Pegasus bonds bump a bit higher; Mirant bank debt, bonds up

By Paul Deckelman and Sara Rosenberg

New York, July 12 - Bonds of Pegasus Satellite & Communications were heard to have firmed slightly after having been muddling around below their recent highs of late, although there was no fresh news seen out - either positive or negative - on the Bala Cynwyd, Pa.-based satellite television distribution company.

On the bank loan front, Mirant Corp.'s 2003 bank debt and its Mirant Americas Generating subsidiary bank debt both headed higher during Monday's session, though with no specific public news

seen sparking the momentum.

Mirant's corporate paper was quoted at 55 bid, 56 offered, up about a point on the day, a trader said.

Meanwhile, the MAGI paper really rallied, moving up by about four or five points on the day to 77.5 bid, 79.5 offered, the trader added.

The Atlanta-based energy company's MAGI bonds were meantime also seen higher during Monday's session, with the Mirant Americas Generating 8.30% notes due 2011 up two-and-a-half points, at 80.5 bid, while its 9 1/8% bonds due 2031, pushed up to 80.5 bid from 78 before.

Mirant sought Chapter 11 protection from its creditors in a bankruptcy filing just a year ago.

Elsewhere, Pegasus "bumped up a bit," a market source said, quoting the company's 12 3/8% notes due 2006, 9¾% notes due 2006 and 9 5/8% notes due 2005 all firming a point or so to around the 52 level. The Pegasus 12½% notes due 2007 did even better, going to 53 bid from 51.75

Pegasus distributes DirecTV service to about 1.1 million mostly rural customers, but its exclusive franchise to do so is scheduled to come to an end on Aug. 31.

The two companies have been feuding for some time over just how much those customers should actually be worth to El Segundo, Calif.-based DirecTV. After months of legal wrangling, DirecTV and the National Rural Telecommunication Cooperative - a TV programming distribution industry group of which Pegasus was the largest member - agreed to end the exclusive right of NRTC members like Pegasus to sell DirecTV in their territories, effective Aug. 31.

While DirecTV said that non-Pegasus members could arrange to continue to distribute its programming in their service areas on a non-exclusive basis, it gave Pegasus no such option, instead making a take-it-or-leave it offer of $675 per customer, which Pegasus rejected as grossly inadequate. It filed for bankruptcy protection in Portland on June 2, charging that DirecTV and NRTC were conspiring to destroy its business, and saying that the filing was the only way to preserve the value of its distribution agreement. Pegasus said DirecTV and NRTC had no right to unilaterally abrogate its exclusive contract.

In response to the bankruptcy filing, DirecTV recently began to market its services to new customers in Pegasus' formerly "exclusive" territory - and the Portland court ruled last month that DirecTV was within its rights, and refused to grant Pegasus a court order to stop the practice.

Adelphia slides more

Also among the communications names, Adelphia Communications Corp. bonds continued to weaken from their recent highs well above par.

The bankrupt Greenwood Village, Colo.-based cable operator's 9 7/8% notes due 2005 dropped to 94 bid from 95.5, while its 8 3/8% notes due 2008 were half a point lower at 93.

The company's 10½% notes, scheduled to mature this coming Friday, lost two points to 95.5, while other issues were marginally lower.

MCI rises

A trader in distressed issues said he had seen little real movement in names such as Adelphia and Pegasus on Monday, saying that "most of the focus was on Amkor and MCI."

The latter company - just weeks after having emerged from bankruptcy in April - got a boost Monday when Leucadia National Corp., a New York-based investment company, expressed interest in buying a 50% stake in MCI, the Company Formerly Known As WorldCom. MCI said that Leucadia would seek permission from the Justice Department and the Federal Trade Commission, which would scrutinize any such deal for antitrust implications

The news sent the Ashburn, Va.-based long-distance telecommunications company's bonds up about two to three points across the board Monday, traders said.

A trader quoted MCI's 7.735% notes due 2014 going home at 93 bid, 93.5 bid - a bit off their highs for the day in the 94 vicinity, but still up a solid three points from Friday's level.

As for Amkor, the West Chester, Pa.-based high tech company's bonds were seen down about two points across the board - on top of a similar fall Friday - after Moody's Investors Service lowered its outlook to negative from stable.

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