Mirant higher, trial set for bondholders; WorldCom still active; Fleming issue under a penny

By Carlise Newman

Chicago, June 19 - Mirant Corp. debt gained again Thursday, boosted by rumors this week of a meeting and news that an expedited trial had been set for a complaint filed by its bondholders to block the company's exchange offer.

The Delaware Chancery Court Wednesday scheduled an accelerated trial for November or December for the complaint, filed by bondholders of the Mirant Americas Generation LLC unit.

Mirant's 7 5/8% notes due 2006 were seen at 78 bid, 80 offered, a distressed debt trader said, up two points from Wednesday and nearly five points from last week, when they were trading around 72 bid. Mirant's 2003 bank debt was quoted at 73 bid, 75 offered, having fluctuated throughout the day, to end the session up one point from Thursday.

"Mirant was the big thing going today. We traded the 7s of '08 several times at around 77½ and then it kind of died down in the afternoon a little, and started back up before the close," a distressed debt trader said.

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.

In a hearing before the court, Mirant and Mirant Americas Generation agreed to amend the offering documents for the exchange and to provide additional information.

The trial date would follow by several months the end of the exchange offer, which is scheduled to expire June 27 unless extended.

"I still stick with the opinion that (the bondholders) don't have a leg to stand on in this," a trader said.

Also among current exchanges, US Unwired Inc.'s bonds were seen higher.

As previously reported, US Unwired on Tuesday extended the expiration date of its exchange offer to 5.00 p.m. ET on June 23. The offer was previously scheduled to expire at 5.00 p.m. ET June 17.

US Unwired's bonds were seen at 50 bid, 53 offered, rising three-quarters of a point from Wednesday, a trader said.

"We aren't big in US Unwired, but they've been pretty busy the last few days. On a day like yesterday, that was certainly welcome. Today was a little livelier," a distressed debt trader said.

Under the terms of the offer, the Lake Charles, La. -based owner of five Sprint PCS affiliates will exchange its 13.375% senior subordinated discount notes due Nov. 1, 2009 for $187.50 in cash and $185 in face amount of new senior notes per $1,000 face amount of existing notes.

Aside for the extension, all other terms and conditions of the exchange offer and the consent solicitation remain the same.

On May 29, holders of more than 50% of US Unwired, Inc.'s 13.375% senior subordinated notes said they will not participate in the company's exchange offer. The holders also formed an ad hoc committee, signed a lock-up agreement and hired Chanin Capital Partners as financial advisors and Orrick, Herrington & Sutcliffe as legal advisors.

"We're not prepared to say whether we're talking to bondholders. But don't interpret that as deciding we are not," US Unwired's chief financial officer, Jerry Vaughn, told Prospect News on Tuesday. "We're just extending the offer for a week."

As of June 16, $2.25 million of existing notes had been tendered.

Elsewhere, Worldcom Inc., which has been "extremely active" this week according to a trader, traded at "levels around 27, 271/2." The 7½% notes due 2011 were up a half-point Monday to land at 27.5 bid, 28.5 offered at the close.

WorldCom has been steadily rising since it announced its April revenue early in the week, and has actively traded for the past few weeks. WorldCom'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.

The Ashburn, Va.-based telephone and internet company 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 have "finally hit bottom...they're under a penny," a trader said. The notes have fallen to 1/8 of a cent bid.

"So far, so fast," the trader added.

There was no fresh news on the Dallas grocery store operator, but it has been facing restructuring and announced it would sell 40 stores last week.

Another issue that got close to a penny at one time - United Airlines Inc. - was seen falling a point Thursday. The 9½% notes due 2009 were quoted at 16.5 bid, a trader said.

Adelphia Communications Corp.'s 9 7/8% notes due 2007 were up 1.5 points to 61.5 bid, a trader said. The Greenwood Village, Colo.-based cable company has been wallowing in Chapter 11, and has faced numerous fraud allegations.

Global Crossing Inc. was also seen active Thursday. Its 9½% notes due 2009 were quoted at 4.75 bid, down ¼ of a point. 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 Crossings 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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