WorldCom, Fleming still active; Conseco higher; AK Steel continues to recover from earnings

By Carlise Newman

Chicago, July 23 - WorldCom Inc. and Fleming Cos. Inc. remained active in an otherwise dormant trading session Wednesday, with minor moves from Global Crossing Inc. and Mirant Corp.

WorldCom bonds opened at 30½ bid, 31 offered, up ½ point from Tuesday's close, and remained there throughout the day, a trader said. There were minor news reports on WorldCom Wednesday, but none that would necessarily affect the price of bonds, he said.

"We trade a ton of WorldCom every day lately," he added.

Bankruptcy examiner Richard Thornburgh said on Tuesday in a court hearing that he needs more cooperation from WorldCom and its employees to complete his investigation of the accounting fraud. He told the Senate Judiciary Committee examining the company's $11 billion accounting scandal that he hopes to wrap up his work by September, but is awaiting further information and needs to conduct additional interviews.

The Senate Judiciary Committee held the hearing to discuss the company's 2002 collapse to determine whether to adjust existing bankruptcy laws and if telecommunications policies are adequate to promote competition. WorldCom's competitors claim that the laws are in favor of WorldCom.

Earlier this month, a federal judge in New York approved a settlement between the SEC and WorldCom in which the Ashburn, Va.-based company would pay $750 million to investors aggrieved by the scandal. The SEC will monitor the payment plan, which will result in the distribution of cash and stock to bondholders and stockholders.

WorldCom competitors proposed that companies that have engaged in massive fraud and misconduct be prohibited from using the Chapter 11 protection, which allows a company to reorganize while holding off creditors, and be forced to file for Chapter 7 instead, which would put them out of business.

At present, there is no legislation pending to change bankruptcy law.

"It was the epitome of a summer session. Same old, same old," a trader said. "Still, we did some trades in Fleming, WorldCom...the same names but at least there was some action."

Fleming bonds were slightly higher than Tuesday. The 9¼% notes due 2010 were seen trading at closing the session at 14½ bid, 15½ offered, a half-point rise.

Last Thursday the company obtained court approval for the sale of its grocery wholesale operations. Fleming and C&S Wholesale Grocers Inc. signed an asset purchase agreement to sell Fleming's wholesale grocery business to C&S.

The sale procedures now provide for other bidders to submit offers by July 28, with an auction to follow on July 31. The final sale hearing will be held Aug. 4 and the closing date for the sale would be expected in mid-August.

Mirant's 8.3% notes due 2011 were last seen 76 bid, 78 offered, a half-point jump from Tuesday, a trader said.

"It was pretty quiet but Mirant is still moving a bit," he said.

News Tuesday that an emergency order by the court would halt some Mirant creditors from trading shares or claims has not impacted the bonds.

The court order stated those holding claims against the Atlanta-based energy company over $250 million, and shareholders owning 4.75% of Mirant's stock, are prohibited from selling or trading shares or claims until the bankruptcy court can consider Mirant's request to establish a notice procedure regarding trading of shares and claims.

The order is intended to preserve losses which could produce future tax savings of $200 million to $400 million.

Elsewhere, Global Crossing Inc.'s bonds closed Wednesday's session at 4½ bid, 5½ offered, a trader said, a quarter-point lower than Tuesday.

Bankruptcy-burdened West Point Stevens Inc.'s 7 7/8% noted due 2008 were down 1 point to 22½ bid, a trader said.

AK Steel Corp. "continues to recover after Friday's debacle," a trader said. He said the 7 7/8% notes due 2009 were up a half-point to 77½ bid.

On Friday, AK Steel reported a second-quarter net loss on a combination of lower selling prices for flat-rolled steel and higher costs for maintenance and raw materials. The supplier of steel for auto makers reported a net loss of $78.2 million, or 72 cents a share, in contrast to net income of $ 16.2 million, or 15 cents a share, a year earlier.

Analysts were expecting a loss of 43 cents a share.

Conseco Inc.'s debt also "went up a little," with its extended bonds dropping to 63¼ bid, up from 62 bid, while its unexchanged bonds were up a point and a half to 37½ bid.

On Wednesday Conseco filed its fourth amended plan of reorganization with the bankruptcy court. The new amendments reflect minor modifications to the non-debtor release provision and related components of the plan.

Also, New York satellite operator Loral Space & Communications Inc., which filed for Chapter 11 last week, "is beginning to falter," a trader said. The 10% notes due 2006 down a point to 64 bid, he said.

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