Tyco gains on new CEO; Allied Waste lower; MedQuest planning new deal

By Paul A. Harris

St. Louis, Mo., July 27- Tyco International Ltd.'s bank paper firmed amid a relatively quiet Friday session on that new chief executive officer Edward Breen is poised to square the books relating to that conglomerate's notably ranging list of acquisitions.

Also in the secondary market Allied Waste Industries Inc.'s loans were heard trading down along with its stock, as the company is dogged by the common cold of U.S. corporate administration in summer 2002: rumors of accounting questions.

Meanwhile a new loan swam into view as part of a financing from diagnostic imaging firm MedQuest Inc.

Tyco's loans rose Friday as investors seemed to affirm the hand-off of the conglomerate's tiller to Edward Breen who was hired away from Motorola to replace longtime Tyco chairman and chief executive Dennis Kozlowski, who was charged with tax evasion shortly after he exited the company.

"Tyco strengthened up a little bit today on the announcement that they have a new president," a trader said late Friday afternoon.

"They moved into the low 90s for the '03 paper and call it 80 for the '06 paper."

Another market source also noted Tyco's bank loans trading higher, although no level was specified.

Meanwhile, sources said, Allied Waste's paper took the opposite direction.

"It continues to drift down on no news," a market source said, adding that the company's bonds are down on "the usual accounting news" - although any suggestions of accounting issues are no more than unconfirmed market rumors.

Specifying that the Allied Waste bank loans were heard "95-ish," the source added "Allied Waste is a big deal - one of the biggest deals in the index - and nobody likes to hear 'accounting problems.'"

Having so stated, however, the source proffered an alternate hypothesis. Instead of casting the corporate accountants as the villains responsible for Allied trading down Friday, this source pointed to other forces known to become vigorous when the capital markets demonstrate volatility.

"I think it's the hedge funds picking the weak members of the herd and piling on the rumors," the source said

"Allied Waste is probably one of those weak members. For years Allied Waste has been rumored to have accounting problems and they've consistently not had accounting problems that anybody can figure out. But they get picked on."

Another source, a trader, also noted that Allied Waste had "weakened three points, on the accounting news."

Other paper heard to trade on Friday, one source said, was Nortel Networks Corp. The trader said that the paper was heard to be on the move but specified no levels.

And on the new deal front Friday Alpharetta, Ga.-based independent, fixed-site, outpatient diagnostic imaging center operator MedQuest Inc. was heard to be at work on a new credit facility to help finance an LBO involving JP Morgan Partners. The company is also bringing a Rule 144A offering of $180 million 10-year senior subordinated notes as a first time junk bond issuer. The bond deal, via sole bookrunner JP Morgan and co-managers UBS Warburg and Wachovia Securities, is set to price Aug. 8.

Sources on the syndicate of the bond deal confirmed the existence of a new MedQuest credit facility. However those sources declined to divulge any of the specifics of the facility Friday. Calls to the company were unreturned.

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