Loral paper falls further on satellite demise; Goodyear stabilizes; Global Crossing gets slight boost

By Carlise Newman

Chicago, Sept. 23 - Loral Space & Communications Inc. debt was still dropping Tuesday, although not as heavily as Tuesday when the company said its Telstar 4 communications satellite, which stopped working on Friday, was a total loss.

The satellite was insured for $141 million. Loral had agreed to sell the satellite along with five others to another operator, Intelsat, for $1 billion, but said on Monday that losing the satellite would reduce the amount Intelsat pays. The size of the reduction will depend on how much insurance it can recover, but it still expects the Intelsat deal to go ahead in a timely manner.

The New York-based satellite operator's 10% notes due 2006 were down a further 3 points to 51 bid, traders said. The same issue had dropped 6 points Monday after the company announced that the problem was so severe that the satellite was a total loss.

"They're in trouble now," a trader noted. "They needed this money. When the satellite shut down you didn't see much happening in the bonds, but now this, this is a big deal."

Loral said Telstar 4 is part of its four-strong North American fleet that serves media companies such as CBS and Fox Broadcasting. Loral said it and Lockheed Martin Corp., the manufacturer of the satellite, continue to work to identify the cause of the problem.

Elsewhere Goodyear Tire & Rubber Co. debt stabilized Tuesday after a few sessions of losing. The company said on Monday its new labor agreement with the United Steelworkers of America will save a total of $1 billion over the next three years. In addition, old favorites Global Crossing Inc. and Enron Corp. passed desks slightly higher than Friday.

Goodyear estimated it will have direct savings of $450 million from changes in its pension and medical plans, plus another $700 million in "avoided costs" for wages and retiree medical benefits.

Goodyear's 7 7/8% notes due 2011 were unchanged at 78 bid, 79 1/8 offered.

"This should have been good news but on Monday investors were expecting the savings to be better. It seems as though the news has sunk in now and isn't having as much of an effect," a trader said.

Meanwhile, Global Crossing Inc. bonds continued to firm Tuesday. On Friday, the President agreed to permit the company to sell a majority stake to Singapore Technologies Telemedia.

Global Crossing bonds closed Monday's distressed trading session at 8¼ bid, 9 7/8 offered, a rise of ½ point, a trader said.

Global Crossing bonds closed Monday's distressed trading session at 8 bid, 9¼ offered, a rise of ¾ of a point. The bonds had traded at 6½ bid on Thursday, prior to the news, and had been at levels around 3-4 bid a few weeks before that. The notes had traded at those levels for weeks.

"Not a huge move but anything is big when your paper is trading around a nickel on the dollar for weeks," the trader said.

STT has agreed to pay $250 million for the stake in Global Crossing, which operates a high-speed fiber optic network in 27 countries and went bankrupt in January 2002 after accumulating $12.4 billion in debt amid sagging demand.

Meanwhile, Enron Corp. bonds were still rising Monday. Last Thursday Enron 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 43 bid, 46 offered, up 1 point, a trader said.

Meanwhile WorldCom Inc., which filed a reorganization plan in early September, saw its senior notes trade at 33¼ bid, while MCI's bonds were seen at 78 bid, 79 offered.

WestPoint Stevens Inc.'s 7 7/8% notes due 2005 were down 2 points at 23 bid.

In other news Telewest Communications plc was "moving up," a trader said. He said the 11% notes were 48 bid, 50 offered, up 2 to 3 points from Monday's 46 ½ bid area.

Last week Telewest reached an agreement on the terms of its financial restructuring with the ad hoc committee of its bondholders, W.R. Huff Asset Management, the Liberty Media Group and IDT Corp., and bondholders will receive 98.5% of the company.

The agreement allows the holders of Telewest's existing share capital to receive the remaining 1.5% of the equity.

(Paul Deckelman contributed to this report.)

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