UAL, AMR rise on improved operating reports; Calpine still strong; Global Crossing better bid

By Carlise Newman

Chicago, June 27 - UAL Corp., Calpine Corp. and Global Crossing Ltd. dominated distressed debt trade Friday in a lackluster session graced with little fresh news.

UAL released a better-than-expected May monthly operating report, and said that it met the requirements of its debtor-in-possession financing for the fourth straight month.

The Chicago-based parent of United Airlines' 9 ¾% notes due 2021 were quoted up a point to 7.5 bid, 9.5 offered. The 8 ¼% notes due 2008 were up a point and a half to 14 bid, 19 offered, a distressed deve trader said.

As part of its DIP financing agreements, United's lenders required the company to achieve a cumulative EBITDAR loss of no more than $738 million between Dec. 1, 2002 and May 31, 2003.

UAL reported a loss from operations of $155 million in May, and non-operating income of $219 million, which included $300 million that the company received from the U.S. government under the terms of the Emergency Wartime Supplemental Appropriations Act in recompense for costs due to the war in Iraq.

"UAL was better bid, although it's been firmer for the past week or so. So have most of the airline names," a trader said.

UAL's news followed a report from AMR Corp. Thursday that said the struggling airline had positive cash flow in May.

According to a Form 8-K filed Wednesday with the Securities and Exchange Commission, AMR said that if the improved operating revenue environment continues, it expects to report positive operating cash flow for June.

AMR's 7.8% notes due 2006 were quoted at 54 bid, 59 offered, up one point from Thursday and three points from Wednesday, a distressed debt trader said. Its 9% notes due 2012 were quoted at 69 bid, 71 offered, from 66 bid, 69 offered Thursday, and several points higher than Monday, when they were seen at 63.5 bid, 65.5 offered.

According to the filing, unit revenue in May was up 4% from year-ago level and the company is witnessing improved unit revenue in June compared with year-ago level.

"Same old, same old. Today was all about odds and ends from the action early in the week. Nothing really new," a trader said.

He said Calpine Corp.'s news Thursday that it plans to sell about $1.8 billion in second-priority senior secured notes and term loans was still having "somewhat" of an effect on its bonds. Calpine's 8 ¼% notes due 2008 were quoted at 92 bid, 94 offered, up a half point from Thursday, when it shot up four points from the previous session.

"The paper wasn't as active today, which can probably be attributed to warm weather in New York on a Friday," he said.

In a press release Thursday, the San Jose-based power company said the notes and term loans will be secured by substantially all of its directly owned assets, including natural gas and power plants, as well as the stock of Calpine Energy Services and other units.

Calpine intends to use the net proceeds to repay existing debt, including about $950 million in term loan borrowing and $450 million under the company's working capital revolvers.

The company said it expects to establish a $500 million working capital revolver, which will be secured by a first-priority lien on the same assets that will secure the notes and term loans. The revolver will replace Calpine's existing $950 million working capital revolver.

Another relatively active name, and one repeated this week, was Global Crossing.

On Thursday, XO Communications Inc. offered $200 million in cash to certain Global Crossing Ltd. bondholders to encourage them to back its takeover offer for the bankrupt telephone company.

Global Crossing's 9 ½% notes due 2009 were up half a point, to 5 bid, 5.5 offered, a trader said.

In making the latest $200 million overture, XO hopes to get the unsecured creditors to support its proposal rather than Global Crossing's exclusive agreement to sell a 61.5 percent majority stake to Singapore Technologies Telemedia, or STT.

"This is kind of the same thing Icahn did with XO themselves. He took over XO last January by buying up their debt while they was bankrupt," a distressed debt trader said.

XO is more than 80 percent owned by billionaire investor Carl Icahn.

Under the terms of the deal, XO will pay holders of the $2.25 billion senior secured Global Crossing bank debt $220 per $1,000 of principal, or $495 million. XO will pay holders of Global Crossing's pre-petition unsecured indebtedness $200 million in cash in full satisfaction of all unsecured claims.

A disclosure statement hearing for the XO Plan must occur on or prior to August 16, 2003 and a confirmation hearing for the XO Plan must occur on or prior to September 30, 2003.

In addition, allowed administrative and priority claims will be paid in full as and when allowed or on such other terms as holders of such allowed administrative and priority claims may agree but such allowed claims shall not exceed $195 million.

Elsewhere, Owens Corning's 7 ½% notes due 2018 were seen at 58.5 bid, 59 offered, from 56 bid Thursday. Its 7.7% notes due 2008 were quoted in the "58 bid area," a trader said.

Adelphia Communications Corp., which has been steadily rising recently, saw its 9 7/8% notes due 2007 rise 1.75 points to 62 bid, and again the trader said there was no particular reason for the rise, just a "healthy interest." Arahova Communications Inc., Adelphia's subsidiary, saw its 8 7/8% notes due 2007 fall a half-point to 64 ½ bid.

Mexico City wireless company Grupo Iusacell's 10% notes due 2004 were seen at 60.5 bid, while its 14 ¼% notes due 2006 were seen at 29 bid. A trader said both were "significantly lower."

Iusacell is again in default on $266 million in debt and has again asked creditors for additional time to pay, the company's parent company said on Friday.

Originally due in March 2001, Iusacell negotiated a series of extensions of the syndicated loan's maturity date. It was most recently extended to June 26.

Mexican tycoon Ricardo Salinas moved on June 13 to buy Iusacell, taking on its $811 million in debt, for $10 million. Verizon Communications Inc. and Vodafone Group Plc agreed to sell their combined 73.9 percent stake in Iusacell to Movil Access, a firm owned by Salinas.

Debt holders under the most recent extension have the right to declare the total debt in default, the company said. It did not specify how long it wanted to extend the debt.

Cleveland-based Oglebay Norton Co. was seen "better" on Friday. The building materials manufacturer's 10% notes due 2009 were quoted at 44 bid.

© 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.