Oakwood Homes continues climb as hearing begins; WorldCom and Enron continue respective paths

By Carlise Newman

Chicago, Sept. 26 - Oakwood Homes Inc. continued to shoot higher Friday as the hearing on its disclosure statement got underway in the U.S. Bankruptcy Court for the District of Delaware, and after rising to levels not seen in a long time in the past few days.

Oakwood Homes paper traded at 36 bid Thursday, far higher than levels it had recently seen around 28 bid. On Friday, the bonds were seen rising another 2 points to 38 bid, 40 offered, a trader said.

"It was a bigger move Thursday. They came out of the gate a good 6 points higher," he said.

In addition to the start of the hearing to approve its disclosure statement, perhaps helping the rise was Thursday's economic data. Sales of existing homes climbed to another record level in August. The National Association of Realtors on Thursday said home resales increased to a 6.47 million annual rate last month, a 5.5% rise from July's revised 6.13 million annual pace. Previously, July resales had been reported at a 6.12 million annual rate.

The August report came in much stronger than expectations; Analysts were looking for existing-home sales to come in at a 6.05 million rate.

In addition, sales of new, single-family homes bounced back in August after a July decline that was bigger than initially reported. New-home sales rose 3.4% in August to a seasonally adjusted annual rate of 1.15 million, the Commerce Department said.

The outcome of the hearing on the disclosure statement was not available as Prospect News went to press Friday.

Meanwhile WorldCom Inc. and Enron Corp. remained "somewhat active" on Friday, traders said. WorldCom saw its senior notes rise ½ point to 34¾ bid, 35 offered, a trader said.

Late Wednesday, the bankrupt telephone company asked a bankruptcy court to find AT&T Corp. in contempt, saying it violated bankruptcy rules by filing a lawsuit against it and seeking damages for the routing of telephone calls.

WorldCom said a complaint filed by AT&T on Sept 2 in federal court in Virginia violated a bankruptcy provision that prevents certain civil suits from being brought against a company during a Chapter 11 reorganization.

"We see WorldCom every day. I don't think that lawsuit news necessarily is having that much of an effect today. It's more of a move due to light volume," a trader said.

Meanwhile Enron bonds weakened further Friday after the company filed a complaint against six of its former banks and investment banks on Thursday. The debt had risen in recent weeks after Enron filed a reorganization plan that increased returns to creditors.

The 8% notes due 2005, last seen trading at 42 bid, were quoted at 39 bid, 40 offered, a trader said, a drop of 1½ points.

The Houston energy company alleged that its banks gave bad financial advice that contributed to Enron's unraveling in late 2001.

"It was pretty quiet but you've still got the WorldComs and the Enrons, and other bits and pieces to clean up before the weekend," one trader said.

UAL Corp. paper firmed Thursday after the bankrupt airline reported a profit in the month of August the previous day. UAL posted August net income of $68 million, excluding $114 million in costs related to its reorganization. The airline said it had an operating profit for the month of $105 million.

The parent of United Airlines said it continued to generate positive cash flow in August and met the requirements of its debtor-in-possession financing for the seventh straight month.

UAL's 9¾ % notes due 2021 were seen at 19 bid, 21 ¼ offered Friday, a rise of 1 point from Thursday, he said.

"UAL was one of the top movers this week. I haven't seen much of the paper before this week. But it's typical to see it in big volumes after the monthly reports. You see that in the really low-priced bonds," he said.

As part of its debtor-in-possession financing agreements obtained for its bankruptcy proceedings, UAL's lenders required the company to achieve a cumulative EBITDAR loss of no more than $219 million between Dec. 1 and Aug. 31.

United ended August with a cash balance of $2.4 billion, including $698 million in restricted cash and up slightly from $2.3 billion at the start of the month.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.