McLeodUSA Notches Up
Bids on McLeodUSA firmed to 74-77 from the low 70s early last week on news that $140 million of the company's revolver would be paid down. Last week the company reached an agreement with Forstmann Little & Co. on a financial restructuring plan. McLeodUSA recently filed a prepackaged Chapter 11 plan. Traders said the significant reductions in bonds and bank debt were driving the levels. "It eliminates some of the debt on the company and means less leverage," said a dealer.
Still, dealers said trading was a bit locked because bidders were hoping the offer side would come down slightly while holders were said to be hesitant to sell on an anticipated recovery. "We're not seeing much flow," reported a dealer.
The plan, which is subject to the agreement with McLeodUSA bondholders and other security holders, would eliminate at least 95% of the company's $2.9 billion of bond debt and the associated $300 million in annual interest expense.