Goodyear Tire maintains rally on union news; WorldCom monthly revenue rises again

By Carlise Newman

Chicago, Sept. 16 - Goodyear Tire & Rubber Co.'s bonds firmed again Tuesday, one day after the company's largest union, the United Steelworkers of America, said its members have approved a three-year contract that cuts wages and benefits and closes a plant in exchange for increased job security and a board seat.

The union said 70 % of members approved the pact, more than a 2-to-1 margin. It represents nearly 19,000 workers and 22,000 retirees.

Goodyear's benchmark 7 7/8% notes due 2011 were up "about 3 points" to 86 bid, 87¼ offered, from 83 bid, 84¾ offered Monday, a trader said.

The Akron, Ohio-based tire and rubber company said the contract gives 12 Goodyear facilities a protected plant designation, which means the sites must remain open under all but the most extreme circumstances, according to news reports. Minimum-staffing levels must be maintained at those plants and the company can't transfer production from a protected facility to a plant staffed by nonunion workers.

Goodyear also is obligated to consider protected plants first when developing new products for sale in North America, the union said.

"There was a lot of action in Goodyear paper yesterday and today. It'll probably be active for a while. The union news was big for them," a trader said.

Elsewhere, WorldCom Inc. came out with its monthly operating number for the month of July. Revenue rose 2% to $2.116 billion from $2.075 billion in June.

The bonds did not react to the news and were seen unchanged at 33 bid, 34 offered. MCI bonds were seen at 78¼ bid, 79½ offered, also unchanged.

"These monthly reports have been getting better and better, so I don't think that matters to the bonds anymore," 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.

NorthWestern Corp. debt firmed again Tuesday, just one day after the company announced it had filed for Chapter 11 bankruptcy protection.

NorthWestern also obtained a commitment for $100 million and possible as much as $490 million of debtor-in-possession financing from Bank One NA.

A trader said the 8¾% notes due 2012 and the 7 7/8 % notes due 2007 were quoted as having risen to 85 bid from "around 83 bid," according to one trader.

"Not bad for a company with a not-so-bright future," he said.

The Sioux Falls, S.D.-based natural gas provider's subsidiaries, including Blue Dot Services Inc. and Expanets Inc. were not included in the Chapter 11 filing.

Expanets will sell all its assets to Cerberus Capital Management LP and TenX Capital Management Inc. for $107.5 million in cash, less the amount of debt and capitalized leases assumed, plus a contingent note that will pay up to an additional $27.5 million. The cash amount is subject to an adjustment based on the net current assets of Expanets transferred at closing.

Elsewhere, Telewest Communications plc's bonds were up on Monday's news that the company has reached agreement in principle 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 Corporation, and bondholders will receive 98.5% of the company.

Telewest's 9 5/8% notes due 2006 were up 1 point to 46½ bid, a trader said.

The agreement allows the holders of the U.K.-based cable company's existing share capital to receive the remaining 1.5 % of the issued share capital.

In other news, WestPoint Stevens Inc.'s 7 5/8% notes due 2005 were up 2 points to 24 bid.

And Global Crossing Inc., awaiting news on whether a sale of its assets to Singapore Telemedia will receive the go-ahead from the federal government, was reportedly active, a buy side source said. He quoted the bonds at 4 bid, 5 offered, up ½ point.

"The Global paper has been up because the deal with STT is supposed to be approved soon," he said.

Another trader said he saw Canadian airline Air Canada Inc.'s 10¼ % notes due 2011 down 1 point to the 46 bid area.

He said Enron Corp.'s 7 3/8% notes due 2019 were seen at 18¾ bid, 18 7/8 offered, but did not have prior levels.

Elsewhere, Exide Technologies' 10% notes due 2005 were down 1 point to 4 bid. The Princeton, N.J.-based battery maker obtained court approval for its disclosure statement last Wednesday.

(Paul Deckelman contributed to this report)

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