United Airlines up even on monthly loss; Calpine loans rebound

By Paul Deckelman and Sara Rosenberg

New York, Feb. 26 - United Airlines bonds were being quoted at firmer levels, even as the bankrupt Number-2 U.S. air carrier reported another large loss for January.

Calpine Corp. bank debt was meanwhile seen firmer, as market participants evaluated the San Jose, Calif.-based independent power generator's next move.

Elk Grove Village, Ill.-based UAL said its net loss for January was $252 million, including $26 million in reorganization expenses, and its operating loss was $191 million.

It ended the quarter with $2.2 billion in cash, of which $650 million was restricted for existing obligations. That cash balance was down $131 million from December.

However, even with the loss and its rate of cash burn, the carrier - hoping to emerge from Chapter 11 around mid-year, said that it met special bankruptcy financing requirements for the 12th consecutive month.

A trader said that UAL's bonds "have been steadily climbing", apparently on investor hopes that the carrier might be able to extricate itself from Chapter 11 after having made a forced landing there in December 2002.

He saw the bonds as having pushed up to 17 bid from prior levels around 16.25 bid, 17 offered.

A distressed-debt bond trader also saw the bonds having gained a little altitude to around the 17 level, although he said that he hadn't seen much activity in them.

Calpine loans higher

Back on the ground, bank debt traders said a focus on Calpine's loans was once again seen Thursday, as both the second-lien term loan and the Calpine Construction Finance Co. II LLC revolver rebounded following a soft start to the day and a relatively volatile week.

A trader said the second-lien term loan was quoted at 95.5 bid, 96 offered, versus previous levels of 95 bid, 96 offered, while the CCFC II revolver was quoted at 97 bid, 98 offered, versus previous levels of 96 bid, 96.75 offered.

On the bond side of the ledger, Calpine bonds "looked like they were back to where they had begun, before all of the stuff started with the cancelled deal," a trader said.

He quoted its 8½% notes due 2008 at 77 bid, 78 offered.

Another trader saw most of the company's bonds "in that same 76-78 bid context.,"

On Thursday, Calpine held a conference call during which officials tried to put investors' concerns at ease over the cancellation of the bank and bond deals that were slated for the refinancing of CCFC II by stating: "We're reviewing alternatives, different structures, different capital markets. But, it's a quality asset with quality cash flow and the refinancing risk in my mind is minimal."

The $2.5 billion CCFC II credit facility matures in November and has about $2.3 billion in outstanding debt under it including letters of credit.

Also on Thursday, Calpine put out earnings numbers for the quarter ended Dec. 31, 2003, that included earnings per share of 29 cents or $119.6 million of net income, compared with a loss per share of seven cents, or $25.2 million of net loss, for the quarter ended Dec. 31, 2002.

Revenues for the quarter were approximately $1.92 billion compared to revenues of approximately $1.87 billion last year. EBITDA, as adjusted was $422.7 million compared to $405.2 million for the fourth quarter of 2002.

For the 12 months ended Dec. 31, 2003, the company reported earnings per share of 71 cents, or $282 million of net income, compared with earnings per share of 33 cents, or $118.6 million of net income, for the 12 months ended Dec. 31, 2002.

Revenues for the year were approximately $8.9 billion compared to approximately $7.4 billion for full year 2002. EBITDA, as adjusted was about $1.58 billion compared to about $1.52 billion for 2002.

"During the year, Calpine refinanced $4.2 billion of maturities, raised $2.7 billion through liquidity transactions and reduced debt by $461 million. We also expanded our revenue-generating capabilities - adding 3,500 megawatts of capacity and signing more than 7,000 megawatts of power contracts with major load-serving customers. On the operations front, we lowered our cost of production, enhanced plant performance and further benefited from economies of scale," said Peter Cartwright, president and chief executive officer, in a company news release.

For 2004, the company expects breakeven GAAP earnings guidance based upon an assumed average market spark spread of $7 per megawatt-hour. The company also anticipates EBITDA, as adjusted, of approximately $1.7 billion and revenues of $11 billion.

Levi Strauss gains again

Levi Strauss & Co. bonds were seen up about a point or so for a second consecutive session, although there was no news out on the San Francisco-based apparel company. Levi's 11 5/8% notes due 2008 were seen at 70 bid, 71 offered, up from 69 bid, 70 offered on Wednesday.

Adelphia Communications Corp.'s debt was seen relatively steady at the levels it held after the Greenwood Village, Colo.-based cable operator announced its reorganization plan Wednesday. However, the 8 7/8% notes of its Century Communications Corp. Unit were quoted up several points at one desk, to the 114 level.

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