Mississippi Chemical still gaining at a slower rate; Levi going strong; Dan River back in picture

By Carlise Newman

Chicago, Dec. 4 - Mississippi Chemical Corp. paper was still higher in distressed debt trading Thursday, but lost some of its luster from the 4-point gain seen on Wednesday.

The news that 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 has brought the bonds up mildly each day this week, until Wednesday when the notes zoomed ahead for no particular reason.

Mississippi Chemical's 7¼% notes due 2017 moved up to 19 bid Thursday from prior levels at 18 bid. The bonds had risen a ½ point both Monday, when the news first broke, and Tuesday, and then shot up to 18 bid on Wednesday.

The sale agreement represents 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.

In addition, Levi Strauss Inc. paper was going strong. The bonds had fallen on Monday's 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 apparel maker named Jim Fogarty of Alvarez & Marsal as interim CFO.

Levi's 11 5/8% notes due 2008 were quoted at 75 bid Thursday, up 2 points from the day before. The bonds dropped as much as 4 points Monday, then zoomed ahead Tuesday to end 3 points higher.

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.

But generally trading was subdued.

"It's going to be rough for the next few weeks. There's just nothing going on," one trader said.

However, he said Dan River Inc.'s 12¾% notes due 2009 were seen at 28 bid, up 1½ points. The bonds had last been seen trading weeks ago at 23 bid.

"There was no real news out there but the bonds have been at attractive levels for weeks and we're seeing more interest," the trader said.

At that time the Danville, Va.-based company posted third-quarter earnings and the bonds plunged from levels in the mid 70s. It posted a net loss of $103.5 million, or $4.70 a share, compared with net income of $4.7 million, or 21 cents a share, a year earlier. Net sales for the quarter ended Sept. 27 were $103.7 million, down nearly 30% from $147.4 million a year earlier.

The results included a non-cash write-down of $91.7 million related to goodwill impairment as a result of recent operating performance.

Elsewhere, Loral Space & Communications Ltd.'s bonds were losing steam somewhat, with the 10% notes due 2006 down a point at 73½ bid. The bonds had been trading at levels around 75 bid for the past several weeks, and had plummeted earlier in November after the company reported a huge third-quarter loss.

Traders said the drop, though slight, could be due to the news that Satelites Mexicanos, partially owned by the New York-based satellite operator, said on Thursday it would delay the launch of a new satellite until the second quarter of next year as it restructures its debt.

Satmex had expected to launch the satellite this month, but difficulties in refinancing its debt, a key step in getting part of the money it needs to pay for the satellite's insurance, have delayed the process. The Mexican satellite company, 49%-owned by Loral, has $525 million in high-yield bonds and floating-rate notes maturing next year.

Meanwhile, WorldCom Inc. paper was quieter. The bonds were seen unchanged at 36 bid, 37 offered, "with buyers out there," a trader said.

The bonds were last seen trading at 34 bid last Monday, and had risen 1 point to current levels on Wednesday. Prior to that, they were at levels in the low-30s after announcing they had experienced a wider loss in September.

WorldCom said it posted a $35 million net loss in September, due to a soft consumer market and competitive business climate. The company blamed the loss on lower operating income that resulted from reduced revenue. The Ashburn, Virginia-based company's revenue dipped slightly to $1.95 billion for September, down from $2.01 billion the previous month.

The loss contrasts with the $132 million in net income posted in August.

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