There was no noticeable change in bank debt levels for Qwest Communications International last week despite intensifying bankruptcy fears. Traders quoted the name in the 58-62 range, but they said the paper had not changed hands. The company is in dire need of liquidity and it must avoid violating its bank covenants at the end of the year, when its maximum allowable debt-to-EBITDA ratio drops from 4.25 times to four times.
Market players believe Qwest could avoid filing for bankruptcy if it can either complete the sale of its directories business or renegotiate the terms of its bank line. While the company has stated that its is in the final stages of the directory sale, execution of the sale is reportedly delayed. The company also is looking to obtain a new $500 million credit facility through its directories unit. If the sale were completed, the company would look to turn the new credit into financing that can be used by the parent company, according to a Qwest spokesman.