Allegiance Telecom's bank debt held its ground in the mid-to-high 60s after the company filed for bankruptcy last week. The market for the competitive local-exchange carrier's bank debt has been quoted slightly stronger since the end of last month. "CLECs in general have been better lately," said one trader.
Allegiance has been negotiating with its creditors for some time and after failing to reach an agreement, it filed for bankruptcy in the best interests of the company, explained Thomas Lord, Allegiance's executive v.p., cfo and director. He said he was unaware of any trades on the company's bank debt.
Allegiance ran into default under its credit facility when it failed to reduce its $1.275 billion in debt to $660 million by April 30 as dictated by its credit agreement. At the end of last year, the company had $342.8 million outstanding on its revolver and $145.5 million on its delayed-draw term loan. TD Securities is the administration agent on the secured credit.
Senior bank debt holders have a security interest in the capital stock of Allegiance Telecom Company Worldwide, which is owned by Allegiance Telecom. The security also extends to all the assets of Allegiance Telecom Company Worldwide and includes the capital stock owned by that entity in each of its subsidiaries.