XO Communications' bank debt shot up 10 points to the 68-70 range last week after its bank group agreed not to press default measures agreed upon in a December 2001 forbearance agreement. Dealers said only small pieces of the paper traded up from the 58-60 range where it had been quoted since the end of March. The forbearance agreement gave the company breathing room until April 15. After that date, lenders could have demanded immediate repayment of the debt and attempted to seize the company's assets. The company is still working with its creditors towards an acceptable balance sheet recapitalization.
XO Communications is currently the subject of a bidding war between Carl Icahn and Forstmann Little & Co. Icahn has agreed to invest $500 million in the company for a 50% stake. Forstmann has a definitive agreement with the company and would invest $800 million along with Telefonos de Mexico for an 80% share. Calls to Wayne Rehberger, senior v.p. and chief financial officer, were not returned by press time.