Allegiance Telecom bank debt was up about a half a point with the announcement that the company has entered into an agreement whereby Qwest Communications International will purchase substantially all the assets of the company for $300 million. The bank debt was quoted in the 97 1/ 2-98 1/ 2range following the news. "The initial stalking horse bid is the first step of the next phase that will determine the value of the Allegiance Telecom business," said Andrew Albrecht , v.p., investor relations and corporate development at Allegiance.
Under the Qwest purchase scenario, the $300 million cash offered will be directed to pay down the company's bank debt, which totaled about $472.7 million at the end of September. The remaining amount would be provided by cash on the company's balance sheet. While Allegiance had $288.7 million of cash equivalents on hand at the end of November, it is uncertain how much cash the company will have available by the time the transaction closes. Allegiance bank debt had ticked up to the 97-98 range from the 92-93 context following the initial reports that Qwest could potentially acquire the company.
Allegiance has filed a motion with the bankruptcy court to begin a sale process to give other potential bidders that have expressed interest in the company the opportunity to offer higher bids for Allegiance. While Albrecht could not comment on the identities of those parties, speculation has included Corvis Corp . , Sprint Corp . , and XO Communications as among the likely candidates.