Enron rises after new plan shows increased recovery for creditors; Metris continues ascent

By Carlise Newman

Chicago, Sept. 18 - Enron Corp. paper, which had been rising steadily recently, zoomed forward Thursday on news that the company filed an amended reorganization plan that promises a better recovery for unsecured creditors.

The plan increased estimated recoveries for unsecured claims against the three top debtors to 16.6% for Enron Corp., 19.5% for Enron North America and 22.5% for Enron Power Marketing, Inc.

The previous recoveries were 1.4% for Enron Corp., 18.3% for Enron North America and 21.3% for Enron Power Marketing, Inc.

Enron's 8% notes due 2005 rose to 38 bid from 34 bid, a trader said.

"The bonds have been rising all week in anticipation" of the plan filing, he said.

The court is expected to hold a hearing on the disclosure statement in late October.

Meanwhile Metris Cos. Inc. was still crossing desks Thursday, two days after the company sold $590 million of credit card assets and refinanced $610 million of secured debt.

Metris' 10% notes due 2004 were quoted at 78 bid, 79 ¼ offered, a 3 point rise from Wednesday, a trader said. The notes had been up 4 points on Wednesday from when they were last seen trading, about a week earlier.

"The refinancing is still boosting Metris paper. We'll probably see it trade tomorrow and then gradually get back to earlier levels," he said.

The Minnetonka, Minn.-based company, which issues credit cards to customers with dubious financial histories, also has to come up with a tangible plan by the end of September to refinance $610 million of secured notes in order to draw other financing obtained in March. The notes that were refinanced would have matured in January 2004. The new financing matures on February 28, 2004.

Another name not seen very frequently was Atlas Air Cargo, which was mixed Thursday after being "up big" Wednesday, according to traders.

The company's 9¼% notes due 2008 fell to 43 bid from 451/2, a trader said. The 7.68% notes due 2015 were unchanged at 35 bid, after having risen "a good 7 or 8 points" on Wednesday.

One trader cited "settlement news," as the cause for the rise Wednesday, which, although having been announced last Friday, still appeared to be having some effect on the bonds.

"I don't know what happened today, why they're down again," he said.

Atlas Air Worldwide Holdings Inc., the parent of Atlas Air Cargo, said last Friday it will file for Chapter 11 bankruptcy protection in the first half of December. However, the company also said it reached an agreement with the holders of a majority of its class A enhanced equipment trust certificates, and the agreement will further extend the forbearance agreement entered into in early July.

On July 2, Atlas Air and a majority of the class A holders entered into an agreement in which the Class A holders agreed to forbear from causing an event of default for 60 days, which was extended from Aug. 31 to Sept. 12.

Now the class A holders have agreed to further extend the forbearance period until Dec. 15, provided that Atlas Air complies with the covenants and conditions in the term sheet agreements for the restructuring.

Atlas Air said the extension enables it to work with the class A holders to prepare final documentation regarding their agreement and will give Atlas Air time to negotiate with other parties to the EETC financing transactions to effect a restructuring of the EETC debt and leases.

The EETCs were issued in 1998, 1999 and 2000 to finance Atlas Air's initial fleet of 12 Boeing 747-400 freighter aircraft.

In other news, WorldCom Inc. was unchanged at 33¼ bid, 34½ offered.

"The activity in WorldCom seems to have leveled off some. No fresh news," a trader said.

Ashburn, Va.-based WorldCom said last week it reached an agreement with its creditor groups last week. Traders have said the new agreement brings WorldCom one step closer to emerging from bankruptcy, possibly earlier than expected.

Elsewhere, asbestos-related bonds continued to be higher on Thursday, traders said.

Armstrong Holdings were last 54 bid, 56 offered, "about 2 points higher then last week" a trader said. And Owens Corning 7½% notes due 2005 were up 2 points at 47 bid, 49 offered.

In other news, Global Crossing Inc., awaiting news on whether a sale of its assets to Singapore Telemedia, was traded actively, a market source said. The source quoted the bonds at 6½ bid, "up a little" although he did not have levels.

New York-based satellite operator Loral Space & Communication Inc., which filed for Chapter 11 in July, saw its 10% notes due 2006 up 3 points to 60½ bid.

Adelphia Communications Corp.'s 9 7/8% notes due 2007 were up 1 point to 69 bid, a trader said, while Kaiser Aluminum Inc.'s 10 7/8% notes due 2006 were also a point better at 77 bid.

(Paul Deckelman contributed to this report)

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