Leap Wireless International's vendor financing paper has been climbing--in the words of one dealer--by "leaps and bounds" in the secondary market. The name continued on its upward march into the 61-621/ 2 range after the company filed its latest quarterly results last week. Traders said the name had been quoted in the mid-s two weeks ago.
One of the variables supporting Leap is the Federal Communications Commission's decision to extend number portability to wireline phones in addition to wireless, said one buysider. Leap already has a high number of customers who chose to switch off their wireline services in exchange for wireless, he explained. The company is also starting to see less churn-off in terms of its customer base, suggesting that Leap may change from a run-off story to a growth story, he added.
Finally, those holding claims to the vendor financing paper will receive about $3 million in new senior notes under the plan of reorganization, which carry a coupon of 13%. The company has the option to redeem the notes, but must pay a redemption premium. Some believe that the company may choose to eventually refinance those notes given that MetroPCS was able to obtain $1 million in new notes at a coupon of 103Ž 4%, the buysider noted. Leap's plan of reorganization has been approved by the court, but the company needs to obtain FCC approval for the change of control of licenses that will occur when Leap emerges from bankruptcy. A spokeswoman for the company declined comment