Mississippi Chemical still floating mildly higher; Levi continues to vary; Telewest at lower levels

By Carlise Newman

Chicago, Dec. 2 - Mississippi Chemical Corp.'s bonds were slightly higher for a second day on Monday's announcement that its subsidiaries, Mississippi Potash Inc. and Eddy Potash Inc., have entered into an agreement to sell their potash assets to two subsidiaries of Intrepid Mining LLC for $27 million.

Mississippi Chemical's 7¼% notes due 2011 were seen at 14½ bid, ½ a point higher, according to a trader. On Monday the bonds had also risen ½ point.

"We don't often trade the seriously distressed stuff, and this is one we don't see often. It's a small gain, but it's a big move for bonds this low," he said.

The agreement with Interpid is a stalking horse bid that requires bankruptcy court approval, according to a news release. The next step will be an auction process where other interested parties may submit bids.

The sale of the assets is expected to close in the first quarter of 2004.

Meanwhile Levi Strauss Inc. bonds continued their descent on news that chief financial officer Bill Chiasson will leave the company as it looks for ways to cut debt and costs.

The San Francisco-based jeans maker, which has seen its credit rating cut in recent months due to a high debt load and poor performance, named Jim Fogarty of Alvarez & Marsal as interim CFO.

Levi's 7% notes due 2006 were down 1 point from Monday, according to a trader. The bonds had dropped 4 points Monday and had been trading in the 69 bid range for most of last week.

However, Levi's 11 5/8% notes due 2008 were quoted up around 2 points at 72 bid, 74 offered, after dropping as much as 5 points on Monday, according to a trader.

"The bonds are acting like no one knows to take the news as good or bad," he said.

Assuming stable exchange rates, Levi Strauss said it expected full-year net sales would decline by 2% to 3%. Net debt at year-end is projected to be between $2.1 billion and $2.2 billion, as compared to previous guidance of about $2.1 billion.

Levi Strauss said last month that it would not file its third-quarter earnings report on time because it discovered accounting errors for past years and would have to correct prior earnings reports. The company said it had discovered that in 1998 and 1999 it mistakenly took the same tax deduction twice for losses related to various manufacturing plant closures.

In other news, Telewest Communications plc bonds remained at lower levels for the week. The 10 5/8% notes were quoted by a trader at 54 bid, 56 offered, 2 points lower than when they were seen trading last week at 56 bid, according to one trader.

Last week Telewest said it plans to implement a financial restructuring that will allow noteholders to exchange notes for 98.5% of the common stock of the company.

"This news would have been better received if it hadn't happened during holiday-dead trading. You would have seen the paper at healthier levels," a trader said.

The terms of the restructuring were decided between the bondholder committee, W.R. Huff Asset Management Co. LLC, the senior lenders and certain major shareholders, according to a filing with the Securities and Exchange Commission.

Completion of the restructuring will result in, among other things, the cancellation of all of the outstanding notes of Telewest and Telewest Jersey in return for the distribution of 98.5% of the common stock of the new company to the noteholders; and the distribution of the remaining 1.5% of the common stock of the new company to Telewest's eligible shareholders.

This will reduce the total outstanding debt of the business by £3.9 billion to £2.0 billion

Elsewhere HealthSouth Corp. bonds were slightly better bid. The 7 5/8% notes due 2012 were quoted up 1 point at 87 bid, 88 offered.

Unrelated but noted by traders was news that HealthSouth said it will replace five members of its board of directors under a settlement with the Teachers Retirement System of Louisiana, which is suing the health care company.

Two HealthSouth directors will resign by Dec. 15, another two by April 15, 2004 and the fifth by Aug. 31, 2004. The board changes settle the Teachers Retirement System of Louisiana's lawsuit over the scheduling of an annual HealthSouth shareholder meeting.

The settlement does not affect the retirement system's lawsuit against HealthSouth founder and former chief executive Richard Scrushy, the directors themselves and certain third parties, according to Grant & Eisenhofer, the law firm that is representing the retirement fund.

(Paul Deckelman contributed to this report)

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