Revlon bonds softer after advance; RCN firms up

By Paul Deckelman and Sara Rosenberg

New York, Feb. 19 - Revlon Inc. bonds were heard to have softened by several points Thursday, coming off the highs they had hit in the several sessions that followed the New York-based cosmetics maker's unveiling of its massive debt-for-stock swap. RCN Corp. bonds were better, as investors looked hopefully at the Princeton, N.J.-based telecommunications operator's future prospects following an expected prepackaged bankruptcy reorganization.

Revlon "softened up a couple of points," a trader said, quoting the company's 8 1/8% notes due 2006 and 9% notes due 2006 as having fallen back to 107.15 bid, 108.5 offered from their prior levels around 110.5 bid, 111.5 offered.

"They're down a couple [of points] on the session, but still up five points on the week - and it's only Thursday, he said.

He noted that those bonds had been at 103.5 bid on Tuesday morning, when the market reopened after the Presidents' Day Holiday weekend. That in turn, was well above the levels which those bonds had held before Revlon's announcement last week that it would swap new class A common shares for $780 million of bank and bond debt - some held by its corporate parent, billionaire Ronald Perelman's MacAndrews & Forbes company, some held by large institutional investor Fidelity Research & Management, and some held by other investors. Revlon is offering to exchange the 8 1/8% and 9% notes for 400 shares of its stock per $1,000 principal amount of the bonds tendered for exchange and accepted by the company for purchase, and will exchange 300 shares for Revlon's 8 5/8% notes due 2008. The stock option works out to a better price than the bonds currently trade at now.

RCN rises on Chapter 11 expectation

Elsewhere, a market source said that RCN Corp.'s 11% notes due 2008 pushed up to 56 bid from 52 previously; he cited the impact of the company's statement earlier in the week that it expects to file a prepackaged Chapter 11 case in order to implement a planned restructuring of some $1.7 billion of debt.

The company is currently still in talks with potential lenders.

Among bank debt investors, Charter Communications Inc.'s loan paper was seen a touch softer, with the term loan A quoted at 96.75 bid, 97.25 offered and the term loan B quoted at 97.75 bid, 98.25 offered.

But according to one trader, the activity and the little dip had nothing to do with the company's release of earnings results. "People didn't really pay attention to earnings. They've been buying on market technicals not news," the trader explained.

The St. Louis-based cable company reported fourth quarter results that included income from operations of $138 million, up from $43 million in the same period last year, revenues of $1.217 billion, up 2% from the fourth quarter of 2002, adjusted EBITDA of $484 million, up 6% from last year's fourth quarter.

For the full year revenues increased 6% to $4.819 billion, adjusted EBITDA grew 7% to $1.927 billion, operating costs and expenses rose $122 million, or 4%, income from operations increased by $4.838 billion to $516 million, net loss applicable to common stock declined to $242 million from $2.517 billion and net loss per common share declined to 82 cents, from $8.55.

"2003 was a year of transition as we reorganized our operations, made significant changes in our management team, and completed call center consolidations and billing conversions. Even in this transition year, we accomplished much, which we believe positions the Company to improve sales, customer satisfaction and operating performance in 2004. We made significant progress in improving our financial position and we continue to evaluate opportunities to reduce intermediate term debt maturities and leverage," said Carl Vogel, president and chief executive officer, in a company news release.

Charter's benchmark 8 5/8% notes due 2009 were seen a point easier at 84.5 bid, while its 8¼% notes were half a point down at 93.

At another desk, however, a trader saw Charter's debt largely unchanged, quoting its 10% notes due 2009 steady at 89.25 bid, 90.25 offered and its 10¾% notes at 90.5 bid, 91.5 offered.

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