Goodyear Tire spikes up on agreement with union; Allegiance Telecom lingering after earnings

By Carlise Newman

Chicago, Aug. 21 - Goodyear Tire Co. and the United Steelworkers of America agreed to a tentative three-year contract late Wednesday night, the catalyst for a spike in the company's bonds in Thursday's trading session.

The two sides said Wednesday they agreed on job security and health care issues for workers while leaving enough financial room for Goodyear to reorganize its business. The union said its members must vote on the contract before it is ratified.

Goodyear's 7 7/8% notes due 2011 were quoted at 76 bid, 77 offered, an improvement of 4 points from Wednesday, a trader said.

"This had been expected so it was priced somewhat, but it was a nice move for a company that's been kind of dormant for a while," a trader said. "And on a day like this, it was welcome. It was really dead."

The sides had traded several proposals and counterproposals since negotiating began in March. The union said it was prepared to strike and this month insisted a contract be ironed out within days, not weeks.

The latest round of talks began earlier this month when the union offered a counterproposal officials said was stronger in health care benefits for workers and retirees than what the company had offered Aug. 6.

Allegiance Telecom Inc. was seen on desks on Thursday, a trader said. Late Tuesday Allegiance reported second quarter earnings results.

The company reported second quarter revenues of $196.7 million, a decrease of 3.9% compared with first quarter 2003 and an increase of 6.6% compared with the second quarter of 2002.

"Bonds were 21 bid in the morning, but no offers were made all day," a trader said. "It's just lingering around from Tuesday."

Allegiance Telecom said it had unrestricted cash and short-term investments totaling $269.2 million at the end of the second quarter.

The company said it continues to see improved productivity and efficiency as it focuses its business on profitability. The company's revenue per employee increased to $226,900, an increase of $6,800 or 3.1% over the revenue per employee for the first quarter of 2002 and an increase of $57,800 or 34.2% over the revenue per employee for the second quarter of 2002.

Loral Space & Communications Ltd. was still active Thursday, as news of possible bids surrounded the distressed satellite company in recent days.

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

Loral's 10% notes due 2006 rose a modest ¾ of a point to 65¾ bid, 68 offered Thursday, a trader said.

"We didn't see as much activity in Loral today as earlier in the week, yesterday and so on," 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.

Meanwhile, WorldCom Inc.'s bonds were seen unchanged at 29¼ bid, 30 offered, a trader said.

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.

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