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. One trader noted this was the first time in the last six months that he had seen WorldCom's bank debt change hands, whereas the bonds have been a lot more active. Salomon officials declined comment. This latest move follows WorldCom's release of promising numbers in its monthly operating report, including EBITDA of $416 million. At the end of September, the company also stated that cash on hand totaled $1.4 billion, up $200 million for the month.
One trader noted that recent reports indicating that the company could 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. Other positive news for the company includes the search for a new ceo and chairman. Michael Capellas, a former president of Hewlett-Packard, is emerging as a top candidate. Calls to WorldCom were not returned by press time, but Capellas, who quit H-P last week, has reportedly admitted to "some discussions" about the ceo position.