Qwest Communications bank debt held its ground despite reports that bondholders are protesting the terms of the company's most recent exchange offer. Traders said the market for the name was in the 93 range, but no trades could be confirmed. Two weeks ago, immediately following the news that the company was pursuing an exchange, the paper changed hands in the 92 context.
Market players explained that the bank debt is not affected by the bondholder dispute because of its senior status. In addition, some speculate that the exchange will still be completed, albeit with revised terms. The exchange offer is asking bondholders to accept a reduction in principal and a longer term, explained one trader. Calls to the company were not returned by press time.
Qwest amended its bank deal earlier this year to avoid bumping up against a debt-to-EBITDA covenant that would require the company to meet a maximum leveraged requirement of four times by the end of this year. The company was able to raise its allowable leverage ratio to six times for the life of the loan and push out the credit's maturity date from May 2003 to May 2005. In exchange for the amendment, Qwest used a portion of the proceeds from the sale of its Dex Media East directory's business to reduce its $3.4 billion credit facility to $2 billion.