Goodyear stabilizes; Global Crossing unchanged; Fleming bonds better on plan filing

By Carlise Newman

Chicago, Dec. 12 - Goodyear Tire & Rubber Co. bonds managed to fare a bit better in Friday's session after a steep drop Thursday on the news that it had discovered more accounting problems, forcing it to postpone a planned debt sale until next year and possibly unleashing additional labor problems.

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 were little changed at 88 bid, 90 offered. On Thursday the bonds had dropped 4 points early in the day from previous levels of 92¼ bid, 93¼ offered.

"The paper was not hit anywhere near as hard as Thursday," one trader said.

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.

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.

As a result, it said it will likely not be able to sell $250 million in debt and $75 million of equity by year-end, as required by its labor agreement with the United Steelworkers of America. The union has the right, but not the obligation, to strike if the conditions aren't met.

"Thursday was bad, but once the ratings agencies have at the company, it's going to get worse," one trader commented.

To that effect, Standard & Poor's on Thursday said it may cut its rating on Goodyear further into junk territory due to the news.

Elsewhere, Global Crossing Inc. bonds were unchanged after several days of gains incurred when the company emerged from bankruptcy.

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.

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

"The shine has kind of worn off now, but it is Friday and it is December. Nothing much happens anywhere," he said.

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, Fleming Cos. Inc. debt was slightly higher after the company filed its reorganization plan and disclosure statement in court. Under the plan, lenders will be paid in full while unsecured creditors will receive most of the company's equity.

Fleming's 10 1/8% notes due 2008 ended the session at 22¾ bid, slightly higher than Thursday, when the bonds jumped 3 points, according to a trader.

The plan is designed for the company to be reorganized around its convenience business, Core-Mark International Inc. Fleming said the plan is intended to provide the emerging company with a capital structure that can be supported by cash flows from this operation, absent an offer for the convenience division that would provide greater value for the company's creditors.

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

The bonds plunged 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.

"Today was one big lull," one trader said of Friday's activity. "Just little stuff here and there."

He said Revlon Inc. paper was quoted down several points on the session Friday. Its 8 5/8% notes 2008 were seen at 42½ bid, down 3 points. The paper had been mainly unchanged to slightly higher this week, a trader noted.

Loral Space & Communications Inc.'s 10% notes due 2006 were down a point to 74 bid. The notes had been sagging a point or so every day for the last week or so, according to a trader.

Parmalat Finanziaria SpA bonds fell as low as the low 50s, then recovered to levels straddling 70 bid after the company belatedly paid its €150 million bond that matured on Monday. The bonds ended the session in the 61 bid, 62 offered area.

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