This Wednesday is the deadline for Allegiance Telecom to cut its debt almost in half but all is quiet on the bank debt front with the market for the company's term loan holding firm in the mid-60s. In conjunction with an amendment to the company's credit facility late last year, Allegiance pledged to reduce its $1.275 billion debt load to $660 million by April 30. When LMW went to press last week, there was no word of the company's plans to deal with the deadline and calls to Thomas Lord, Allegiance's cfo, were not returned. According to company filings, Allegiance may exchange cash or equity for its debt and may choose to pursue the transactions through exchange offers or a pre-packaged bankruptcy proceeding.
The last trade in Allegiance bank debt that was spotted was a $20 million piece that changed hands in late March. The piece traded in the high 50s to low 60s context. Since then the market for the paper has climbed into the mid 60s, but no paper is believed to have changed hands. While traders said there were a number of buyers looking for the name, there were no sellers. The holders feel good about the loan, which is a positive sign, said one dealer. Edward Rose, president of Cardinal Investment Co., had reportedly bought up 20% of Allegiance's bank debt and some of the company's bonds late last year. While one trader suggested that Rose is still a holder of the company's debt, his position could not be confirmed. Rose could not be reached for comment.