PanAmSat plans $1.01 billion note placement as part of refinancing

By Paul Deckelman

New York, July 14 - PanAmSat Corp. announced plans Wednesday to issue $1.01 billion of new senior unsecured notes due 2014, as part of a sweeping series of refinancing transactions by the Wilton, Conn.-based global provider of video, broadcasting and network distribution and delivery services.

However high yield syndicate sources at several investment banks that are expected to be involved in the issuance of the notes and with the concurrent arrangement of nearly $3 billion in new bank credit facilities said late in the session that nothing about a big new bond deal had been officially announced yet.

They suggested that details might emerge in the next day or two.

PanAmSat, which operates a fleet of 24 satellites that distributes television programming feeds and other information worldwide, said late Wednesday that in connection with the anticipated sale of the company to affiliates of Kohlberg Kravis Roberts & Co., The Carlyle Group and Providence Equity Partners, Inc., by 80.4% owner DirecTV Group Inc., it would begin certain related financing transactions, which would include the issuance of $1.01 billion of new senior unsecured debt and the launch of new senior secured credit facilities with $2.66 billion of term loans and a $250 million revolving credit facility. The new bank debt matures beginning in 2009.

The company also plans to repay some of its outstanding debt by tendering for any and all of its $800 million outstanding 8½% senior notes due 2012 and its $275 million of outstanding 6 1/8% notes due 2005.

PanAmSat said that after completion of the refinancing transactions, which are scheduled to close at the same time as the company's acquisition, it plans to have total debt of about $4.2 billion outstanding, including amounts undrawn under a revolving credit facility, and including some $275 million of existing senior secured notes that will remain outstanding.

The $2.91 billion credit facility is set to launch Thursday to retail investors.

The facility consists of a $250 million five-year revolver talked at Libor plus 250 basis points with a 50 basis points commitment fee, an $800 million five-year term loan A talked at Libor plus 250 basis points and a $1.86 billion seven-year term loan B talked at Libor plus 275 basis points.

The facility already launched to managing agents toward the end of June at which time 10 institutions were invited to participate in the meeting.

Citigroup and Credit Suisse First Boston are the joint lead arrangers and joint bookrunners on the bank deal. Bear Stearns, Lehman Brothers and Bank of America are co-documentation agents.

Standard & Poor's on Wednesday assigned a BB+ bank loan rating and a 1 recovery rating to the company's proposed senior secured credit facilities, and assigned a B+ rating to PanAmSat's proposed $1.01 billion of senior unsecured notes.

S&P said the ratings on the existing 6 3/8% senior secured notes and 6 7/8% senior secured debentures, which will remain outstanding following the financing transactions, were raised to BB+ from BB and a 1 recovery rating was assigned to that senior secured debt.

S&P also affirmed its other ratings on PanAmSat, including the BB corporate credit rating. The outlook is stable.

The agency said that under the company's new ownership, the ratings "will reflect financial risk from acquisition-related debt, a likelihood of potential acquisitions, which could limit near-term financial profile improvement and a degree of uncertainty about the company's financial policy under its new owners."

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