Mirant still going strong; WorldCom starts week higher; Fleming remains under a penny

By Carlise Newman

Chicago, June 23 - Mirant Corp. remained most active in distressed debt trading Monday, still reeling from the news Friday that the energy provider had asked its bank lenders to approve a prepackaged bankruptcy plan.

Mirant said it hoped to restructure its debt without a Chapter 11 filing, but the struggling company has said if it is unable to get enough banks to agree to its debt restructuring plan it may be forced to file for bankruptcy protection.

Mirant Americas Generations' 7 5/8% notes due 2006 fell to 76 bid, 79 offered from 77 bid Friday and 78.5 bid Thursday.

Earlier this month, the company asked its bondholders to approve a prepackaged reorganization in parallel with an exchange offer for the debt. Friday's filing extends the request to the bank lenders.

"Mirant was weaker. It traded like crazy Friday and today and I expect, tomorrow [Tuesday]," a distressed debt trader said.

On June 10, certain bondholders of a Mirant subsidiary sued Mirant to try to block its plan to exchange $1.45 billion in bonds that are due or putable in the next three years for ones due in five years. A trial on the suit will be held in November or December, Mirant said Friday.

The debt exchange offer involves swapping $1.45 billion existing bonds for new bonds with later maturities as part of a larger debt restructuring that would keep Mirant out of bankruptcy. It also includes refinancing nearly $3.5 billion in bank debt. The Atlanta-based energy company also asked bondholders to approve a prepackaged bankruptcy if it can't accumulate enough creditor support for the out-of-court proposal.

The complaint filed by the bondholders alleges that the exchange offers are an illegal "asset grab" by Mirant in violation of federal securities laws.

Elsewhere, Worldcom Inc., which was "extremely active" last week according to a trader, traded at 29 Monday. The 7½% notes due 2011 were up 1.5 points to land at 29 bid, 30 offered. They had been trading at 27 to 27.5 on Friday, a trader said.

"We see WorldCom every day. It's getting better and better with each day. The paper was in the teens a few weeks ago," a trader said.

WorldCom has been steadily rising since it announced its April revenue early last week. The Ashburn, Va.-based telephone and internet company's revenue in April totaled $2.05 billion, down 2.4% from $2.1 billion in March. Operating income rose 36% to $114 million from $84 million.

WorldCom ended April with $3.7 billion in cash on hand, an increase of approximately $400 million from the beginning of the month.

In other news, Fleming Cos. Inc.'s 10 5/8% senior subordinated notes due 2007 - which fell to 1/8 of a cent bid on Thursday, well under a penny - were seen at the same levels Monday.

"It's amazing that you see any interest in this company when it's down to this level, but strangely it's still there," a trader said.

The Dallas grocery store operator has been facing restructuring and announced it would sell 40 stores last week.

United Airlines Inc. was seen rising a point Monday. The 9½% notes due 2009 were quoted at 18 bid, 19 offered, a trader said, up from 17 bid, 18 bid on Friday.

AMR Corp.'s 9% notes due 2012 were seen up a point at 63 bid, 65 offered, a trader said. The Fort Worth-based airline's bonds had been gaining Friday after Standard and Poor's raised its ratings on AMR and its American Airlines unit by two notches, citing expected improvements to earnings and cash flow from $1.8 billion in annual labor concessions reached with its unions in April.

S&P raised the corporate credit ratings on AMR and American to B- from CCC. The outlook is negative.

Global Crossing Inc. was also seen active Thursday. Its 9 ½% notes due 2009 were quoted at 5 bid, up ¼ of a point. The company's bank debt was seen trading Friday at 22.5, and on Monday it had risen to 22 7/8 bid, 23½ offered, a trader said.

The Florham Park, N.J.-based telecommunications company had been active last week after XO Communications Inc. announced it was bidding for the company. XO, controlled by billionaire investor Carl Icahn, offered more than $700 million wholly in cash for Global Crossing's assets or said it would buy any or all of its bank debt at $210 per $1,000 at face value, or a total of $472.5 million for its $2.25 billion in face value of debt.

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