Choice One Communications dropped from the 77 range trading in to the 66-70 context after a conference call last Wednesday between lenders and their consultant. Traders said the subjects discussed at the meeting were confidential and Lisa Schnorr, director of investor relations and corporate communications for Choice One, said the company was aware of the call but was not a party to it. She said the company was aware of the paper's drop. "We do recognize that our debt has traded down," she said.
There was speculation that the consultant cast doubt on Choice One's expected earnings, but that information could not be confirmed. Schnorr noted that the company has not released any expectations to the public. Choice One had about $399 million in senior credit facilities outstanding at the end of last year. Wachovia Securities is the company's lead bank. Calls to Wachovia officials were not returned by press time.
Choice One had been struggling over the last year and only recently achieved cash-flow positive status in the third and fourth quarters of 2003. Prior to that, the company was still at risk for an in-court restructuring due to concerns over liquidity and weak free cash flow prospects (LMW, 8/30). Toward the end of last year, however, Choice One's loan had risen into the 73-75 context in tandem with other competitive local exchange carriers as a possible acquisition of Allegiance Telecom reflected positively on the companies.