United Rentals falls on amendment; PanAmSat continues decline; AT&T to break Friday

By Sara Rosenberg

New York, Oct. 3 - Following an amendment to its credit facility, United Rentals Inc. slid southwards in secondary bank loan trading as investors worried over the company's inability to comply with original covenants. Also dipping in trading levels recently is PanAmSat Corp., which lost about four points over the past few weeks. Lastly, drawing some market attention is AT&T Corp.'s bank debt that is expected to break for trading on Friday.

United Rentals' loan is currently being bid at 96½ and offered at 98, down 1½ points from previous levels, according to a trader.

"It's a very cyclical company," the trader explained. "As people get concerned about the stock market, they get nervous over cyclical names."

The Greenwich, Conn. equipment rental company recently amended its credit facility agreement, changing the minimum interest coverage ratio. JPMorgan Chase Bank acted as U.S. administrative agent, and J.P. Morgan Bank Canada was the Canadian administrative agent.

The minimum interest coverage ratio was modified to 1.75 to 1.0 for on or before June 30, 2002, 1.50 to 1.0 for July 1, 2002 through Dec. 31, 2003 and 1.75 to 1.0 for Jan. 1, 2004 and thereafter, according to a filing with the Securities and Exchange Commission.

"The covenant change reflected not the greatest news," a buy-side source said. "It has pretty good coverage and leverage statistics. Over the last month or so the stock has dropped by about 50%, so I guess that's worth two points on the bank debt."

In return for the amendment, the company paid a 12.5 basis points amendment fee.

Another name on the move is PanAmSat Corp. The company's bank debt has "been on s low grind down over the last few weeks", a trader said. On Thursday, the loan had a "95 post" compared to quotes in the 99 region in the near past.

According to one buy-side source the steady decline could be attributed to "a lot of uncertainty hanging around that name." The trader however expressed a different opinion, accrediting the loss to "technicals," explaining, "There are more sellers than buyers."

PanAmSat is a Wilton, Conn. provider of video, broadcasting and network services through satellites.

Meanwhile, AT&T Corp., despite having a senior unsecured debt rating of Baa2, is receiving attention from leveraged players.

"We're watching AT&T Corp.," one trader told Prospect News. "It's supposed to break tomorrow."

When asked why the investment-grade company was going to join junk names in the secondary, the trader responded: "It will probably trade around 91/92. [Also] it's $4 billion. It's too big so it's hitting the leveraged market."

AT&T is a New York, N.Y. provider of voice, data and video communications services.

In other news, QwestDex held a meeting for some larger institutions on Thursday regarding its approximately $1.5 billion credit facility, according to market sources. The loan is officially scheduled to launch to institutional investors on Monday.

"One of my colleagues went and he was very favorably impressed," a fund manager said. "I think it will go well."

The only concern amongst investors at this time is that when QwestDex West hits the bank loan market next year with the second stage of the leveraged buyout financing the QwestDex East paper might suffer, the fund manager explained. The manager added that investors are trying to obtain a guarantee that if the West loan prices differently than the East loan due to a change in market conditions, etc. the East loan price will be adjusted to match.

JPMorgan, Bank of America, Deutsche Bank, Lehman Brothers and Wachovia Securities are the lead banks on the deal.

The loan is anticipated to consist of a 61/2-year term loan B sized at about $700 with an interest rate of Libor plus 350 basis points and a six-year pro rata portion sized at approximately $800 million with an interest rate of Libor plus 300 basis points, the source said. "All of this is subject to change," he warned. "Details will be finalized before the bank meeting."

Proceeds will be used to help fund the leveraged buyout of QwestDex by The Carlyle Group and Welsh, Carson, Anderson & Stowe.

QwestDex is a directory services company.

AES Corp. is bringing a $1.6 billion credit facility to market that will be used to replace its $850 million revolver due March 2003, the $425 million term loan due Aug. 2003, the $262.5 million term loan to AES subsidiary AES EDC Funding II LLC due July 2003 and £52.3 million letter of credit facility, according to a news release.

According to some market sources, the Arlington, Va. power company's loan launched on Thursday, however, according to others, the loan was pushed off until next week. Citibank is said to be the lead bank on the deal but no confirmation of this information was obtained.

Following up on some deals, GenCorp Inc.' subsidiary Aerojet-General Corp. completed its acquisition of General Dynamics' space propulsion business. In conjunction with this transaction, the company amended its credit facility to include a new $115 million term loan (Ba2/BB+) due March 2007, with an interest rate of Libor plus 375 basis points, according to a syndicate source. That was $10 million smaller and 75 basis points more interest than originally planned.

Deutsche Bank and ABN Amro were the lead banks on the deal.

Besides assisting in the acquisition, the term loan was also used to reduce outstanding amounts under the Cordova, Calif. manufacturing company's existing revolver.

Dade Behring Inc. closed on a $575 million exit financing facility with the emergence from Chapter 11 on Thursday. The facility consists of a $125 million five-year revolver with an interest rate of Libor plus 350 basis points and a $450 million six-year term loan B with an interest rate of Libor plus 350 basis points. Deutsche Bank was the lead bank on Deerfield, Ill. clinical diagnostic company's new loan.

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