Allegiance Telecom filed its plan of reorganization confirming that the company's bank debt will be completely paid off under the proposed restructuring. The bank debt is still quoted at a slight discount to par in the 99-991/2 range. But traders said the discount incorporates the risk of how long it will take the company to emerge, rather than the risk the plan will not be consummated. Allegiance has almost $478 million in claims under the facility and lenders are slated to receive cash equal to the total amount.
The cornerstone of Allegiance's plan of reorganization is an agreement whereby XO Communications will purchase substantially all of the company's assets for $311 million in cash and approximately 45.38 million shares of XO common stock. Allegiance is seeking approval for this plan of reorganization and its disclosure statement at a hearing on April 16.
Allegiance bank debt was quoted in the mid-to-high 60s after the company filed for bankruptcy last May. TD Securities is the administration agent for the secured credit. Company officials could not be reached by press time.