Parmalat bonds seen quietly higher; Adelphia, MCI gain

By Paul Deckelman

New York, Dec. Jan. 2 - Bonds of troubled Italian dairy products giant Parmalat Finanziaria SpA were heard by market participants to be a bit higher on Friday, although trading during the truncated post-holiday session was said to be almost non-existent.

Parmalat's paper was quoted by one trader about a point-and-a-half higher on Friday, the first official trading day of the new year, although not much was seen in the way of actual trading.

He quoted the company's dollar-denominated 6 5/8% notes due 2008 at 21 bid, 22 offered, up more than a point from where they had closed out on Wednesday. Those bonds - which a month ago carried an investment grade rating and had traded at levels near par - had tumbled to levels as low as 14 bid in recent days, following revelations of massive accounting fraud and a subsequent bankruptcy filing.

Parmalat's euro-denominated issues - the bulk of its bonds - were likewise up about a point or more; the trader saw its 6¼% notes due 2005 having advanced to 21 bid/22 offered from prior levels at 18.5 bid, 19.5 offered. Its floating-rate notes due 2005 were more than a point better at 20 bid, 21 offered; the 6% notes due 2006 were at 21 bid, 22 offered, while the 6 1/8% notes due 2010 were quoted at 20.5 bid, 21.5 offered. Parmalat's 1% convertible notes due 2005 were quoted at 15.5 bid, 16.5 offered.

On Friday, prosecutors in Italy continued to question former company executives, as they tried to unravel the Enron-like financial foibles that produced a "hole" in the company's finances possibly as large as €8 billion. They were also looking into whether the company's outside auditors played any knowing role in covering up what the prosecutors say was a massive scheme to defraud investors, using forged documents and shadowy offshore subsidiaries in places like the Cayman Islands.

Company founder and ex-chairman Calisto Tanzi remains jailed in Milan after doctors examined the 65-year-old tycoon - who once had a heart attack - to see if he could withstand the rigors of being imprisoned. Tanzi has admitted to siphoning off about €500 million from the publicly-traded company he started and diverting it into unprofitable family-owned ventures, according to news reports.

Elsewhere, Adelphia Communications Corp. - which, ironically, was driven into bankruptcy in 2002 by similar accusations that the group's founder had looted the company and sank the money into his family-owned businesses - was being quoted higher Friday, although there was no fresh news out on the Denver-based cable television system operator.

"They were all [quoted] up a couple of points," a market source said, pegging parent Adelphia's 8 3/8% notes due 2008 and 7¾% notes due 2009 both at 94.5 bid. Adelphia subsidiary Century Communications' 9½% notes due 2005 firmed to levels around 97.5. Traders have recently said that Adelphia's rise back to near-par levels, despite its current bankrupt status, is a sure sign that the company is likely to emerge from Chapter 11 soon - and they cited market scuttlebutt that bondholders are likely to make a full recovery.

Another communications company expected to emerge from reorganization before long is MCI Inc. - the Company Formerly Known As WorldCom Inc. The old WorldCom bonds were being quoted Friday around 33.5 bid, 34 offered, while the bonds of the latter's MCI long-distance subsidiary - and now, the namesake for the whole company - were up a point, its 7¾% bonds due 2025 at 81 bid, 81.5 offered.

Telewest Communications plc's 9 5/8% senior debentures due 2006 were quoted up half a point at 62.5 bid.

But overall, the market source lamented, "there was just a handful of trades - if even that."

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