Global Crossing sees big jump on ST Telemedia investment; Air Canada unchanged

By Carlise Newman

Chicago, Dec. 8 - Global Crossing Inc. bonds jumped upwards Monday after floating higher recently on news that Singapore Technologies Telemedia would put $200 million into Global Crossing to ease its transition from bankruptcy, raising its total investment in the telecom company to $450 million.

Global Crossing's 9 5/8% notes were seen at 10½ bid, up from 9 5/8 on Friday, according to a trader. He did not have prior levels.

"It's been so long since we've seen that issue that I have no idea where it's been," he said.

ST Telemedia obtained regulatory approval in October to buy 61.5% of the bankrupt U.S. fiber optic network operator for $250 million.

Global Crossing's creditors were promised payment in the form of senior secured notes when ST Telemedia received approval to buy the majority stake. Creditors led by billionaire Carl Icahn, who hold about $2.25 billion in Global Crossing debt, were discontented, as they felt the notes did not provide sufficient collateral. Icahn had earlier tried to bid for Global Crossing.

Under the deal announced on Friday, ST Telemedia will take over some senior debt from the creditors, which will reduce the amount of bonds the creditors will receive once the firm emerges from bankruptcy.

Meanwhile Air Canada bonds were basically unchanged after a Canadian judge approved a plan from Trinity Time Investments to invest $650 million into the bankrupt carrier (see story elsewhere in this issue).

The judge left the door open for Cerberus Capital Management to outdo the bid by Dec. 12. Cerberus had submitted two bids previously, one of which was unsolicited.

Air Canada's 10¼% notes due 2011 were seen unchanged at 40 bid. A few weeks ago, the bonds had been trading in the 48 bid area.

Levi Strauss Inc. paper was slightly weaker after several days of mixed action. 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 69 bid, about 1 point lower than Friday when they were seen unchanged at 70 bid. The bonds dropped as much as 4 points last Monday on the news.

"Things are slowing down in that area a bit," a trader said.

Elsewhere Telewest Communications plc's 9 5/8% notes due 2006 were up 2 points at 66 bid , according to a trader. The bonds had risen about 2 points on Friday for no particular reason, and the same was said of Monday's boost.

"Telewest has been pretty active for the past month or so," the trader said.

Telewest recently announced plans to implement a financial restructuring that will exchange its notes for 98.5% of the common stock of the company. The bonds were flying high at 70 bid on that news, released about two weeks ago.

Completion of the restructuring will result in 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 new Telewest to the noteholders; and the distribution of the remaining 1.5% of the common stock of new Telewest to Telewest's eligible shareholders. This will reduce the total outstanding indebtedness of the business by £3.9 billion to £2.0 billion and significantly reduce interest expense.

In other news, Owens Corning 7½% notes due 2005 were unchanged at 42½ bid, 43½ offered. The bonds had been trading at nearly the same levels since early November, when the company reported third-quarter earnings.

Owens Corning reported income from operations of $104 million for the quarter, including $5 million of Chapter 11-related charges and a $1 million other charge as the result of a contractual post-closing adjustment to the selling price of the Company's metal systems business.

For the third quarter of 2002, the company reported a loss from operations of $2.342 billion, including $35 million of Chapter 11-related charges, an $11 million restructuring charge, other charges of $33 million, and the $2.356 billion charge for asbestos-related liabilities. All charges included in income from operations are pre-tax.

The Toledo-based flooring company ended the quarter with a cash balance of $769 million.

"Asbestos names were active, the big ones at least. It was good to see something other than the same things we've seen for the past few days," one trader commented.

Another asbestos name, Armstrong World Industries Inc., was unchanged at 53 bid, 54 offered, according to a trader. The bonds were trading in the low 50s since November, but recently had improved, and had been a point better on Friday.

Last week, parent company Armstrong Holdings Inc. said its shareholder meeting scheduled for Dec. 3 will be adjourned to Jan. 7, 2004 in view of a procedural delay in the Chapter 11 case of Armstrong World Industries Inc., which is Armstrong Holdings' only significant asset.

The meeting was called to authorize the dissolution of Armstrong upon implementation of a plan of reorganization in its Chapter 11 case, according to a news release. The adjournment provides additional time for shareholders who have not yet voted to vote on the proposal.

Armstrong is a Lancaster, Pa.-based flooring manufacturer.

Elsewhere Revlon Inc.'s 8 5/8% notes due 2008 dropped to 48 bid from recent levels in lower 50s.

Sheboygan, Wis.-based J.L. French Automotive Casting Inc.'s 11½% notes due 2009 were up 2½ points to 48½ bid, according to traders. The bonds had fallen 1 point on Friday, and otherwise have not been seen trading in quite some time, traders said.

(Paul Deckelman contributed to this report)

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