McLeodUSA's $615 million "B" loan traded up to 50-52 up from 46-48. A trader attributed the rise to a spike in the company's equity. "If the equity market thinks it's worth more maybe the banks should too," he said. In the last three weeks McLeod's share price has tripled in value to 75 cents. Kenneth Burkhardt, McLeod's executive v.p., cfo and director, declined to comment on price movements in the bank debt.
The share price climbed after MCI announced it will use McLeod's facilities to provide local telephone services to its residential customers. Also last week, McLeod announced a five-year extension of its contract with the state of Iowa for operations and maintenance of its communications network. The extension of the contract will bring McLeod additional revenues of approximately $5 million.
McLeod's credit plummeted during the second half of 2004 (LMW, 10/15). Last May, the debt was quoted in the 70s, but slid after McLeod reported a net loss of $91.4 million and declining revenues of $193 million. McLeod emerged from bankruptcy in April 2002.