Pegasus Satellite Communications announces $250 million drive-by note offering

By Paul A. Harris

St. Louis, Mo., Dec. 10 - Pegasus Satellite Communications Inc. will price a drive-by offering of $250 million of senior notes late Wednesday or early Thursday, a syndicate source told Prospect News Monday.

The nine-year notes (B3/CCC+) will mature Jan. 15, 2010 and will be non-callable for four years.

Bookrunner is CIBC World Markets, with Bear Stearns & Co. as joint lead and co-managers Lehman Brothers and Fleet Securities.

The Rule 144A notes contain a three-year equity clawback for 35%, the source said.

The Bala Cynwyd, Pa.-based DBS and cable TV company, a subsidiary of Pegasus Communications Corp., also operates 11 TV stations affiliated with the Fox, UPN, WB networks.

The syndicate source said that the company will use the proceeds of the new bonds to retire Pegasus Satellite's interim credit facility, to redeem Pegasus Media & Communications, Inc.'s $85 million of 12½% senior subordinated notes due 2005, to repay Pegasus Media & Communications bank debt and for general corporate purposes.

In a press release Monday the company provided new guidance, forecasting DBS revenue for the fourth quarter at $215 million ($834 million for 2001), fourth quarter DBS pre-marketing cash flow as $60 million ($235 million for 2001) fourth quarter SAC $23 million ($154 million for 2001), fourth quarter DBS EBITDA $37 million ($81 million for 2001) fourth quarter net subscriber additions of 35,000 (128,000 for 2001), and fourth quarter SAC per gross addition: $225 million ($370 million for 2001).

The company also said the credit agreement of its Pegasus Media & Communications unit has been amended, extending the date to exercise an option to obtain up to $200 million in additional term loans from December 31, 2001 to June 30, 2002.

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