 offered.

The settlement allows that in exchange for dropping its objections, the TOPrS holders will get 1.5% of the equity in the reorganized Conseco, stock warrants and share in any recovery of loans made to officers and directors in exchange for dropping objections.

The court has set Sept. 9 as the hearing date to consider confirmation of the amended plan.

Goodyear Tire & Rubber Co., after three days of non-stop negotiations, proposed a new contract offer to its biggest labor union on late Sunday, and its bonds were better bid on Tuesday. The company is looking to reduce expenses after consecutive losses in the past two years and declining sales in North America, its biggest market.

The bonds rose two points to 72 bid, 73½ offered, a trader said.

"Goodyear's been moving up, but it's touch and go from here," a trader said.

The United Steelworkers of America said it hopes to formally respond to Goodyear's proposal later on Tuesday. For the past two days, union leaders have been perusing the document. Negotiations between Goodyear and the Steelworkers began in March, broke off in June and resumed two weeks ago.

Goodyear has said it plans to cut costs by about $1 billion to $1.5 billion by 2005 to reduce capacity and restore profits after losing $1.3 billion over the past two years. The company is seeking wage and benefit concessions from the union as part of its turnaround effort, but has not said whether those plans included job cuts or plant closings.

The steelworkers have sought to preserve job security and health care benefits and have maintained the company must first restructure debt and invest in its U.S. plants to keep them competitive.

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