Energy companies move on news from Dynegy, Reliant; telecoms firm

By Carlise Newman

Chicago, April 2 - Dynegy Inc. lifted the energy sector in distressed debt trading Wednesday after the company announced $1.66 billion in new financing. Ditto for Reliant Resources Inc., which late Monday announced it had obtained a $6.2 billion financing package, averting a potential bankruptcy filing.

Adelphia Communications Inc. and Centennial Communications Corp. continued to rise on an "an overall good feeling" in the sector, according to a distressed debt trader. And Fleming Cos. trudged a tad higher Wednesday as investors decided what to do with the troubled national food wholesaler, which filed for bankruptcy Tuesday.

Dynegy said on Wednesday its Dynegy Holdings unit secured $1.66 billion in new financing. The Houston-based power company said the $1.6 billion facility consists of a $1.1 billion secured revolving credit facility that matures on Feb. 15, 2005; a $200 million secured term loan that also matures on Feb. 15, 2005; and a $360 million secured term loan that matures on Dec. 15, 2005.

The new facility replaces Dynegy Holdings' existing $900 million and $400 million revolving credit facilities that were scheduled to mature on April 28 and May 27, respectively, and a $360 million communications lease, which was scheduled to mature in December 2005.

The new facility, which requires no scheduled amortization of principal, will provide funding for the ongoing collateral needs of existing businesses and general corporate purposes, the company said. The facility also preserves the commitments of the 21 lenders in the former revolvers and communications lease financings.

Credit Suisse First Boston, Morgan Stanley and Greenhill & Co. were financial advisors to the company. Salomon Smith Barney Inc., Banc of America Securities LLC, and Bank One NA acted as co-lead arrangers.

"Dynegy, Reliant, all the energy names were better across the board," said a trader. He quoted Dynegy's 8 1/8% notes due 2005 at 88 bid/89 offered, about the same as Tuesday. They had risen from 82.5 bid/83.5 offered on Monday. Its 8¾% notes due 2012 were seen rising a point to 77 bid/78 offered from 76 bid/77 offered Tuesday.

"Most of the jump was yesterday when the rumors of the financing were floating around. Activity seemed to die a little once it was out," he said.

Reliant's bank debt was seen trading close to par after financing news announced Tuesday. Also based in Houston, the company announced a $6.2 billion package, replacing the company's $2.9 billion Orion acquisition bridge loan, an $800 million revolving credit facility that was converted to a term loan, an $800 million revolving credit facility and construction agency agreements totaling $1.4 billion. The package is split between a $2.1 billion revolving credit facility and $3.8 billion in term loans, which mature in 2007.

Fleming didn't fare as badly as in recent days. The Lewisville, Tex.-based company announced Tuesday it had filed for Chapter 11 bankruptcy protection. Ahead of the announcement, the company's 10 1/8% senior notes had dropped 5 points to 19 bid/21 offered; on Tuesday they were seen at 20 bid/21 offered. On Wednesday, the bonds traded at 19 bid/21.5 offered early in the day, then rose to 20 bid/21 offered by the end of the session.

"Fleming was up a little, then down a little, then ended up just a little higher. Everyone is still looking at that financing and trying to figure out if they're going to have enough money to get out of this," said a distressed debt trader.

As reported Tuesday and confirmed by Fleming on Wednesday, the company secured a commitment for $50 million of funding to keep its business running until it can get more money through debtor-in-possession financing, which is expected to be $150 million in size.

Some analysts and traders expressed doubt that the $150 million Fleming eventually hopes to secure would be sufficient to cover its costs, particularly during the early stages of bankruptcy.

On Tuesday, the New York Stock Exchange suspended trading in the company. Trading of Fleming's stock was halted at 50 cents per share. It is now trading on the Pink Sheets under the symbol FLIMQ.

Communications companies fared better on Wednesday. Coudersport, Pa.-based Adelphia Communications Inc.'s bank debt was seen trading two points higher. Its old Century term loan was quoted at 75 bid/76 offered, while the new Century loan was quoted at 72 bid/73 offered. The revolver was also seen at 72 bid/73 offered.

Cellular company Centennial Communications Corp., based in Wall, N.J., also firmed up a bit. Its term loan B was quoted at 83 bid/84 offered, while the term loan C saw levels of 86.5 bid/87.5 offered.

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