Loral Space higher despite proposal rejection; Mirant bank debt lower after CFO quits

By Carlise Newman

Chicago, Oct. 9 - Loral Space & Communication bonds remained higher Thursday, despite news that the company rejected a $1.85 billion bid from EchoStar Communications Corp. to buy all the company's assets (see story elsewhere in this issue).

Loral's 10% notes due 2006 were up 2½ points to 66½ bid, 67 offered, one trader said.

On July 15, Loral reached an agreement to sell to Intelsat its six North American satellites, including Telstar 4, for $1.1 billion. Consistent with the bidding procedures approved by the bankruptcy court, Loral will evaluate any bids that it may receive for its North American satellites on or before Oct. 15, including one from EchoStar if it submits a bid for those assets.

Elsewhere, Mirant Corp. bank debt dropped Thursday after news that the company's chief financial officer, Harvey Wagner, resigned after less than a year in the job.

The Atlanta-based energy company said Wagner will stay on in an interim capacity until a replacement is hired.

Mirant's 2003 revolver was quoted at 51 bid, 52 offered; its 2004 revolver was seen at 54 bid, 56 offered; and the 2005 revolver at 75 bid, 77 offered.

A trader said the debt was "down about a point and a half across the board."

"Harvey believes that at this important time in Mirant's restructuring process, the company deserves to have a CFO capable of making the necessary commitment to see it emerge from Chapter 11 as viable and strong," president and chief executive Marce Fuller said in a statement.

In January Wagner replaced Ray Hill as CFO of Mirant, which was heavily in debt and beaten down by lower electricity prices. The company has since filed for Chapter 11 bankruptcy protection.

Collins & Aikman Corp. debt was still rising, a move attributed to a positive private call with bank lenders on Tuesday.

Before the call, the Detroit auto parts supplier's paper had dropped over 10 points in three days after news that it may be dropped as a contractor by DaimlerChrysler AG's Chrysler Group.

News reports said that Chrysler Group is ready to drop all current and future contracts with the auto parts supplier. Chrysler's current and planned business with Collins & Aikman is worth $1 billion, the reports said.

Collins & Aikman's 10¼% notes due 2006 were seen 84 bid, 86 offered Thursday, up 1½ points.

"This can't keep going. Ahead of the holiday it's pretty thin so I would think that has something to do with it," a trader said.

Meanwhile, Global Crossing Inc. bonds improved on Thursday, due to Federal Communications Commission approval for Global Crossing's application for transfer of control to Singapore Technologies Telemedia (see story elsewhere in this issue). With the approval, Global Crossing said it will emerge from bankruptcy shortly.

Global Crossing bonds were about 2 points higher at 7 bid, 8 offered, one trader said.

"The paper was up because they're getting so close to getting out of bankruptcy," he said. "Actually I thought we'd see a bigger move, but things have progressed pretty well and I think this was somewhat expected."

FCC approval was the final regulatory clearance needed for ST Telemedia to go ahead with its purchase of Global Crossing. ST Telemedia is investing $250 million for a 61.5% ownership position. Global Crossing creditors will receive a 38.5% equity interest.

Meanwhile, Charter Communications Inc. bonds were doing well Thursday.

"Charter sold off pretty hard a couple of weeks ago, when the rumor circulated that they were going to have to do a new financing, on top of the 10¼% notes that they just did. And the bonds traded off. Now they seem to be coming back," a trader said.

Charter's 8 5/8% notes, the benchmark issue, were 80 bid, 81 offered, up ½ point, he said.

"Charter paper continues to do pretty well. Some of the outstanding Charter issues are up several points over the last week or so," another trader said.

Chemical maker Solutia Inc. did not fare as well after the company issued guidance for the third quarter. The 7 3/8% notes due 2027 were seen down 1 point to 65 bid, a trader said.

The St. Louis-based company said it expects an after-tax loss of $1.65 to $1.70 per share in the third quarter, given its settlement over PCB contamination in Alabama, weaker economic conditions and higher costs of raw material and energy.

Solutia, which also said Thursday that it closed on a new three-year, $350 million revolving credit facility, said the expected loss includes charges of $1.40 to $1.50 per share. Because of the new revolver and related transactions, three series of notes including the 7 3/8s of 2027 will no longer be secured, reverting to unsecured status.

Analysts expected a loss of 7 cents per share by Solutia, which reports its third-quarter earnings later this month.

In other news, Adelphia Communications Corp. was up again. The 10 7/8% notes due 2010 were seen up 1 point to 79 bid, 81 offered, traders said.

West Point, Ga.-based personal products maker WestPoint Stevens Inc.'s 7 7/8% notes due 2005 and 2008 were seen up 3 points to 16 bid.

WorldCom Inc. "keeps trading up," according to a trader, who said he saw the bonds now around 35 bid.

"That's a big jump from where they were a couple of months ago, in the mid-20s," he said.

WorldCom got a big boost in early September when offered a better deal to clinch support from two groups of creditors. The deals with trade creditors and subordinated creditors will likely bring the company closer to emerging from bankruptcy.

(Paul Harris and Sara Rosenberg contributed to this report)

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