A $40 million chunk of Comdisco's bank debt traded last week as the bidding process for some of the company's assets drew objections from bidders. Deutsche Bank was rumored to be the buyer of the block, snapping it up in the mid-80s. Deutsche Bank officials declined to comment. Dealers said the wrangling over Comdisco's assets should translate into higher prices when they are sold. "It means more competition and makes the price go up, so it's a good thing," noted a market player.
SunGard and IBM recently filed objections to the bidding procedures proposed by Comdisco and Hewlett-Packard Co. in Comdisco's Chapter 11 bankruptcy proceedings, but the substance of their gripes could not be determined last week. A Comdisco spokeswoman would not comment on any objections made by IBM or SunGard. The company is still planning to emerge from Chapter 11 bankruptcy in the first quarter 2002. "We continue to explore alternatives to maximize the value for our stake holders," she said.
SunGard had made a bid to purchase the Availability Solutions business of Comdisco for $775 million in cash. Hewlett-Packard made an earlier bid for $610 million purchase of the assets, which remains subject to higher and better offers. IBM is a potential bidder for the company's technology services business and for its $5 billion loan portfolio. Spokeswomen at Comdisco and SunGard confirmed that objections had been filed, but declined to comment further.
Until last week's trade, Comdisco's paper most recently traded in the low-80s. The company has a $550 million deal that breaks down into two tranches and expires in 2002. Pricing in 70 basis points over LIBOR. Citibank and Bank of America are the lead arrangers. The company is receiving $200 million debtor-in-possession financing. Citibank is administrative agent, J.P. Morgan is syndication agent, and Heller Financial is documentation agent.