Newport breaks; Ford, GM react to sales results; Revlon, Valassis up on earnings; Kleen nets orders

By Sara Rosenberg

New York, May 1 - Newport Television LLC allocated and freed up its credit facility for trading, with the term loan quoted well above its original issue discount price.

In other trading news, Ford Motor Co.'s term loan was slightly stronger, while General Motors Corp.'s term loan softened, as both companies released U.S. April sales numbers, and Ford's were comparably better.

Also, Revlon Inc. and Valassis Communications Inc. both saw their term loans trade higher following the release of positive financial results.

Moving to the primary market, Kleen Energy Systems LLC's credit facility, which launched with a morning bank meeting, had already received a number of commitments by early afternoon.

Newport Television's credit facility hit the secondary market on Thursday, with the $515 million term loan quoted a couple of points higher than where it was originally issued to lenders, according to a market source.

The term loan freed up for trading at 92½ bid and then rose throughout the day to reach 94 5/8 bid, 95 3/8 offered, the source said.

Pricing on the term loan is Libor plus 500 basis points, with a 3% Libor floor, and the paper was sold to investors at an original issue discount of 91.

During syndication, the discount on the term loan widened from initial talk of 95.

Newport Television's $590 million senior secured credit facility also includes a $75 million revolver.

Wachovia, Goldman Sachs and UBS are the lead banks on the deal.

Proceeds from the already funded credit facility were used to help finance Providence Equity Partners Inc.'s acquisition of Clear Channel Communications Inc.'s television group for $1.012 billion. Providence's total equity commitment was about $260 million.

The sale included 56 television stations, including 18 digital multicast stations, located in 24 markets across the United States. Also included in the sale were the stations' associated web sites, the Television Operations Center and Inergize Digital Media, which manages the television group's online and wireless initiatives.

The acquisition was first announced in 2007 and before finally closing in mid-March, Providence tried to get out of the deal, but Clear Channel took the equity firm to court, and then Wachovia tried to back out of the debt commitment.

Over the course of the negotiations, the purchase price for Newport Television was lowered from the originally agreed upon price of $1.2 billion.

Ford trades up, GM down

Ford announced April U.S. sales on Thursday that fell a little short of people's expectations, but being that it was stronger than General Motors' sales results, the company's term loan traded higher, according to a trader.

And, General Motors' term loan traded lower as a result of its disappointing sales results, which were also released on Thursday, the trader said.

Ford's term loan was quoted at 91 7/8 bid, 92 3/8 offered, up from 91¾ bid, 92¼ offered. "[April] number's better than GM so it held in better," the trader remarked.

Meanwhile, General Motors' term loan was quoted at 93¾ bid, 94¼ offered, down from 94 bid, 94½ offered. "Numbers, I thought, were a bit awful," the trader added regarding General Motors' sales results.

For the month of April, Dearborn, Mich.-based automotive company Ford reported total sales of 200,727, down around 12% from the same period last year.

Ford said that lower sales to daily rental companies, which were down 32%, contributed to the sales decline, as well as a 36% drop in sales for sport utility vehicles and a 19% drop in sales of trucks. The decrease in sport utility vehicles and truck sales was attributed to higher gas prices.

As for Detroit-based automotive company General Motors, total sales for April were 260,922, down 16.3% from 311,687 from April 2007, and on an adjusted basis, total sales declined 22.7%.

General Motors' truck sales were 136,814, down 26.7% from 186,545 last year.

Revlon heads higher

Revlon's term loan gained ground on Thursday as the company's first-quarter numbers were a little better than projected, especially the net loss result, according to a trader.

The term loan was quoted at 94¾ bid, 95¾ offered, up from 94½ bid, 95½ offered, the trader said.

For the quarter, net loss was $2.5 million, or nil per diluted share, compared to a net loss of $35.2 million, or $0.07 per diluted share, in first quarter 2007. The net loss was smaller than the company indicated when it released preliminary results last month. At that time, it was estimated that the net loss would be about $5 million.

Net sales for the quarter were $320.4 million, compared to $328.6 million last year, operating income was $32.5 million, compared to $3 million, and adjusted EBITDA was $58.1 million, compared to $32.3 million. In its preliminary results, the company had expected net sales of around $320 million, operating income of around $30 million and adjusted EBITDA of around $55 million.

The company said that the improvement in operating income, net loss and adjusted EBITDA in the first quarter was due mainly to lower selling, general and administrative expenses, primarily due to the fact that the first quarter of 2007 included significant brand support expenses related to the launch of Revlon Colorist hair color.

"We have delivered improved margins and demonstrated our ability to control costs and improve cash usage. We have also demonstrated, with our 2008 new product launches, that we have reinvigorated our new product development process," said David Kennedy, president and chief executive officer, in a news release.

"We believe that strong new product development will result in sustainable sales growth, which given our margin structure, will be profitable. Our plan, therefore, is based on growing our sales and continued control of our costs. We believe these factors, along with other efficiencies, will lead to further margin expansion. All combined, we expect to generate sustainable, profitable sales growth and positive free cash flow," Kennedy added in the release.

Revlon is a New York-based cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and personal care products company.

Valassis up on earnings

Valassis' term loan moved higher during market hours, although trading activity was light, following the company's good first-quarter earnings announcement, according to a trader.

The term loan was quoted at 93¾ bid, 94¼ offered, up three quarters of a point from pre-earnings levels, the trader said.

For the quarter, the company reported revenues of $597.1 million, up 65.3% compared to $361.3 million for the first quarter of 2007, net earnings were $12.4 million, up 10.2% from $11.2 million last year, and earnings per share were $0.26, up from $0.23.

Also, adjusted EBITDA for the quarter was $63.2 million, up 47% from pro forma adjusted EBITDA of $43 million in the same period last year.

"We are pleased with our performance, the third consecutive quarter of exceptional results in light of the difficult market conditions. This positive momentum is evidence of the strong strategic rationale behind our shared mail acquisition, our integration game plan and our outstanding execution of this plan," said Alan F. Schultz, chairman, president and chief executive officer, in the release.

As was previously reported, in April, the company drew down its $160 million delayed-draw term loan, with proceeds earmarked for the repayment of senior secured convertible notes due 2033.

The company also expects to repay its 6 5/8% 2009 secured notes, which mature in January 2009, through a combination of cash, any excess proceeds from the delayed-draw term loan and borrowings on its revolver.

The revolver is currently priced at Libor plus 225 basis points, but based on certain ratio covenants, the company expects pricing to drop down to Libor plus 200 bps in the next six to 12 months.

"Once the 2009 notes are repaid, we will have no scheduled liquidity events until 2014, and we will strive to achieve investment grade status far before that time. We are comfortable with our current strong liquidity position, including $93.5 million in cash and cash equivalents at quarter end, a $120 million revolver and expected adjusted cash flow of approximately $103 million to $116 million in 2008," said Robert L. Recchia, executive vice president and chief financial officer, in the release.

Also on Thursday, the company reiterated the financial guidance for 2008, expecting increased adjusted EBITDA of between $260 million and $280 million and adjusted cash earnings per share of between $2.14 and $2.39.

Valassis is a Livonia, Mich.-based marketing services company.

Cash, LCDX inch up

The cash market in general was stronger by anywhere form a quarter to a half a point on Thursday, and LCDX 10 was better as well, according to a trader.

The index was quoted at 99.25 bid, 99.35 offered, up from Wednesday's closing levels of 99 bid, 99.10 offered, the trader said.

At some point during the session, the index traded as high as 99.40, but then some sellers stepped in, pushing levels slightly lower before the close, the trader added.

Kleen Energy catches interest

Kleen Energy's $1.015 billion credit facility already had "significant commitments" in the book by Thursday afternoon even though the deal had just officially launched with a bank meeting on Thursday morning, according to a market source.

The facility consists of a $250 million revolver, a $450 million construction term loan A (NA/NA/BBB-) and a $315 million construction term loan B (NA/NA/BBB-).

The revolver and the term loan A are both being talked at Libor plus 175 bps, and the term loan B is being talked at Libor plus 250 bps, with a 3.25% Libor floor.

Both the term loan A and the term loan B have fixed mandatory amortization schedules, the source said.

The term loan B has call protection of 103 for four years, then 102 in year five and 101 in year six.

The revolver and term loan A mature eight years following completion of the project and the term loan B matures 14 years following completion of the project.

Investors are being offered the revolver, the term loan A and the term loan B as a strip, and upfront fees will be based on commitment size, the source remarked.

Goldman Sachs is the bookrunner and joint lead arranger on the deal. Other joint lead arrangers include BNP Paribas, Dexia, HSH Nord Bank, ING, Natixis, Scotia Capital, Union Bank of California and WestLB.

Proceeds from the credit facility will be used to help fund the construction of a 620 megawatt power plant in Connecticut.

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