Mirant bank debt and bonds firm despite numbers; Pegasus lower

By Paul Deckelman and Sara Rosenberg

New York, June 1 - Mirant Corp.'s 2003 bank debt rebounded by about a point on Tuesday as investors put the disappointing monthly numbers which the bankrupt Atlanta-based merchant power company released last week into perspective. Mirant bonds were likewise seen having firmed off their recent lows.

The 2003 bank paper was quoted at 52 bid, 53 offered, according to a trader.

On Friday, the bank debt had been seen trading around 51.5, with quotes closing around 51 bid, 52 offered, after having plummeted by about 2½ points from Thursday's levels in response to the release of monthly numbers.

"You can't get overly excited on monthly numbers," the trader said. "It [the debt] should have been off - but not by that much. Basically, it's market technicals."

Over on the bond side of the fence, a market source was quoting the Mirant Americas Generating 8.30% notes due 2011 and 9 1/8% bonds due 2030 as having firmed to 71.5 bid from last week's lows around 70.75. He also saw the MAG 7.20% notes due 2008, its 7 5/8% notes due 2006 and its 8½% bonds due 2021 all up likewise up three-quarters of a point on the session at 71.75.

However, he noted that parent Mirant Corp.'s 7.90% notes due 2009 and 7.40% notes maturing later this year were both unchanged around 56.5.

But at another desk, a trader in distressed bonds saw Mirant headed in the opposite direction, quoting the 7.40s as having fallen to 54 bid, 56 offered from around 56 bid previously.

On Thursday, Mirant reported that for the month ended March 31, it 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 $15.5 million and net revenues of $1.2 billion.

Pegasus down again

The distressed-bond trader also saw Pegasus Satellite Communications Inc.'s bonds continuing to head south, despite a lack of fresh negative news on the troubled Bala Cynwyd, Pa.-based television program distributor - which is trying to figure out where it is going to get the money to pay for a $62.5 million legal judgment rendered against it last month in a court case against its long-time adversary, DirecTV.

The trader saw Pegasus' 11¼% notes due 2010 "down a few points," at 46 bid, 48 offered versus 50 bid, 52 offered at the tail end of last week. He quoted Pegasus' 13½% notes due 2007 as having fallen to 16 bid, 20 offered from 20 bid, 21 offered on Friday.

At another desk, an observer said of Pegasus "oh yeah, they dropped," pegging the Pegasus 131/2s at 19 bid, down from 22 previously, and its 12 3/8% notes due 2006 and 12½% notes due 2007 as having fallen to 51 bid from 55 previously.

He also quoted its 12¾% notes due 2007 at 21 bid, down from 23, while the 9 5/8% notes due 2005 and 9¾% notes due 2006 each ended at 53 bid, down from 55.

Investment-oriented internet bulletin boards were meanwhile focusing on the date of June 8 - noting that in its 8-K filing with the Securities and Exchange Commission last week, Pegasus said that it had 10 court days from May 24, when the court set the amount of the award to DirecTV, plus penalties and interest, at $62.5 million, to pay that sum or face execution of the judgment, which could result in pushing the company into insolvency. That works out to June 8 - a week from Tuesday of this week.

Satellite operator Loral Orion Inc.'s 10% notes due 2006 were being quoted down two points at 68 bid, while Telewest plc's 11% notes due 2007 were half a point better at 57.5; the latter company announced that creditors had approved its plan of reorganization, which calls for the conversion of most of the British broadband and cable operator's debt into equity, and the company could emerge from bankruptcy by mid-July.

Adelphia loans trade

Elsewhere in the communications sphere, Adelphia Communications Corp.'s bank debt was active Tuesday, although when all was said and done, various names had traded around at unchanged levels, according to a trader.

Most active on the day, however, was the TCI bank paper, which traded around 99, the trader added. The TCI paper went out on Friday at 98.75 to 99, according to a different trader.

The bankrupt Greenwood Village, Colo.-based cable operator's Century Old and Century New bank debt was still quoted in the 97 to 98 context, where it was seen on Friday.

Adelphia's 9 7/8% notes due 2007 and its Century Communications 8 7/8% notes due 2007 were both seen down half a point, at 103 and 110, respectively.

Delta bonds lose more

Delta Air Lines Inc.'s bonds - which had firmed in light pre-holiday trading during Friday's abbreviated session - were once again losing altitude Tuesday.

Delta was "down a couple of points," a trader said, estimating that the Atlanta-based air carrier's bonds were "off two to three points, depending on their coupon and maturity,"

He quoted Delta's 7.70% notes due 2005 as having fallen to 60 bid, 62 offered from prior levels at 63 bid, 65 offered, and saw Delta's 10% notes due 2008 falling back to 489 bid, 51 offered from 52 bid, 54 offered on Friday.

At another desk, a trader - who like many market participants skipped Friday's half-session - saw Delta's 8.30% bonds due 2029 dropping to 37.5 bid, 39 offered from 41 bid, 43 offered on Thursday, the last full trading session of last week. He said that Delta's 7 7/8% notes due 2005 were being offered around the 61-62 area, versus 65 last Thursday.

Another trader - who saw little happening in the junk market, with most financial market attention focused on strong economic numbers out of Washington and the jump in oil prices - acknowledged that the airlines were softer, with Delta leading the way downward.

He saw the 7.70% notes at 61 bid, 63 offered, off from 64.5 bid, 66.5 offered last week, while the 8.30s were had dropped to 37.5 bid, 39.5 offered, "quite a lot lower" than Friday's close at 41.5 bid, 43.5 offered. He saw Delta's 10 3/8% debentures dropping to 40 bid, 42 offered from 43 bid, 45 offered Friday, while the 7.90% notes due 2009 fell to 47 bid, 48 offered from 50.5 bid, 52.5 offered.

Delta had been roiled last week, he said, by rumors of "an imminent [Chapter 11] filing," after the carrier for the first time officially warned that it might have to take such a step should it not be able to convince its pilots union to sign off on steeper cost-cutting concessions - Delta wants a 30% cut, while the captains are staying put at an offer of 9%. This was followed by news reports that Delta had hired The Blackstone Group, a frequent player in corporate restructurings, as an advisor, and later reports that it had retained the Davis Polk & Wardwell law firm, to help with the restructuring.

The bonds had bounced during Friday's half session from a major drop seen on Thursday on investor bankruptcy fears, but those gains proved to be short-lived in the wake of the weekend news of Al-Qaeda's bloody attack on a Saudi oil complex, as part of an effort to destabilize that country's government and throw the world petroleum markets into chaos.

On Tuesday, light crude for July delivery hit a record high of $42.33 per barrel on the New York Mercantile Exchange, up $2.45 on the session, in response to the weekend's events. That is expected to weigh heavily on the airlines, particularly on carriers such as Delta, which are not hedged against rising fuel oil prices.

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