Leap Wireless International's vendor-financing paper shot up roughly 10 points last week from the 43 level into the 52-54 range. Dealers said the name traded as high as 55 before softening into the low 50s. A few market players noted that a recent public transaction demonstrated positive valuations and the market was drawing parallels to Leap Wireless. One trader suggested that this transaction was for MetroPCS, a Dallas-based wireless services provider that is seeking $150 million in new senior notes. MetroPCS has a comparable business plan to Leap Wireless, so some investors believe that if MetroPCS can obtain new financing, Leap Wireless can too, he explained. There were also rumblings that a private equity investor could be on the sidelines, said one trader.
The bank debt for San Diego-based Leap Wireless has seen a considerable recovery over the last year, climbing out of the low teens (LMW, 11/02). The company, is winding up its bankruptcy proceedings and a confirmation hearing is set to begin next week. Vendor debt claim holders are slated to receive 96.5% of the new common stock in the reorganized company, as well as new senior notes totaling $350 million under the company's plan of reorganization. Leap Wireless has also recently completed the sale of spectrum in its Idaho markets to Edge Acquisitions for $3.25 million. Calls to Doug Hutcheson, senior v.p. and cfo, and investor relations spokespeople were not returned.