WorldCom still rising after affirming forecasts; Loral Space higher; Horizon PCS settles down

By Carlise Newman

Chicago, Aug. 19 - WorldCom Inc. bonds continued firmer on the company's affirmation Tuesday of its most recent financial forecasts.

The Ashburn, Va.-based long distance company said it stands by its July 7 financial forecasts, which called for 2003 revenues of $24.5 billion. It said its revenues would be $24.6 billion in 2004 and $25 billion in 2005.

WorldCom's bonds, which have "cooled off" in recent days, rose 1½ points on Tuesday and another 1 point on Wednesday, to end the session at 29¼ bid, 30 offered, a trader said.

On Tuesday the company said a statement in its Aug. 18 Securities and Exchange Commission filing, which stated that all guidance regarding future financial performance should be ignored, had referred to projections the company had made before it filed Chapter 11 bankruptcy protection in July 2002.

In the Aug. 18 SEC filing, the company said the reference to KPMG's findings of weak internal controls referred to information previously released on June 3.

The company had warned in its July 7 forecast that the recent ban that prevents it from competing for new government contracts could weigh on its net income. Depending on the ban's duration, its net income may be cut by $36 million to $250 million over three years, WorldCom had said.

Loral Space & Communications Ltd. was a fresh name on trading desks Tuesday, as news of possible bids surrounded the distressed satellite company.

On Wednesday, U.S. antitrust enforcers said they approved a plan by Loral to sell six satellites to Intelsat Ltd. for $1 billion - but a possible offer from TV broadcaster EchoStar Communications Corp. might surpass that deal.

Loral's 10% notes due 2006 were "active" and rose 2 points to 65 bid, 67½ offered, a trader said.

"The bonds were moving right out of the gate," he said.

On Tuesday, Loral said EchoStar had made an informal bid for its North American satellites and showed interest in the rest of the company. Loral did not disclose the terms offered by EchoStar, but the broadcaster told a court on Monday it could pay about $1.45 billion for all of Loral's assets, lawyers who were at the court hearing said, according to news reports.

The bid, which Loral said it would evaluate, was the first public sign of rival interest since Loral agreed in July to sell its North American satellites to Intelsat for $1 billion.

"We'll have to see what happens, but this looks to be good for EchoStar at least," said a trader. "And for one it was just good to see a new name on the desks today. We've been trading a lot of the same stuff lately."

On the desks for a third day was Horizon PCS bonds, which were steeply lower after the company filed for bankruptcy Friday.

The Sprint affiliate's 14% notes due 2010 traded at 6¼ bid, 7 offered, a rise of only a ¼ point from Tuesday.

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.

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