Adelphia bank debt heads north as investor comfort on co-borrower issues grows

By Sara Rosenberg

New York, March 6 - Adelphia Communications Corp's bank debt saw an improvement on Thursday, with the most noticeable being the Century debt, although all of the company's tranches moved up, according to a trader.

Asked what is pushing this long-troubled name northward, the trader explained that although it took a lot of time and a lot of work people are getting more comfortable with the co-borrower issues that Adelphia has been facing, giving investors a bit more confidence in the credit.

The "old" Century term loan debt was bid at 681/2, the "new" Century term loan debt was bid at 66½ and the revolver was bid at 66, the trader said, adding that the quotes moved higher by "a couple of points". A second trader said that he saw the Century term loan B trade at 67.

Other recent Adelphia news includes Tuesday's announcement that the Bankruptcy Court approved the company's employment agreements with William T. Schleyer, chairman of the board of directors and chief executive officer and Ron Cooper, president and chief operating officer.

"We are pleased and excited to embark upon the complex challenge and extraordinary opportunity of rebuilding Adelphia. We begin the restructuring effort with a skilled and dedicated employee base, a core commitment to customer service, an advanced set of cable and broadband offerings and strong operations in eight regions nationwide. These significant assets will enable us to hit the ground running in our effort to better serve Adelphia's customers and regain the confidence of all stakeholders," said Schleyer and Cooper, in a news release.

Adelphia is a Coudersport, Pa. cable television company.

Xerox Corp. was also better bid across the board during market hours, according to a trader, who added that the revolver was bid around 931/4, the term loan A was bid around 96¼ and the term loan B was bid around 973/4. LoanX put the revolver at 92.6 bid, 93.9 offer, the term loan A at 96.357 bid, 97.286 offer and the term loan B at 97.813 bid, 98.729 offer.

The stronger bid was not attributed to any particular company news, rather the bank debt was said to have followed the company's stock and bonds, both of which moved higher over the course of the day. The stock closed at $8.80, up 22 cents or 2.56% form the previous day's close.

Enron Corp. held an auction on Thursday for about $10 million of letters of credit, according to sources. The Houston energy company's letters of credit were sold in the low 20's.

In the primary bank loan market, Serologicals Corp. launched a new $125 million credit facility (B1), consisting of a $100 million five-year term loan and a $25 million revolver.

Proceeds from the term loan will be used to help fund the acquisition of Chemicon International Inc.

Serologicals is an Atlanta provider of biological products.

Pinnacle Entertainment Inc. launched a new $225 million credit facility, consisting of a $100 million four-year revolver and a $125 million five-year term loan. Bear Stearns and Bank of America are the lead banks on the deal.

The Las Vegas diversified gaming company will use the proceeds to help fund the Lake Charles project and to refinance existing debt.

In follow-up news, DirecTV Holdings Inc. closed on its new $1.675 billion senior secured credit facility (BB-/Ba2). The deal, which was originally expected to be sized at $1.55 billion, was upsized during the syndication process since it was well received by institutional investors.

The loan consists of a $250 million five-year revolver with an interest rate of Libor plus 350 basis points, a $375 million five-year term loan A with an interest rate of Libor plus 350 basis points and a $1.05 billion seven-year term loan B with an interest rate of Libor plus 350 basis points.

Deutsche Bank, Bank of America, Credit Suisse First Boston, Salomon Smith Barney and Goldman Sachs were the lead banks on the deal.

Securing the loan is substantially all of the company's assets and it is guaranteed by the company's domestic subsidiaries.

In addition to the credit facility, the company closed a $1.4 billion senior notes offering on Feb. 28.

After consideration of the undrawn revolver and payment of transaction fees, approximately $2.75 billion of the proceeds from the bank and bond financing will be paid to Hughes in a distribution that will be used to repay $506 million of outstanding short-term debt, fund Hughes' business plan through projected cash flow breakeven and for Hughes' other corporate purposes.

"This financing was very well received by the market and we are pleased with its successful completion," said Michael J. Gaines, Hughes' chief financial officer, in a news release. "Due to DirecTV's strong financial results and outlook, there was significant demand for our offering from a broad group of investors. These two transactions provide Hughes with significant long-term incremental liquidity and complement the long-term financing completed at PanAmSat this time last year. In addition, we have strengthened our financial position by extending the average maturity of our debt to more than seven years at what we consider to be very attractive interest rates."

DirecTV is an El Segundo, Calif. digital satellite television service provider. Hughes is a provider of digital television entertainment, satellite-based private business networks, and global video data broadcasting.

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