Discovery dips with add-on; MGM Mirage up on numbers; Harrah's rises; LCDX falls

By Sara Rosenberg

New York, May 5 - Discovery Communications Holding LLC's existing term loan B debt was slightly lower in trading on Tuesday as news emerged that the company will soon launch an add-on to the tranche.

In addition, price talk on Discovery Communications' proposed term loan B add-on surfaced ahead of the official launch as accounts were already being notified about the details of the new deal.

Back over in trading, MGM Mirage's term loan was stronger as earnings were announced, Harrah's Operating Co. Inc.'s term debt was higher as there was an overall firmer tone to the market and especially in the gaming sector, and the LCDX 12 index softened with equities.

Discovery term B softens

Discovery Communications' existing term loan B was a bit weaker during market hours after plans were announced to officially launch a $500 million add-on to the tranche via a conference call scheduled for Wednesday morning, according to a market source.

The existing term loan B was quoted at 93½ bid, 94½ offered, down from Monday's levels of 93¾ bid, 94¾ offered, the source said.

The existing term loan B will not see a change in pricing in connection with the add-on since there is no Most-Favored-Nation language in the existing credit agreement, the source explained.

Pricing on the existing term loan B is Libor plus 200 basis points.

Discovery existing B gets rated

On Tuesday, Discovery Communications' existing term loan B was rated Baa3 by Moody's Investors Service.

The rating reflects the company's strong operating and financial profile driven by solid cash flow generated from its growing and highly profitable cable television networks, strong brands and global programming distribution.

Moody's went on to say that the rating also reflects the term loan B's structural subordination to about $2.2 billion of senior unsecured unrated debt issued by the company's operating subsidiary, Discovery Communications LLC.

Discovery add-on talk emerges

In connection with announcing the new deal and starting to talk to accounts about it, Discovery Communications came out with pricing guidance on its proposed $500 million term loan B add-on, the source said.

The new debt is talked at Libor plus bps with a 2% Libor floor, the source remarked, adding that there will be an original issue discount, but the amount is still to be determined.

Bank of America and JPMorgan are the lead banks on the deal, with Bank of America the left lead.

Proceeds will be used for general corporate purposes.

Commitments from lenders will be due next week.

Discovery Communications is a Silver Spring, Md.-based nonfiction media company.

MGM better with earnings

Switching again to the secondary market, MGM Mirage's term loan was higher during Tuesday's market hours on the back of earnings being released late Monday, according to a trader.

The Las Vegas-based gaming, hospitality and entertainment company's term loan was quoted at 72 bid, 74 offered, up about three or four points on the day, the trader said.

For the first quarter, net income was $105.2 million, or $0.38 per diluted share, compared to net income of $118.3 million, or $0.40 per diluted share, in the previous year's first quarter,

Net revenue for the quarter was $1.499 billion, down 20% from $1.884 billion in the comparable 2008 period.

And, consolidated EBITDA was $532 million in the quarter, compared to $536 million in the prior-year period.

MGM seeing stabilization

In its earnings release, MGM Mirage pointed out that it's seeing signs that business levels are stabilizing as resorts have seen increases in occupancy levels through the first quarter and into April, and forward booking has improved.

As for its balance sheet, at March 31, the company had about $14.4 billion of borrowings outstanding and its cash balance was about $1.4 billion.

During the quarter, the company drew down the remainder of unused borrowing capacity available under its $7 billion senior credit facility.

"We continue to work constructively with our advisors and senior lenders to find a comprehensive long-term solution to improve our financial position," said Dan D'Arrigo, executive vice president and chief financial officer, in the release.

"We are evaluating a variety of options - which may include asset sales, new capital, and modifying or extending our existing debt - to address our liquidity needs and strengthen our balance sheet," D'Arrigo added.

Harrah's gains ground

Harrah's Operating's term loan B debt climbed higher in trading in response to the overall better feel to the cash market and, more specifically, the gaming sector, according to a trader.

The term loan B debt was quoted at 73¼ bid, 74¼ offered, up about a point on the day, the trader said.

Harrah's is a Las Vegas-based provider of branded casino entertainment.

Federal Mogul holds steady

Meanwhile, Federal-Mogul Corp.'s strip of term loan B and C debt pretty much held steady on Tuesday on earnings results, with levels seen at 57½ bid, 59½ offered, versus 57½ bid, 59 offered on Monday, according to a trader.

For the first quarter, Federal-Mogul's net loss was $101 million, or $1.02 per share, compared to net loss of $31 million, or $0.31 per share, in last year's first quarter.

Sales for the quarter were $1.238 billion, which is a 27% decline on a constant dollar basis, or 33% currency-impacted decline, when compared to $1.859 billion for the same period in 2008.

Federal-Mogul EBITDA declines

Federal-Mogul also revealed on Tuesday that its operational EBITDA for the first quarter was $70 million, compared to $207 million in previous year.

"Federal-Mogul's financial results for the first quarter of 2009 reflect the global automotive market downturn and its related effects," said José Maria Alapont, president and chief executive officer, in a news release.

"The company's Q1 2009 revenue declined, although less than the global markets. We continue to aggressively implement right-sizing actions to have the maximum impact on near-term results, while simultaneously protecting the company's business strategy," Alapont added.

Federal-Mogul is a Southfield, Mich.-based supplier of powertrain and safety technologies.

LCDX slides

The LCDX 12 index headed downwards during the trading session in sympathy with the stock market, according to a trader.

The index was quoted at 81.80 bid, 82 offered, down from 82.25 bid, 82.50 offered, the trader said.

As for equities, Nasdaq closed down 9.44 points, or 0.54%, Dow Jones Industrial Average closed down 16.09 points, or 0.19%, S&P 500 closed down 3.44 points or 0.38%, and NYSE closed down 29.46 points, or 0.51%.

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