Charter rises with numbers; Idearc inches up as investors digest possible bankruptcy; Dana holds steady

By Sara Rosenberg

New York, March 16 - Charter Communications Inc.'s old and new term loan debt was stronger on Monday after the company announced quarterly results and that it is skipping a bond interest payment.

Also in trading, Idearc Inc.'s term loan was a little better as it appeared as if the market had enough time to come to terms with last week's news of a potential Chapter 11 filing, and Dana Holding Corp.'s term loan held firm following its fourth-quarter numbers.

Charter gains ground

Charter's term loans headed higher during the trading session following the company's release of fourth-quarter earnings and news that a bond interest payment will be skipped, according to a trader.

The old term loan was quoted at 77 bid, 78 offered, up from Friday's levels of 76¾ bid, 77¾ offered, and the new term loan was quoted at 89¼ bid, 90¼ offered, up from 88½ bid, 89½ offered, the trader said.

"Numbers were okay. Skipped bond coupon today maybe more cash for the banks," the trader remarked.

For the three months ended Dec. 31, Charter had a net loss of $1.495 billion, or $3.96 per common share, compared to a net loss of $468 million, or $1.27 per share, in the previous year.

The company said that the increase in net loss resulted primarily from an impairment charge, partially offset by the increase in sales of our bundled services and improved cost efficiencies.

Charter EBITDA, revenue improves

Also on Monday, Charter said that its pro forma adjusted EBITDA totaled $619 million for the fourth quarter, an increase of 10.1% compared to the pro forma results for the year-ago quarter of $562 million.

Actual adjusted EBITDA for the quarter was $620 million, an increase of 9.7% versus $565 million in 2007.

Fourth quarter pro forma revenues were $1.653 billion, an increase of 7% from $1.545 billion over pro forma 2007 results.

Actual revenues for the quarter were $1.656 billion, compared to $1.553 billion.

Charter missing interest payment

As was previously reported, Charter recently reached an agreement-in-principle with an ad hoc committee of debt holders on the terms of a financial restructuring to reduce debt by about $8 billion, which is expected to be implemented through a Chapter 11 filing to be initiated on or before April 1.

Consequently, one of Charter's subsidiaries, CCH II LLC, did not make its scheduled interest payment on Monday on certain of its outstanding senior notes.

The governing indenture for the notes permits a 30-day grace period, and in accordance with its agreement with bondholders, Charter expects to make its bankruptcy filing prior to the expiration of the grace period.

The company had $21.666 billion in total debt at Dec. 31.

Charter is a St. Louis-based broadband communications company and cable operator.

Idearc finds some footing

Idearc's term loan was a little stronger on Monday now that the investors have had a few days to digest the company's recent announcement that it is considering filing for Chapter 11, according to a trader.

The term loan was quoted at 30½ bid, 31½ offered, up from Friday's levels that were in the area of a 29½ to 30 bid and a 30½ to 31 offer, the trader said.

Last Thursday, Idearc said that it is evaluating various options for restructuring its capitalization and debt service obligations as a result of possible non-compliance with the leverage ratio sometime in the first half of 2009, and a default resulting from auditors issuing a going concern opinion in its Dec. 31 financial statements.

Some alternatives being considered by the company include a pre-packaged or similar plan of reorganization under bankruptcy laws.

The company went on to say that even if a pre-packaged reorganization can not be agreed upon, it will likely file for Chapter 11 anyway.

Idearc shareholder objects to bankruptcy

The largest shareholder of Idearc, Jack Corwin, sent a letter to each member of the board of directors on Monday urging that bankruptcy could be avoided by pursuing other readily available alternatives, according to a news release.

According to Corwin, Idearc has sufficient cash on hand - $510 million at year-end 2008 - to pay down enough of its outstanding debt to avoid the need for a bankruptcy, and failure to do so would be a breach of the board's fiduciary duty to its shareholders.

"Where alternatives may exist for companies to avoid bankruptcy it is highly unusual for a corporation to choose the route of bankruptcy at the risk of damaging their business and harming their employees and other stakeholders," Corwin added the release.

Idearc is a Dallas-based provider of yellow and white page directories and related advertising products.

Dana unfazed by results

Dana's term loan was unchanged on Monday at 28 bid, 32 offered after the company came out with quarterly numbers, according to a trader.

For the fourth quarter, Dana reported a net loss of $256 million, compared to a net loss of $257 million in the prior year; loss from continuing operations of $256 million versus $228 million; and a net loss from continuing operations of $2.64 per share, compared to a loss of $1.52 per share.

Net sales for the quarter were $1.521 billion, down from $2.157 billion in the three months ended Dec. 31, 2007.

"We continue to respond to difficult market conditions through aggressive cost-reduction and efficiency actions, comprehensive operational restructuring, and being responsive to our customers," said John Devine, chairman and chief executive officer, in a news release.

"These are unprecedented times that make any projections uncertain. We believe we are taking the difficult actions necessary to survive in the current environment and compete over the long term. There can be no assurances, however, if the global economy deteriorates substantially beyond our planning assumptions.

"We expect 2009 to be even more challenging than 2008, but we believe Dana is prepared with plans to continue re-sizing our operations, improve operational performance and margins, and maintain adequate liquidity and earnings," Devine added.

Dana EBITDA declines

In its earnings release, Dana revealed that fourth quarter EBITDA dropped to a negative $3 million from a positive $112 million for the same period in 2007, driven by the impact of lower vehicle production.

Free cash flow was a negative $50 million for the quarter, compared to $83 million for the prior year period, primarily due to lower earnings for the quarter.

At year end, the company had cash balances of $777 million, total liquidity of $866 million and net debt of $474 million.

Dana is a Toledo, Ohio-based supplier of axles, driveshafts and structural, sealing, and thermal-management products, as well as genuine service parts.

iStar closes

iStar Financial Inc. closed on its new $1 billion credit facility due June 26, 2012 that is priced at Libor plus 250 basis points, according to a news release.

Proceeds are available for general corporate purposes.

Lenders from the company's existing bank group participated in the new deal.

In addition, the company restructured its revolving credit facility, giving lenders a second-lien on the same collateral pool securing the new loan, so that it is no longer unsecured.

The revolver is priced at Libor plus 150 bps.

Covenants under the facilities include minimum consolidated tangible net worth of $1.5 billion, ratio of total debt to net worth of 5:00 to 1:00, ratio of EBITDA to fixed charges of 1:00 to 1:00, and ratio of unencumbered assets to unsecured debt of 1:20 to 1:00.

iStar is a New York-based finance company focused on the commercial real estate industry.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.