Calpine bonds, bank debt steady after last week's slide; Mirant loans off

By Paul Deckelman and Sara Rosenberg

New York, Nov. 28 - Calpine Corp.'s bonds were seen better Monday, as was the San Jose, Calif.-based power generating company's bank loans, apparently steadying as a reaction to the slide seen last week after Calpine was dealt a major legal setback.

Also in the power generating sphere, Mirant Corp.'s 2003 bank debt was seen having come in from the levels it held during Wednesday's abbreviated pre-Thanksgiving holiday session. However, the bankrupt Atlanta-based energy company's bonds were seen continuing to firm, apparently still getting a boost from the recent news that 97% of the unsecured creditors and shareholders had okayed its proposed plan of reorganization, clearing the way for hearings this week in Houston.

Delphi Corp.'s bonds were seen not much changed, in the mid-50s, as the bankrupt Troy, Mich.-based automotive components supplier got some help from former corporate parent General Motors Corp., which agreed to let Delphi keep prices on the components it sells GM at current levels next year, rather than insisting that Delphi drop prices as specified in previously agreed contracts.

Calpine's second-lien term loan was seen up by about a point during Monday's session with levels closing out the day at 74 bid, 76 offered, according to a trader.

Over on the bond side of the fence, a trader saw the company's 8½% notes due 2008 two points better at 42 bid 43 offered, although he observed that the rise was "only because they went out so crappy on Wednesday - not because anything good about them has come out."

Another trader saw Calpine's 8½% notes due 2011 up two points on the session at 35.5 bid, 36.5 offered, while its 10½% notes due 2006 was likewise better by a deuce at 59.5 bid, 60.5 offered on "no news and an overall positive market tone."

At another desk, a market source quoted Calpine's 8¾% notes due 2007 up two points on the day at 44 bid, while its 7¾% notes due 2009 were up a pair at 38 bid, 40 offered.

However not everyone agreed. Another market source quoted Calpine's 7 5/8% notes due 2006 two points lower on the day at 60, while its 7 7/8% notes due 2008 were 1½ points down at 40.5 bid, and its 8.40% notes due 2012 were down a whopping three points at 90 bid.

Calpine's bank debt and its bonds had spent most of last week in a downward spiral after the Delaware Court of Chancery ruled that Calpine's use of approximately $313 million of proceeds from the sale of domestic gas assets to purchase gas storage inventory violated the indenture on its second-lien notes.

Calpine had been fighting over the use of proceeds issue with The Bank of New York, collateral trustee for the company's senior secured note holders, and Wilmington Trust Co., indenture trustee for the company's first-and second-lien notes since September.

Approximately $400 million from the sale of Calpine's domestic gas assets remains in an account at the Bank of New York.

Prior to the court ruling, Calpine's second-lien bank debt was being quoted around 77 bid, 79 offered.

Mirant loans dip, bonds gain

Elsewhere, Mirant's 2003 bank debt started out the session trading around the 109.75 level, slightly up from last Wednesday's trading level around 109.125 - but then, quotes came in a little to close out the day at 107.5 bid, 108.5 offered, according to a trader.

"I think people were just trying to take a profit so it came back in," the trader explained.

A bond trader meantime saw Mirant's 7.90% notes due 2009 trading as high as 121 bid, 123 offered, up from previous levels at 120 bid, 122 offered, while the company's 7.40% notes scheduled to come due next month were likewise up a point at 120 bid, 122 offered.

He also saw Mirant's convertible bonds on the rise, with its 2½% notes due 2021 at 104 bid, 106 offered and its 5¾% converts due 2007 at 115 bid, 117 offered, each up a point.

Mirant's bank and bond debt have been on the rise ever since Mirant's Nov. 16 announcement that the final voting tabulation on its plan of reorganization showed that over 97% of its unsecured creditors and shareholders who voted on the plan approved it. The unsecured creditors voting in favor of the plan hold more than 80% of the unsecured debt that voted.

Mirant further said that the plan was also accepted by the unsecured creditor classes of most of its debtor-subsidiaries, including Mirant Americas Generation LLC, Mirant Americas Energy Marketing and Mirant Americas, Inc.

The strongly positive vote by the shareholders and the unsecured creditors clears the way for the confirmation hearing on the plan, which is scheduled to begin on Thursday before the U.S. Bankruptcy Court for the Northern District of Texas.

Mirant also said that along with its plan, which will cut the company's debt load by nearly half, it has obtained commitments for over $2.3 billion in loans to finance the business upon Mirant's exit from Chapter 11. Coupled with its current cash and cash equivalents of over $1 billion and expected debt reduction, Mirant said that it could "emerge from bankruptcy with one of the strongest balance sheets in the merchant power sector."

Delphi rises, falls back

In the troubled automotive sphere, a trader saw Delphi's bonds open around the same 54 bid, 56 offered level seen late last week, and then move as high as 56 bid, 58 offered. However, he saw Delphi giving back all of those early gains and ending at 54 bid, 56 offered.

Another trader saw Delphi's 7 1/8% notes due 2029 at 54.75 bid, 55.75 offered, and said all of the company's debt was "pretty much the same." He called those levels a slight improvement over Wednesday, and said the bonds pretty much tracked GM's.

GM, which spun Delphi off in 1999, said Monday it was willing to forego, at least temporarily, scheduled price cuts on Delphi components which the two companies had previously contractually agreed upon - a big boost for the bankrupt Troy, Mich.-based maker of automotive electronics and other components since former parent GM remains Delphi's single largest customer.

With that helping hand from GM, Delphi, in turn said it would hold off for more than a month on its previous threat to ask the bankruptcy court to void its collective-bargaining contracts with the United Auto Workers union and several smaller labor groups, a threat which had the unions talking about a possible strike.

Delphi - which seeks to knock its roughly $65 per hour average cost per hourly employee down to the $16 to $18 level of pay and benefits that most other auto components companies pay - said it would not go into court to seek to void the contract until at least Jan. 20 - well beyond its initial Dec. 16 self-imposed deadline, giving the company more time to perhaps come to a consensual agreement with the UAW and the other unions on reducing its labor costs.

GM also gyrates

That extension of the drop-dead deadline for reaching agreement on the concessions Delphi says it needs to stay in business is considered good news for GM, since it assures the carmaker of a continued steady flow of parts to its manufacturing operations - operations which could have been curtailed or even crippled had the UAW decided to call Delphi's bluff and strike if it voided its contract.

That "initially pushed GM paper up," a trader said, with the carmaker's benchmark 8 3/8% notes due 2033 moving up to 70 bid, 71 offered, up about a point from where they had left off in Friday's extremely light dealings.

"But GM being GM," he continued, "they managed to give all of that back," and finished unchanged at 69 bid, 70 offered.

Late in the day - when trading was pretty much wrapping up - "there was some rumbling about GM holding up its 10-Q," but he said that on closer examination, it appeared to be "inconsequential, maybe a one penny (per share) adjustment to a third-quarter '04 10-Q," and the 8 3/8s closed actually up half a point on the session at 69.5 bid, 70.5 offered.

Delta higher

Outside of the automotive area, a trader in distressed bonds saw bankrupt Atlanta-based Delta Air Lines Inc.'s notes move as high as 20.5 bid, from levels late last week around 19 bid, 20 offered. Those Delta bonds finished up a point higher at 20 bid, 20.5 offered, the trader said.

He saw no companion movement in the bonds of other bankrupt airline companies, with United Airlines parent UAL Corp.'s bonds still languishing in the mid-teens, while the bonds of Northwest Airlines Corp. were in a holding pattern in the mid-to-upper 30s.

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