The bank debt of Nextel Communications bounced back up to the 88 level, with a trade taking place on Tuesday. Traders said the name was stronger because of the rally in the equity markets earlier in the week. The paper had slipped to the 84 1/2 - 85 1/2 level last week after a J.P. Morgan report stated that the company did not correctly account for its bad debt expense and its customer churn rate (LMW, 10/14). A financial official at Nextel could not be reached by press time. Encompass Services' bank debt remained stable, albeit in the 31-32 context, after the company announced that it would pursue a pre-packaged bankruptcy plan. The company's restructuring plan stipulates that $200 million of the company's outstanding $600 million of bank debt will be rolled into a new term loan and the remaining amount will be converted into an 80% equity stake in the reorganized company. Encompass has yet to secure creditor support for the plan. "The plan offers the best recovery for all concerned constituents," a company spokesman said. One trader, however, estimated that the recovery value of the bank debt could be as low as 35.
Meanwhile, an undisclosed seller is looking to unload a $30 million piece of Conseco bank debt, but the seller is finding the current levels for the paper to be too low, according to market players. "The buyers are in the high 50s, but the sellers aren't there," one trader said. Calls to Conseco were not returned by press time.
A $47-50 million piece of Federal-Mogul changed hands last week in the 47-49 range. One trader noted that recent pressure on Ford and General Motors was trickling down to car-part producers such as Federal-Mogul. The company is continuing to struggle through a bankruptcy process, which has been complicated by asbestos litigation and a bank holder versus bondholder collateral dispute. Calls to Federal-Mogul were not returned by press time.