Kansas City’s Offer for DTI Debt Disappoints

The bondholders of DTI Holdings Inc. didn’t like what they saw in the investment offer from Kansas City Power & Light Co. (KCP), say sources, and the stand-off between the two now has the proposal on hold. And the distressed bonds, which were trading above KCP’s 40 cents-on-the-dollar offer price, have now slipped into the mid to low 30s. KCP, through its sub KLT Telecom, announced on Sept. 27 it would purchase an extra 31% of DTI’s stock for $110 million, increasing its stake in the firm to 78%. KCP was also prepared to purchase at least 90% of DTI’s Series B senior discount notes maturing in 2008, the company’s only tranche. The bonds, which now have an aggregate value of about $357 million, are mostly held by institutional investors, said a high yield source.