Microcell's bank debt surged on the announcement that the company has committed to a restructuring plan. A $3 million piece of the bank debt changed hands in the 61 1/2 context after climbing up out of the 50s last week. About two months ago, the bank debt levels began to rise from the 20s as lenders anticipated a restructuring that would be favorable to bank debt holders.
The restructuring plan calls for secured creditors to exchange C$600 million of debt-bank lenders hold C$443 million of that amount-for C$350 million of new secured debt and 68% of common equity in the reorganized company. The plan provides 57% of the bank debt's current value and that does not ascribe the equity any value, explained one trader. The bank debt could be worth more than par because of the equity and that's why the levels shot up so quickly, noted another trader. Calls to Jacques Leduc, Microcell cfo and treasurer, were not returned by press time.
In other action, directory names rallied as dealers saw the demand for Dex Media East and Bell Actimedia reach 101. Both of these names had been trading in the par context. "There's a good amount of trading into retail, but not a lot in the street," noted one trader. The directory names are sought after due to their rich 4% plus spread over LIBOR, their call protection clauses, and their liquidity, he added. Another trader attributed the boost to the large amount of cash looking for a home. "There are a lot of guys ramping up, high-yield inflows are still strong, and the new issues haven't come out yet," he noted.
Energy names have also been among the favorites in the secondary market this week. Both AES Corp.'s refurbished credit facility and Calpine Corp.'s bank debt paper ticked up. Pieces of AES's revolver, "A" term loan, and "C" tranche changed hands at 91-92, 95 1/2 - 96 1/2, and 93-94, respectively. Across the board the credit is one-two points stronger since before the holidays. "People are back from vacation and they've had some time to get their arms around it," said one trader. Calpine has ticked up in the 90 range, from the high-80s. Investors have become more comfortable with the collateral packages, noted one buysider.
Meanwhile, American Tower's bank debt got a boost from the news that the company would use the $30 million in proceeds from the sale of its Verestar subsidiary to pay down its credit facility. Market players said a $2-3 million piece traded in the 92 3/4-93 context. The bank debt has rallied from the mid-to-high 80s over the last month. Questions for Bradley Singer, cfo, were referred to a spokeswoman who did not return calls by press time.