Bankrupt Williams Communications Group's bank debt jumped from the 72-74 range into the mid- to high 80s this week after Level 3 Communications was reported to be making a $1.1 billion bid for the company. This offer would take the Williams Communications bank debt out at par. Dealers said that investors are still unsure if the deal would be completed. No trades could be confirmed. A spokeswoman for Williams Communications said that the company had received a number of bids, one of which was from Level 3. While she could not elaborate, she noted that the company was looking to release a plan of reorganization soon.
Williams Communications is also reportedly negotiating with financial company, Leucadia National, for an investment of $150 million that would allow it to emerge from bankruptcy as a stand-alone company. Calls to Joseph Orlando, Leucadia cfo, were referred to a spokesperson, who did not return calls by press time.
Level 3 bank debt also received a boost this week with levels rising from the 68-70 context to the mid 70s. While some traders said the rise was due to the bid for Williams Communications, others said it was because of positive information discussed in a confidential bank meeting. Level 3's bank debt has been rallying since it rocketed 10 points to the 68-70 level after the announcement that the company would raise $500 million in new capital from Longleaf Partners Funds, Berkshire Hathaway and Legg Mason (LMW, 7/15). Level 3 has since been dubbed the company in the position to initiate consolidation in the telecom industry. Calls to Sureel Choksi, Level 3 cfo, and Kevin O'Hara, Level 3 coo, were referred to the company spokesman, who declined to comment.