Global Crossing shoots higher as Bush clears way for sale; Enron continues ascent

By Carlise Newman

Chicago, Sept. 19 - Global Crossing Inc. bonds surged Friday on the news that President George W. Bush on Friday agreed to permit the company to sell a majority stake to Singapore Technologies Telemedia.

Bush said he would take "no action to suspend or prohibit" the bankrupt telecommunications company's plan to sell a 61.5% stake to the company, which is owned by the investment arm of the Singapore government, according to news reports.

Global Crossing bonds "opened at 7 bid and got as high as 9 bid" before closing the session at 7¼ bid, 8 offered, a trader said. The bonds had traded at 6½ bid on Thursday.

"That's quite a move for the bonds. I haven't seen them at these levels for months," a trader said.

The decision comes after the two companies resolved concerns about a foreign government-owned company acquiring a U.S. company that operates critical infrastructure like a telecommunications network. The U.S. Defense Department had initially opposed the deal and Homeland Security officials had reservations.

STT has agreed to pay $250 million for the stake in Global Crossing, which operates a high-speed fiber optic network in 27 countries and went bankrupt in January 2002 after amassing $12.4 billion in debt amid sagging demand.

"This will clear the way for them and end this finally. It's been going on for almost two years," one market source commented.

Meanwhile, Enron Corp. bonds firmed slightly Friday, boosted by having filed an amended reorganization plan Thursday that promises a better recovery for unsecured creditors.

The plan increased estimated recoveries for unsecured claims against the three top debtors to 16.6% for Enron Corp., 19.5% for Enron North America and 22.5% for Enron Power Marketing, Inc.

The previous recoveries were 1.4% for Enron Corp., 18.3% for Enron North America and 21.3% for Enron Power Marketing, Inc.

Enron's 8% notes due 2005 rose to 40 bid from 38 bid, a trader said.

"They're still reacting to the plan," a trader said. "It's obviously very good news for the company, and I don't think it was necessarily expected that there would be that much of a jump in the recovery percentages."

The court is expected to hold a hearing on the disclosure statement in late October.

Elsewhere, Air Canada Inc. bonds were firmer Friday on news that the company has reached a tentative restructuring agreement relating to aircraft leases for 38 Airbus aircraft (see story elsewhere in this issue). Under the terms of the tentative agreement, rental payments for each aircraft will be restructured consistent with Air Canada's restructuring plan.

Air Canada's 10¼% notes due 2011 were up 3 points to 50 bid, 52 offered, traders said.

"We saw the bonds trade just a few days ago, and the last we saw them they were around the 47 bid range. I would imagine they'll have a good run for a bit," a trader said.

Air Canada and its financial advisors are involved in negotiations with aircraft lessors and lenders on revised aircraft lease arrangements consistent with current rates and the company's restructuring plan. The company will resume aircraft lease payments as new agreements are reached.

In other news, WorldCom Inc. was unchanged at 33¼ bid, 34½ offered.

Ashburn, Va.-based WorldCom said on Sept. 9 it reached an agreement with its creditor groups. Traders have said the new agreement brings WorldCom one step closer to emerging from bankruptcy, possibly earlier than expected.

Riverstone Networks Inc. said it received a default notice from the trustee for its 3.75% convertible subordinated notes due 2006 - but plans to dispute the claim. The letter claims an event of default occurred as a result of the company's continued failure to file its Form 10-K within 60 days of receiving notice from the trustee, as required by the note indenture (see story elsewhere in this issue).

Most traders said the convertible notes are illiquid, but one pegged it at around 90 bid.

The trustee has accelerated payment and is demanding $131.75 million plus $1.57 million of interest and liquidated damages to Sept. 12.

Riverstone said it is disputing the trustee's position and has told the trustee that it failed to provide proper notice to commence the 60-day period. Therefore, Riverstone claims, an event of default has not occurred and the trustee is not entitled to declare any amounts to be immediately due and payable.

Santa Clara, Calif.-based Riverstone provides carrier class switches and routers for networks.

In other news, New York-based satellite operator Loral Space & Communication Inc., which filed for Chapter 11 in July, saw its 10% notes due 2006 up 2 points to 62¾ bid.

Adelphia Communications Corp.'s 9 7/8% notes due 2007 were up 1 point to 70 bid, a trader said.

(Ronda Fears contributed to this report)

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