Global Crossing sticks to earlier levels; Goodyear paper drops sharply on new accounting troubles

By Carlise Newman

Chicago, Dec. 11 - Global Crossing Inc. bonds stayed close to current levels from earlier in the week when the company emerged from bankruptcy, after a restructuring that erased most of its $12.4 billion in debt.

Global Crossing's 9 5/8% notes were seen up slightly at 10 1/8 bid, according to a trader.

"Just an eighth of a point, but we should see some good gains from now on," he said.

The company is now controlled by Singapore Technologies Telemedia, which invested $250 million in Global Crossing for a 61.5% equity share of the company.

In addition to its original investment, ST Telemedia also agreed to purchase $200 million in senior secured notes that were to be distributed to Global Crossing creditors. The cash injection was used to pay off Global Crossing creditors, the company said.

The remaining 38.5% of the company's equity was distributed to Global Crossing's former secured and unsecured creditors.

Also, on Monday, Global Crossing said it posted a loss of about $25 billion for 2000 through 2002 as the telecommunications market weakened and it wrote down the value of its high-speed network.

Meanwhile, Goodyear Tire & Rubber Co. bonds experienced a steep drop on Thursday from the news after the close Wednesday that it had discovered more accounting problems, likely forcing it to postpone a planned debt sale until next year and forcing it back to talks with its unions.

The company said it identified possible improper accounting issues in Europe as part of an ongoing internal investigation. It has not determined whether the problems will have an impact on its financial statements.

Goodyear's 7 7/8% notes due 2011 fell to 84 bid, 87 offered from previous levels of 92¼ bid, 93¼ offered early on Thursday. Its 6 3/8% notes due 2008 were seen at 90 bid, 93 offered, dropping from 93 bid previously. And its 7% notes due 2028 fell to 71 bid, 76 offered from 80½ bid, 82½ offered, according to traders.

"Goodyear was the big thing today. The bonds dropped a good four points out of the gate," one trader said.

The company plans to delay filing an amended 2002 10-K with the Securities and Exchange Commission until its review of the European accounting issues is complete, likely until next year.

As a result, it will likely not be able to sell a minimum of $250 million of notes and $75 million of equity-linked securities by year-end as required by its new labor agreement with the United Steelworkers of America. The union has the right, but not the obligation, to strike if the conditions are not met.

Goodyear had announced on Oct. 22 that it would restate results for periods dating back to 1998 because of mistakes made in North America when it switched to a new computerized accounting system. It has since said net income will be reduced by $84.7 million.

Elsewhere, Collins & Aikman Corp. debt slowed down a bit after a 4-point rally on Wednesday that occurred for no particular reason and had traders confused. The 11½% notes due 2006 were seen up 2 points at 88 bid, 90 offered, according to a trader.

"This is more like it. There was no reason for them to get that far ahead yesterday," he said.

The bonds took a dive back in early November to low-80s levels after the company confirmed that it would not supply interior trim for future DaimlerChrysler AG midsize sedans.

Collins & Aikman said that the Chrysler "D-segment" business did not meet higher hurdles for returns on investment that it adopted after obtaining the interior trim contract in April. The company said the business would not produce revenue until mid-2006 or later, while requiring an initial investment of more than $50 million.

Then in mid-November, the auto supplier said its third-quarter loss was $32.1 million, or 38 cents a share, compared with a loss of $45.2 million, or 54 cents a share, last year. The company's debt rallied on the news, rising to the mid-80s.

In other news, Revlon Inc.'s 8 5/8% notes due 2008 were down 1½ points at 47½ bid, traders said. The bonds had been rising gently for several days, including Wednesday, when they were up 1 point at 49 bid.

The cosmetics maker's paper was about 6 points higher several weeks ago after financier Ronald Perelman's MacAndrews & Forbes Holdings Inc. has agreed to provide it with up to $125 million of new loans to continue operating.

Parmalat Finanziaria SpA was mentioned by traders Thursday. The Italian food concern's bonds were quoted trading in the 60s. Its 6¼% notes due 2005 were quoted at 68 bid, 71 offered, while the 6 1/8% notes due 2010 were seen at 60 bid, 63 offered. Traders did not have prior levels.

(Paul Deckelman contributed to this report)

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