WorldCom debt falls on monthly operating report; Collins & Aikman up; Revlon rally ends

By Carlise Newman

Chicago, Nov. 18 - WorldCom Inc. fell further Tuesday after releasing a weaker monthly operating report late Monday.

WorldCom's bonds fell ½ point to 34½ bid, 35 offered from 35 bid. The bonds had fallen a ½ point Monday ahead of the report, and prior to that, were trading in the mid- to high-30s levels.

WorldCom recorded $1.95 billion in revenue for September versus $2 billion in August 2003.

Operating income for September was $88 million, a decline of $50 million from August, primarily reflecting lower revenues. Sales, general and administrative expenses were flat month-over-month, including $47 million in August and $55 million in September for restatement and audit expenses.

"The report was not a huge deal but it's something that usually provokes some kind of reaction in the bonds, so the drop is not surprising. And it wasn't huge, but we track everything WorldCom does," said a trader.

Meanwhile, Collins & Aikman Corp. bonds were slightly higher Tuesday. Its 11½% notes due 2006 were up 3 points at 83½ bid, according to a trader. The notes were unchanged Monday from Friday's price of 79½ bid. The 10¾% notes due 2011 rose to 90 bid, 92 offered from 88 bid, 90 offered, also up as much as a 3 points.

"They're going to get as much out of the earnings report as they can," he said.

Last Thursday Collins & Aikman reported a narrower third-quarter loss on lower expenses and reaffirmed its 2003 guidance, excluding restructuring and impairment charges.

The Troy, Mich.-based auto supplier said its third-quarter loss was $32.1 million, or 38 cents a share, compared with a loss of $45.2 million, or 54 cents a share, last year.

The third quarter included impairment and restructuring charges totaling $16 million, or 19 cents a share.

The restructuring charge was related to costs associated with reducing the company's salaried workforce by 750, or 14%.

Sales for the quarter fell 2.2% to $902.2 million from $922.5 million a year ago, reflecting reduced North American customer build volumes.

In 2002, Collins & Aikman reported a loss of $53.5 million, or $1.18 a share, including $56.9 million in restructuring and impairment charges. Excluding items, the loss was 8 cents a share.

Meanwhile Revlon Inc. bonds were slightly lower Tuesday, two trading sessions after the company said that Ron Perelman's MacAndrews & Forbes Holdings Inc. has agreed to provide up to $100 million to Revlon in 2004, to enable the company to continue to execute its plan.

"The rally has ended," one trader said.

MacAndrews & Forbes also agreed to provide $25 million that can be made immediately available to Revlon.

Revlon's 8½% notes due 2006 were down ½ a point to 67 bid, 70 offered. On Friday, after the cash injection was announced, that issue added 2 points, and rose an additional point Monday.

Revlon is a New York-based cosmetics company.

Calpine Corp. debt continued to rise at a mild pace. Calpine's 8½% notes due 2011 were quoted at 74 bid, 75 offered, up 1 point.

On Monday Calpine received funding on its $650 million 4¾% senior unsecured convertible notes due 2023 including exercise of $50 million of the greenshoe.

Net proceeds will be used to repurchase existing indebtedness.

In other news, Enron Corp. bonds got a small boost after the company said it will sell its Portland General Electric utility to funds managed by Texas Pacific Group for $2.35 billion (see story on page one of this issue).

Enron said it has signed an agreement with a new company called Oregon Electric Utility Co., which is financially backed by funds managed by Texas Pacific, a private equity investment firm.

The transaction has been approved by the Enron board of directors and is supported by the official unsecured creditors' committee in Enron's bankruptcy proceedings.

It requires the approval of the bankruptcy court, which will conduct an auction to give other potential buyers an opportunity to submit higher bids.

The Houston energy company's 8% notes due 2005 were seen at 45 bid, 48 offered, a jump of two points from where they had last been seen trading.

After the sale is approved, the parties will request approval of the Oregon Public Utility Commission and certain federal regulatory agencies.

Subject to receiving these approvals, closing is anticipated in the second half of 2004.

Elsewhere, Denny's Corp.'s 11¼% notes due 2008 were up 1 point to 68 bid. There was no fresh news on the company, and the bonds have not been seen trading actively since the company released positive same-store sales in late October, when they rose 3 points.

(Paul Deckelman contributed to this report)

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