Winstar Doubles On Recovery Hopes

Winstar Communications' term loan traded up two-to-three points to trade as high as six on hopes that lenders would soon obtain a recovery on the loan. The bank debt was trading as low as 1 1/8 a year ago. Winstar lenders are anticipating a recovery on the bank debt due to speculation the company will soon resolve a legal battle withLucent Technologies, a former business partner, after Lucent announced a merger agreement with competitorAlcatelin early April.

Investors anticipate Lucent will settle with Winstar so that the merger can be completed smoothly. A trader said investors could expect a 5% recovery on the loan if Lucent pays Winstar trustees. A Lucent spokeswoman declined to comment. In the first quarter of 2006, Lucent reported a $104 million net loss, which included a $278 million charge related to the Winstar litigation. Officials atIDT Corp., the former owner of Winstar, did not return calls.