XO Communications' bank debt has plummeted from the high 60s to the low 50s with a rumor that Forstmann Little & Co. is pulling out of its proposed deal to invest $800 million in the company, along with Telefonos de Mexico, for an 80% share. Traders said that approximately $15 million traded in the 51 range.
At the end of last month, the name shot up 10 points to the 68-70 range after its bank group decided not to press default measures agreed upon in a December 2001 forbearance agreement. Dealers said only small pieces of the paper traded up from the 58-60 range. The forbearance agreement gave the company breathing room until April 15. After that date, lenders could have demanded immediate repayment of the debt and attempted to seize the company's assets. The company is still working with its creditors toward an acceptable balance sheet recapitalization. Carl Icahn is also bidding on the company for a 55% stake in the company in exchange for a $550 million injection in cash (LMW, 4/21).