RCN notes up as they begin trading flat; Mirant bank debt lower

By Paul Deckelman and Sara Rosenberg

New York, May 28 - RCN Corp. bonds were quoted at higher levels in an abbreviated, lightly traded session Friday - although market participants noted that with the Princeton, N.J.-based telecommunications company's bonds now trading flat, or without accrued interest, following its bankruptcy filing, levels are not exactly comparable to where they had been previously.

Elsewhere, Mirant Corp.'s bank debt plummeted by about 2½ points on Friday in reaction to the bankrupt Atlanta-based energy company's "monthly numbers that came out [Thursday]", a distressed trader told Prospect News.

The 2003 bank debt was quoted at 51 bid, 52 offered, the trader added.

A high-yield market source meanwhile saw the bonds of Mirant's subsidiary Mirant Americas Generating down about two points on the session, with the MAG 7.20% notes due 2008 dipping to 71 bid from prior levels around 73 and "all of the Maggies kind of going that way."

However, he saw parent Mirant Corp.'s bonds unchanged, with the 7.90% notes due 2009, for instance, steady at 56.5 bid.

For the month ended March 31, Mirant had about $1.57 billion in cash and cash equivalents, well down from about $1.68 billion at the end of February, about $273 million in net revenues, versus about $387 million in net revenues at the end February, and a net loss of about $55 million, compared to a net loss of about $15.5 million at the end of February.

For the quarter ended March 31, Mirant had a net loss of approximately $15.5 million and net revenues of approximately $1.2 billion.

Adelphia loans active

Meanwhile, although many reported it to be a quiet trading day some market participants saw Adelphia Communications Corp.'s Century Old and Century New bank debt moving around pretty actively in the morning hours, according to a trader.

The Century Old and the Century New both traded around in the 97 to 98 context, a little stronger on the day, the trader added.

A second trader saw some of the Parnassos and TCI trading actively with the paper going out at 98.75 to 99.

The bankrupt Greenwood Village, Colo.-based cable operator's bonds were seen a little easier Friday, its 10 7/8% notes due 2010 going home down a point at 105 bid.

RCN prices better

Also in the communications sphere, RCN's bonds "were up a little" from Thursday's closing levels around 51 bid, a trader in distressed bonds said.

He quoted its 10 1/8% notes due 2010 at 54 bid, 56 offered, and its 11 1/8% notes due 2007 at 53 bid, 55 offered. The company's 11% notes due 2008 were at 52 bid, 54 bid.

"Remember," he cautioned, "they might have been 50-51 [Thursday] and now they're 52, 53 on the bid side, but they could be worth less now, depending on how much interest they gave up" when they began trading flat, as customarily happens when an issuer goes bankrupt or otherwise defaults on a bond.

Salton holds gains

Salton Inc. bonds, which had risen on apparent short-covering Thursday, after the troubled Lake Forest, Ill.-based maker of the popular George Foreman home hotdog and hamburger grills announced some belt-tightening moves, continued to hold those firm levels, a market source said, pegging its 12¼% notes due 2008 at 65 bid, about the level to which they had risen on Thursday. He saw the company's 10¾% notes due 2005 at 75 bid, well up from recent levels in the high 60s.

A trader at another desk who saw the Saltons at those levels characterized them as "a little better" on the session, with the 12¼% notes at 65 bid, 68 offered.

Delta rises

Also higher, a trader said, were the bonds of Delta Air Lines Inc., which had retreated on Thursday in response to news that the Atlanta-based air carrier - which is struggling to cut its employee cost structure so it can remain competitive with its sector rivals - had retained the Blackstone Group to advise it on its restructuring efforts.

That seemed to say to some investors that the money-losing airline company might be headed toward a bankruptcy filing, something Delta has steadfastly denied, but now admits is at least a theoretical possibility if it cannot get its pilots to agree to major concessions.

On Friday, news reports said that Delta had also hired the legal firm of Davis Polk & Wardwell to help with the restructuring. Delta declined to confirm or deny the specific choice of Davis Polk.

The trader saw Delta's 8.30% bonds due 2029 rising to 42.5 bid, 43.5 offered from prior levels around 39 bid, 40 offered.

At another desk, the Delta 10 3/8% notes due 2011 were being quoted up two points on the session at 53, although that still left them down at least five points from where they had been before the Blackstone news caused the Delta paper to lose altitude. And Delta's 8% notes due 2023 were seen down another three points to 54 bid.

HealthSouth edges up

HealthSouth Corp. bonds were seen at slightly firmer levels, apparently not much affected by the news that the Birmingham, Ala.-based provider of outpatient medical services had received a formal notice of default from the holders of its 7% senior notes due 2008.

It was the second such default notice the embattled company had received in a matter of days, with holders of its 7 5/8% seniors due 2012 having delivered a similar notice earlier in the week. The notices refer to the company's failure to file reports with the Securities and Exchange Commission and with the respective trustees for the notes; should the problem not be cured within 60 days, the noteholders would have the right to accelerate the company's indebtedness.

HealthSouth is currently trying to get its bondholders, including the holders of the 7% and 7 5/8% notes, to agree to indenture changes and default waivers that would keep it out of default and prevent the acceleration. It announced Friday that it was extending its solicitation of their consents to such actions by at least another week (see "Tenders and Redemptions" elsewhere in this issue for full details).

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