SunGard softens post numbers; GM, Ford slide lower; Clear Channel drops with downgrade

By Sara Rosenberg

New York, Feb. 20 - SunGard headed downwards during Friday's session on the back of the company's release of quarterly results with the move mainly caused by market weakness, and General Motors Corp. and Ford Motor Co. were both noticeably softer with general sector concerns.

In other secondary happenings, Clear Channel Communications Inc. saw its term loan come in by a few points with a ratings downgrade from Standard & Poor's.

SunGard dips after earnings

SunGard's "old" term loan B was lower by late day Friday after seeing some strengthening initially after fourth quarter results came out, with the fall primarily attributed to the overall market softening up as the day progressed, according to traders.

At the end of the day, the term loan B was quoted at 84½ bid, 85 offered by one trader and at 84¼ bid, 85¼ offered by a second trader, down from Thursday's levels of 85 bid, 85¾ offered.

However, on Friday morning, the paper was seen around the 86 bid, 87 offered context as investors were pleased by the improvement in the company's EBITDA and revenue results in the fourth quarter.

SunGard adjusted EBITDA rises

After the close on Thursday, SunGard announced that for the three months ended Dec. 31, its adjusted EBITDA was $489 million, an increase of 12% compared to $438 million in 2007.

Revenue for the quarter was $1.54 billion, an increase of 11% from revenue of $1.39 billion in the same period last year.

Net loss for the quarter was $174 million compared to net income of $30 million in the corresponding 2007 period.

Income from operations for the quarter was $65 million, which includes a $128 million goodwill impairment charge, compared to $219 million last year, a decrease of 70%.

And, adjusted income from operations for the three months was $383 million, a 5% increase compared to $364 million for the same period in 2007.

SunGard debt total close to $9 billion

SunGard also said on Thursday evening that at the end of 2008, total debt was $8.87 billion, cash balances were $975 million and off-balance sheet debt was $77 million.

"SunGard's performance in the quarter was solid. Despite the turbulence in the financial industry, we achieved a strong finish in our Financial Systems business which is a reflection of our competitive strength and the disciplined decision-making and decisive actions of our employees. The dislocations and uncertainties caused by the economic crisis are unprecedented, but, rather than hunkering down, we see them as a once in a generation opportunity for technology companies that can help their customers find new efficiencies and sources of revenue," said Cristóbal Conde, president and chief executive officer, in a news release.

"While the spending mood for IT has continued to deteriorate, our customers realize that investing in IT is one way they can address the cost pressures they are facing, and they view us as a trusted partner. We have a broad portfolio of products and services, we are well capitalized, and we are confident that SunGard will come out of the economic crisis more competitive than ever," Conde added.

SunGard is a Wayne, Pa.-based software and IT services company.

General Motors, Ford soften

Both General Motors and Ford saw their term loan levels fall off during trading hours on continued negativity towards the auto sector, according to a trader.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 36 bid, 38 offered, down from 39 bid, 41 offered, the trader said.

And, Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 31 bid, 32 offered, down from 32½ bid, 33½ offered, the trader continued.

The trader explained that continued rumblings of a possible bankruptcy scenario for General Motors as well as the concerns that people have had for auto companies for a while now probably caused the downfall in trading levels.

General Motors' Saab reorganizing

General Motors did have some news come out on Friday, as its Saab business announced that it is filing for reorganization under a self-managed Swedish court process to create a fully independent business entity that would be sustainable and suitable for investment.

As part of the process, Saab will formulate its proposal for reorganization, which will include the concentration of design, engineering and manufacturing in Sweden.

This proposal will be presented to creditors within three weeks of the filing.

Pending court approval, the reorganization will be executed over a three-month period and will require independent funding to succeed, which will be sought after from both public and private sources.

The reorganization should have no impact on other General Motors' operations.

"We explored and will continue to explore all available options for funding and/or selling Saab and it was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment," said Jan Ake Jonsson, managing director for Saab Automobile, in a news release.

Clear Channel falls with downgrade

Clear Channel's term loan dropped on Friday as the company experienced a ratings downgrade, according to a trader.

The term loan was quoted at 38 bid, 42 offered, down from previous levels of 40 bid, 44 offered, the trader remarked.

Around midday on Friday, S&P announced that it lowered Clear Channel's corporate credit rating to B- from B and left the rating on CreditWatch with negative implications.

"The ratings downgrade and continued CreditWatch listing reflects our deepening concerns about the company's ability to maintain compliance with financial covenants amid the worsening recession, especially in light of extremely weak recent results reported by peer radio and outdoor companies," said S&P credit analyst Michael Altberg, in the rating release.

The rating agency said that it estimates that Clear Channel could violate covenants in the second half of 2009, or sooner if EBITDA declines are greater than expectations.

Clear Channel is a San Antonio-based media and entertainment company.

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