Pegasus loans, bonds up on court result; Salton plummets again

By Paul Deckelman and Sara Rosenberg

New York, May 13 - Pegasus Media & Communications Inc.'s bank debt and bonds headed higher on news regarding a court decision on the DirecTV case that was viewed by the market as favorable to the Bala Cynwyd, Pa.-based diversified media and communications company.

A trader said that Pegasus' term loan D was quoted at 102 bid, 103 offered, up about half a point on the day, although Pegasus Satellite Communications Inc.'s bank debt was unchanged at 98.5 bid, 99.5 offered.

In the bond-trading pits, Pegasus' 12 3/8% notes due 2006 and its 12½% notes due 2007 were seen having firmed to 69 bid from prior levels at 65, although a market source characterized the company's bonds overall as "mixed"; he saw its 9 5/8% notes due 2005 down a point at 68 bid, while Pegasus Satellite's 13½% notes due 2007 dropped to 50 bid from 54 previously.

At another desk, a trader saw the 12 3/8s having moved as high as 70 bid from Wednesday's 65 bid, 67 offered, although he saw them come off that high to go home at 68 bid, 70 offered.

On Thursday, parent company Pegasus Communications Corp. announced that the website of the U.S. District Court for the Central District of California said that Judge Lourdes Baird has dismissed DirecTV's claim against Pegasus Satellite - DirecTV had been contending that that Pegasus' right to exclusive distribution of DirecTV services will expire when DirecTV's first satellite, DBS-1, is removed from service.

Pegasus said that it believes that the term of its right to exclusive distribution is tied to satellites expected to continue in service until 2016 or beyond.

Pegasus furthermore said that according to the court website, Judge Baird has dismissed Pegasus' claims against DirecTV, terminating further proceedings between the two parties.

Pegasus distributes DirecTV programming to customers in smaller sized and rural markets throughout the country.

Salton plunge continues

Elsewhere, "the name we were seeing [Thursday] was Salton [Inc.]," a trader at a distressed-debt shop said.

He saw the company's 12¼% notes due 2008 as having fallen as low as 47 bid, 50 offered from prior levels in the mid 50s, with Salton's 10¾% notes due 2005 about three or four points better than the 2008 bonds.

"That was the big thing" the trader said, although he said it didn't look like there were any "real decent markets" in the credit.

Salton "got smeared" in the words of another trader for a third straight day; the Lake Forest Ill.-based maker of George Foreman brand hamburger grills and other small appliances had reported a considerably wider quarterly loss from a year ago earlier this week and said it was in talks with its lenders to amend its credit agreements after covenant violations.

The bonds - which began the week not too far below par - continued to tumble Thursday.

At another desk, its 12¼% notes due 2008 heard having dipped into the lower 40s before closing around 50 bid, still down five points on the session, while its 10¾% notes due 2005 "continued to get clobbered," one observer said, falling to 52 bid from 61 on Wednesday.

A trader, who likewise saw the Salton bonds lower, said that "there were rumors in the market that there might be a bank bailout of the company - but it didn't materialize." Salton instead announced that it had retained Ernst & Young Corporate Finance LLC to help it negotiate with its lenders as it tries to restructure its operations.

Leap loans lower

Elsewhere in distressed-debt land, Leap Wireless International Inc.'s bank debt headed lower, with one trader quoting the paper at 102.25 bid, 105.25 offered, versus opening levels of 106 bid, 108 offered and a second trader quoting the paper at 104.25 bid, 105.5 offered, with trades taking place as low as 104 during market hours.

"It might just be down with the equity markets," the first trader said.

"[It's] really technical," the second trader said. "[I] didn't see anything in the 10-K [that was filed Thursday with the Securities and Exchange Commission] that would have driven it this low."

The San Diego-based wireless communications carrier's junk bonds meantime continued to languish at the same low very low levels they've held for some time, with its zero-coupon notes due 2010 at 13.5 bid and its 12½% notes due 2010 at 16.5 bid, both unchanged on the session.

There was continued weakness in the energy sector on Thursday with all energy names said to be "off a touch", according to a bank loan trader.

For example, Calpine Generating Co. LLC's second-lien term loan was quoted down about a point at 89.5 bid, 90.5 offered, the trader said.

CalGen is a wholly owned subsidiary of Calpine Corp., a San Jose, Calif. power company; Calpine's bonds meantime fell in tandem with its bank debt, its 7¾% notes due 2009 dipping to 58 bid from 60.5 on Wednesday, and its 8 5/8% notes due 2010 a point-and-a-half lower, at 59 bid.

A trader saw Calpine's 7 5/8% notes due 2006 two points easier at 71.

Houston-based energy operator Reliant Energy Inc.'s bank debt was down just a touch, with the term loan quoted at 97.375 bid, 97.875 offered, versus Wednesday's trading level of 97.75 according to a different bank loan trader.

Distressed names little moved on the session included Levi Strauss & Co., whose 7% notes due 2006 were seen wearing an 88.5 bid, unchanged, while Trico Marine Services' bonds were anchored around the 43 bid level.

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