HealthSouth moving in thin trade; WorldCom rising; Charter breaks losing streak

By Carlise Newman

Chicago, Aug. 18 - HealthSouth Corp. was the sole relatively active name in an otherwise quiet trading session that was still a bit thin from last week's blackouts and the typical Monday sluggishness.

HealthSouth's bonds rallied last week after the company announced it had paid $117 million in past-due interest under various borrowing agreements, but were weakening as of Friday.

On Monday they were mixed. The 7 5/8% notes due 2012 fell ¾ of a point to 77¼ bid, 79¼ offered, a trader said. The 8.3% notes were quoted at 83½ bid, 85½ offered, a rise of ½ point, while the 6 7/8% notes due 2005 were seen unchanged at 89 bid, 90 offered.

"The bonds were kind of all over the place today. It's hard to pin down what they did exactly. Some were up, some were down. We saw a couple of trades in the 7s of '12," a trader noted.

The Birmingham, Ala.-based hospital and physical therapy provider said it paid all the overdue interest owing on its bank debt and notes, a total of $117 million. The Birmingham, Ala. company also said it has begun talks with holders of its 3.25% convertible subordinated debentures on an exchange offer. HealthSouth owes $344 million in principal on the convertibles, which matured on April 1.

HealthSouth said it was able to make the overdue interest payments due to improving liquidity from operations and asset sales. It also intends to make upcoming interest payments.

Last Thursday, HealthSouth told U.S. regulators it would not file its latest quarterly report on time because of an ongoing probe into its finances. HealthSouth in an SEC filing said it could not yet complete preparing its financial statements for the three months to June 30, 2003, because of the ongoing probe.

Meanwhile, WorldCom Inc.'s bonds were slightly higher at 27½ bid, 28¼ offered, which a trader said was a rise of "about a half-point."

The Ashburn, Va.-based telephone and internet company announced monthly operating figures Thursday. During the month of June, WorldCom recorded $2.075 billion in revenue versus $2.034 billion in May 2003. Operating income in June was $146 million versus $116 million in May. The company had net income in June of $84 million compared to net income of $46 million in May.

The slide in the debt of Charter Communications Holdings LLC last Thursday after Charter canceled the tender offer for $1.063 billion of junk debt and $350 million of convertible debt seemed to have abated Friday and slightly reversed Monday, a trader noted.

The St. Louis-based cable operator's 8 5/8% notes due 2009, which on Thursday had fallen as low as 67.5 bid, 72 offered from prior levels in the mid-70s, were seen rising a point Monday to 74 bid, 77 offered, from 73 bid, 76 offered, a trader said.

Elsewhere, there was "a little activity" in the bonds of Conseco Inc. The unexchanged bonds rose to 40 bid, 41 offered, up from 39 bid Friday, while the exchanged bonds rose ½ point to 66½ bid, 68½ offered from Friday

The company reported a narrower loss for the quarter last Thursday. The loss trimmed to $20.6 million from $1.33 billion a year ago.

"We saw a few trades in Conseco Friday and today, but the buzz is starting to wear down," a trader said.

Conseco also said last Thursday it has resolved a dispute with its former chief executive and current chairman Gary Wendt over financial obligation releases in its bankruptcy exit plan and now will seek court approval of the plan in early September.

Lastly, Adelphia Communications Corp.'s 9 7/8% due 2007 were seen at 68 bid, a rise of a point from Friday, and three points higher than where they had been seen earlier in the week.

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