Salomon Smith Barney was rumored to have traded $20 million of WorldCom bank debt this week with the paper jumping from the low teens into the 22 1/2 to 23 1/2 range. This follows the release of promising numbers in its latest monthly operating report, including EBITDA of $416 million. One trader noted that recent reports indicating that the company would be sold at the end of the bankruptcy process have also contributed to the boost. "If you do the math, the recovery value could be as high as 60," he said. Calls to WorldCom were not returned by press time.
Tesoro Petroleum ticked up with trades in the 89-91 context after the company was able to capitalize on the decreasing cost of crude oil. "Crack spreads have improved dramatically over the last month," one trader noted, adding the improvement would have a huge impact on the company's EBITDA. Tesoro still has to work through its over-leveraged position and while it has laid out plans to do so, including selling of assets by the end of this year, some market players believe Tesoro will have trouble meeting those goals. Sharon Layman, v.p. and treasurer could not be reached.
Allied Waste's term loan "B" traded up to 98-98 1/2 from the 97 range this week after the company announced it will pursue a $250 million offering of senior notes due 2012. Proceeds from the transaction will be earmarked to pay down the company's term loans ratably. Questions to Thomas Ryan, cfo, were referred to a spokesman, who did not return calls.
Meanwhile, an unnamed seller was looking to auction off a $75 million piece of Mirant paper today. One dealer said the seller was looking to offload the paper between 25 and 40. Traders were unsure if the auction was completed. Lehman Brothers was rumored to be the broker for the transaction, but this could not be ascertained. Officials at Lehman could not be reached. The company recently released its second quarter results and disclosed $41 million of accounting errors. Calls to Raymond Hill, cfo, were not returned.