PanAmSat heads higher as pay down seems less certain; Delphi lower on continued negotiation concerns

By Sara Rosenberg

New York, Aug. 30 - PanAmSat Holding Corp.'s bank debt headed higher, moving into the upper-101 region as uncertainty over whether or not the company will in fact be taking out its existing deal when the merger with Intelsat Ltd. is completed overshadowed the market.

Meanwhile, Delphi Corp.'s bank debt continued to feel weaker on Tuesday as investors are still worried over the fate of negotiations between former corporate parent General Motors Corp. and the United Auto Workers union.

PanAmSat's bank debt was up about a point during Tuesday's session as investors are toying with the notion that the company may leave its credit facility in place despite the pending merger with Intelsat.

The bank debt was quoted at 101½ bid, 101¾ offered, according to a trader, up from Monday's levels of par ½ bid, 101 1/8 offered.

On Monday, Intelsat announced that it would be purchasing PanAmSat in a $3.2 billion transaction, plus refinance or assume about $3.2 billion in PanAmSat debt.

Following the news, PanAmSat's bank debt gave up about three eighths to a half of a point as market players were anticipating a pay down in the future. However, levels never fell to the typical par context that is seen on an expected repayment because the buyout could take anywhere from six to 12 months to close.

But, all that changed on Tuesday as speculation that the PanAmSat credit facility would not be refinanced sauntered into the market, pushing levels even higher than they were before the acquisition was announced.

"I guess it must have been out that they're going to leave it. There's a lot of uncertainty there so people decided that's where it's going to trade," the trader explained.

In a commitment letter filed with the Securities and Exchange Commission Tuesday, Pembroke, Bermuda-based Intelsat revealed that, although loan commitments have been received, they will only be used if amendments are not obtained under the existing PanAmSat and the existing Intelsat credit facilities.

These new loan commitments are being provided at two tiers - the PanAmSat operating company level and the Intelsat operating company level.

The PanAmSat opco credit facility commitment consists of a $355.95 million five-year term loan A, a $1.6309 billion seven-year term loan B and a $250 million six-year revolver.

Revolver and term loan A interest rates are based on a four-tier grid that can range from Libor plus 175 to 250 basis points, depending on leverage, and the commitment fee can range from 25 to 50 bps.

Term loan B pricing is Libor plus 225 bps with step down to Libor plus 200 bps if leverage is less than 4.5:1.0.

The Intelsat opco credit facility consists of a $344.5 million seven-year term loan B and a $300 million six-year revolver.

Both the revolver and term loan B will carry an interest rate of Libor plus 175 bps if leverage is greater than 3.5:1.0 and Libor plus 150 bps if leverage is less than or equal to 3.5:1.0. The revolver has a commitment fee of 37.5 bps.

Citigroup, Credit Suisse First Boston, Deutsche and Lehman are joint lead arrangers and joint bookrunners on the credit facilities, with Citigroup the administrative agent and CSFB the syndication agent.

There are also plans to issue anywhere from around $3.27 billion to around $4.23 billion of bonds between PanAmSat opco, PanAmSat holdco, Intelsat opco and Intelsat holdco to fund the acquisition as well.

Lastly, to help finance the transaction, PanAmSat plans on providing $62.2 million in funds from cash on hand and Intelsat plans on providing $95.2 million in funds from cash on hand.

The combined satellite company is expected to have pro forma annual revenues of more than $1.9 billion and to maintain significant free cash flow from operations, providing significant resources for capital expenditures and debt service.

Completion of the buyout is subject to PanAmSat shareholder approval, customary closing conditions and regulatory clearances, including the appropriate U.S. government antitrust authorities and the Federal Communications Commission.

Delphi skids lower

Delphi's term loan was off by about an eighth of a point during Tuesday's session as market participants continued to fret over negotiations between the UAW and GM that, if successfully resolved, could keep the troubled company out of bankruptcy.

The term loan was quoted at 102 3/8 bid, 102¾ offered and the revolver was quoted basically unchanged to slightly lower on the offer side at 95 bid, 95¼ to ½ offered, traders said.

"It was definitely the focus with the GM analyst meeting going on today," one trader remarked.

GM held a meeting for securities analysts and investors at which it basically reiterated that GMAC and the company's global operations, other than in North America, remain on track to meet or exceed 2005 targets.

As many had expected but hoped otherwise, GM did not offer much in the way of an update on the Delphi situation during its meeting.

Delphi is looking to GM for some sort of financial bailout and has warned that it could be forced into Chapter 11 if it does not get concessions from the union and help from GM.

People were optimistic about GM coming to Delphi's rescue until multiple media reports emerged this weekend saying that UAW wouldn't support all the concessions being sought by the companies -causing bank debt levels to drop by about half a point on Monday and by this eighth on Tuesday.

Delphi is a Troy, Mich., supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology to vehicle manufacturers.

© 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.