Harrah's up despite quarterly losses; Telesat gains with earnings; Francis Coppola wraps at initial terms

By Sara Rosenberg

New York, March 13 - Harrah's Entertainment Inc.'s term loan B debt was stronger on Friday even though the company reported losses in the fourth quarter and a downslide in EBITDA, as trading levels were helped by the overall stronger tone in the secondary market.

Also coming out with numbers during the session was Telesat Holdings Inc., whose term loan debt also gained some ground as losses mounted but EBITDA rose.

Over in primary happenings, syndication of Francis Coppola Winery's credit facility was a success with the deal getting done at the same terms that it has had since launching in February.

Harrah's up with market

Harrah's term loan B debt posted some gains during market hours as it was buoyed by the positive momentum in cash in general - which was better by around a half a point to a point - and unfazed by weak quarterly results, according to a trader.

The company's term loan B debt was quoted at 55 bid, 59 offered, up a point from 54 bid, 58 offered on Thursday, the trader said.

For the fourth quarter, Harrah's reported a loss from operations of $5.348 billion, down from income from operations of $145.8 million in the fourth quarter of 2007.

Loss from continuing operations for the quarter was $4.784 billion, down from a loss of $56.1 million in the previous year.

The fourth quarter loss reflects a $5.49 billion charge for impairment of goodwill and other intangible assets that are not subject to amortization.

Other factors impacting fourth-quarter results, according to Harrah's, included increased interest expense and turbulent economic conditions in the United States that have led to reduced customer visitation and spending at the company's casinos.

Total revenues for the quarter were $2.278 billion, down 13.3% from $2.628 billion in 2007.

Harrah's sees drop in EBITDA

Las Vegas-based casino company Harrah's also revealed in its earnings release that adjusted EBITDA for the quarter was $453.6 million, down 26.6% from $618.1 million in the previous fourth quarter period.

"While the faltering economy that's affecting virtually every business in America was the primary factor in the impairment charge and continued to impact our operating results during the fourth quarter, we ended the year with some significant accomplishments," said Gary Loveman, chairman, president and chief executive officer, in a news release.

"During the year, we reduced labor and marketing costs substantially and completed two of the largest capital projects in the company's history, putting the bulk of our planned capital-spending activities behind us.

"In December 2008, we completed an exchange offer that enabled us to reduce our overall principal debt from the 2008 third-quarter levels by approximately $1.16 billion, and we subsequently launched a second exchange offer this month in an effort to reduce the outstanding debt of Harrah's Operating Co. and extend the maturity of that debt," Loveman continued.

"As we move into a year likely to present continuing economic challenges, we are focused on the need to remain flexible in our staffing and marketing requirements and to be nimble in responding to changes in customer and competitor behavior," Loveman added in the release.

Telesat also rises

Telesat's term loan was another name that was stronger on Friday after revealing full-year results that showed an increase in net loss but also an increase in EBITDA, according to a trader.

The term loan was quoted at 84 bid, 88 offered, up from 83 bid, 87 offered on Thursday, the trader remarked.

For the year ended Dec. 31, the company reported a net loss of C$822.4 million, down from net earnings of C$126.5 in the prior year.

The net loss was attributed to non-cash losses arising from foreign exchange fluctuations and an impairment to intangible assets. The non-cash foreign exchange loss for the 12 months, related to the company's U.S. dollar denominated debt, was C$698 million. The company also recognized in the fourth quarter a one-time, non-cash loss of C$483 million related to the impairment of intangible assets.

Consolidated revenues for the 12-month period were C$711.4 million, down 6.3% from C$705.1 million in 2007.

Telesat EBITDA improves

Also on Friday, Telesat said that its adjusted EBITDA for the year was C$456 million, up 24% from C$362.2 million for the 12 months ended Dec. 31, 2007.

"Telesat achieved all of its key financial and operating objectives in 2008 and, as a result, I am very pleased with our performance for the year. On a pro forma basis compared to 2007, adjusted revenues are up over 6%, adjusted EBITDA grew by a substantial 24%, and our adjusted EBITDA margin improved significantly," said Dan Goldberg, president and chief executive officer, in a news release.

"As a result of our strong performance in 2008, our industry leading backlog, the growth already secured through our new satellite programs, and our deep discipline on the expense side of our business, Telesat is well positioned for 2009 and beyond," Goldberg added.

Telesat is an Ottawa, Can.-based fixed satellite services operator.

LCDX heads higher

In more trading news on Friday, the LCDX 10 index was better as equities were once again stronger, according to a trader.

By late in the day, the index was quoted at 73.85 bid, 74.10 offered, up from previous levels of 73.55 bid, 73.80 offered, the trader said.

Nasdaq closed up 5.4 points, or 0.38%, Dow Jones Industrial Average closed up 53.92 points, or 0.75%, S&P 500 closed up 5.81 points, or 0.77%, and NYSE closed up 28.92 points, or 0.62%.

Francis Coppola syndication gets done

Switching to the primary market, Francis Coppola Winery's $97.5 million credit facility was met with strong demand by commercial banks, which allowed for syndication on the transaction to wrap at original terms, according to market sources.

The facility is comprised of a $55 million revolver, a $27.5 million term loan A and a $15 million 18-month delayed-draw term loan.

As was initially proposed, all tranches ended up with pricing of Libor plus 375 basis points, and there is a 75 bps fee on undrawn funds.

Banks committed to the strip of tranches and received an upfront fee of 75 bps for $15 million orders and 100 bps for $20 million orders.

Francis Coppola closing soon

With syndication completed, Francis Coppola Winery's credit facility is anticipated to close and fund during the week of March 16, source remarked.

BMO Capital Markets is the lead bank on the deal.

Proceeds will be used to refinance existing debt and support capital expenditures.

The delayed-draw term loan will back capital expenditures, including a renovation project at the company's Geyserville, Calif., winery.

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