DirecTV breaks; Cumulus slides as buyout falls through; Charter, Calpine, Targa move with numbers

By Sara Rosenberg

New York, May 12 - DirecTV Holdings LLC firmed pricing on its term loan C and freed the deal up for trading, with levels quoted above its original issue discount price, and Cumulus Media Inc. saw its term loan weaken on news that the company's buyout agreement has been canceled, eliminating an already approved change-of-control amendment.

In other trading news, Charter Communications Inc., Calpine Corp. and Targa Resources Partners LP all saw some movement in their debt levels after earnings came out, and the market as a whole felt some pressure in the latter part of the day as news emerged that the buyout of Clear Channel Communications Inc. may actually happen.

DirecTV finalized pricing on its $1 billion five-year incremental term loan C (Baa3/BBB-/BB+) and then proceeded to break the loan for trading, according to sources.

Pricing on the loan firmed at Libor plus 225 basis points, the high end of original guidance of Libor plus 200 bps to 225 bps, sources said.

In addition, the original issue discount ended up at 99, the wide end of the original 99 to 99¼ talk, sources continued.

As was the case since launch, the loan has a 3% Libor floor.

The term loan C was seen quoted at 99¼ bid, 99½ offered after it freed up for trading on Monday, one trader remarked, and a second trader said that the debt was ending the day a little stronger on the bid side, with levels of 99¼ bid plus, 99½ offered.

Bank of America and JPMorgan are the lead banks on the deal.

The loan was launched with a conference call last Wednesday and lenders were only given until Friday to commit to the deal.

Proceeds from the term loan, along with $1.35 billion of eight-year senior notes due 2016, will be used for general corporate purposes, including to pay a dividend to its parent, DirecTV Group, who can then use the funds to purchase stock under its share repurchase program.

DirecTV is an El Segundo, Calif., provider of digital multichannel television entertainment.

Cumulus falls with termination of buyout

Cumulus Media's term loan dropped in trading on Monday as investors found out that an already agreed upon change-of-control amendment will no longer be taking effect as a result of the company's buyout agreement being terminated, according to a trader.

The term loan was quoted at 86 bid, 88 offered, down from previous levels of 88 bid, 89 offered, the trader said, adding that it was very quiet in the name.

Under the now obsolete amendment, which was okayed back in March, lenders had agreed to let the credit facility stay in place following the company's proposed buyout so that new debt financing didn't have to be raised.

As part of the amendment, lenders were going to get a 75 bps increase in pricing and a 200 bps amendment fee.

Cumulus Media said that the cancellation of the buyout agreement was a result of the investor group being unable to agree on terms on which they could proceed with the transaction, even after possible alternatives were explored.

The company was going to be acquired by an investor group led by Lew Dickey, the company's chairman, president and chief executive officer, and Merrill Lynch Global Private Equity for $11.75 in cash per share.

As a result of the termination of the agreement, the investor group has agreed to promptly pay the company a termination fee of $15 million.

Cumulus Media is an Atlanta-based radio company.

Charter rises with earnings

Charter's "new" term loan was stronger during the trading session as the company released first-quarter financials, according to a trader.

The term loan was quoted at 99¼ bid, par offered, up from 98¾ bid, 99¾ offered on Friday, the trader said.

The company's "old" term loan was unchanged at 88½ bid, 89½ offered, the trader continued, adding that the "new" is more liquid and trades more, therefore it was more affected by the earnings news.

For the quarter, Charter reported total revenues of $1.564 billion, up 9.8% from $1.425 billion in the same period last year on an actual basis, and up 10.5% from $1.416 billion on a pro forma basis, primarily driven by increases in telephone and high-speed Internet revenues.

First quarter adjusted EBITDA was $545 million, up 9.9% from $496 million in the first quarter of 2007 on an actual basis, and up 10.5% from $493 million on a pro forma basis.

"Our pro forma double-digit revenue and adjusted EBITDA growth for the first quarter was driven by strong RGU additions and ARPU growth," said Neil Smit, president and chief executive officer, in a news release.

"Our continued strong performance into 2008 reflects our focus and execution as we pursue the right strategies for Charter, including driving bundled penetration and targeting our operating and capital investments toward the projects with the highest expected returns."

On a pro forma basis, the company added a net 302,300 revenue generating units during the first quarter and average revenue per basic customer increased 13.4% year-over-year to $100.14.

Net cash flows from operating activities for the first quarter of 2008 were $204 million, compared to a pro forma $263 million last year and an actual of $266 million.

On an actual basis, income from operations was $205 million in the first quarter, compared to $156 million last year, and net loss was $358 million, or $0.97 per common share, compared to a net loss of $381 million, or $1.04, last year.

As of March 31, Charter had $20.575 billion of long-term debt and $467 million of cash on hand.

The company said that it expects that cash on hand, cash flows from operating activities, and amounts available under its credit facility will be adequate to meet its projected cash needs through 2009 and will not be sufficient to fund projected cash needs in 2010, primarily as a result of the CCH II, LLC $2.2 billion of senior notes maturing in September 2010, and thereafter.

Charter is a St. Louis-based broadband communications company.

Calpine dips

Calpine's term loan fell off a little in trading after the company announced first-quarter results, according to a trader.

The term loan was quoted at 92¾ bid, 93¼ offered, down from Friday's levels of 93¼ bid, 93¾ offered, the trader said.

For the quarter, the company reported operating revenues of $1.951 billion, up 17% from 1.662 billion last year, net loss of $214 million, compared to a net loss of $459 million last year, and adjusted EBITDA of $294 million, up 18% from $250 million last year.

Gross profit for the quarter decreased by $97 million to a loss of $29 million, compared to the same period in 2007. The change in gross profit is due primarily to a $92 million unfavorable period-to-period movement in mark-to-market activity recorded in both operating revenues and in fuel and purchased energy expense.

"I am very pleased to announce our first-quarter results showing solid performance in our core operations. In this transition quarter, during which we emerged from bankruptcy, we showed substantial improvement in consolidated commodity margin and adjusted EBITDA, as compared to the same period during 2007," said Robert P. May, chief executive officer, in a news release.

Calpine is a San Jose, Calif.-based power company.

Targa gains ground

Also reporting numbers on Monday was Targa Resources, and in connection with its results, the company's term loan headed higher, according to a trader.

The term loan was quoted at 97¼ bid, 98¼ offered, up from 96¾ bid, 97¾ offered, the trader said.

For the quarter, Targa announced revenues of $512.1 million, up from $348.8 million in the first quarter of 2007, and net income of $24.9 million, or $0.50 per common and subordinated unit on a fully diluted basis, compared to a net loss of $10.6 million last year.

Income from operations for the quarter was $33.9 million, up from $20.8 million last year and adjusted EBITDA was $52.6 million, up from $39.1 million.

Targa is a Houston-based natural gas and natural gas liquids company.

Cash market softens on Clear Channel buzz

The cash market started Monday feeling pretty much unchanged, but as the day progressed, things started to feel weaker, primarily because of chatter regarding the Clear Channel buyout by Thomas H. Lee Partners, LP and Bain Capital Partners, LLC, according to a trader.

Early on in the session, talk was that the banks on Clear Channel's buyout financing may be close to reaching a settlement with the private equity firms, although at a lower purchase price of $36 a share, down from $39.20 per share, the trader said.

Then, in the afternoon, Clear Channel, a San Antonio media and entertainment company, confirmed that the court proceeding pending in San Antonio, Texas initiated by it against the banks was postponed until Tuesday to allow the parties to continue settlement discussions that were recently initiated.

Under the original agreement, Clear Channel was going to get a $19.525 billion credit facility via Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, RBS and Wachovia, consisting of a $1 billion receivables-backed revolver, a $2 billion senior secured revolver, a $1.25 billion senior secured term loan A, a $12.65 billion senior secured term loan B, a $625 million senior secured delayed-draw term loan and an up to $2 billion senior secured term loan C that would be reduced by proceeds from asset sales prior to closing.

"Excess supply has sort of dragged the market," the trader said regarding the cash market in general. "Unchanged this morning and then dragged down through the day. Cash is down about an eighth to a quarter."

"Some of the bigger LBO names were affected by this," the trader continued.

For example, Harrah's Entertainment Inc., a Las Vegas-based casino company, saw its term loan B-2 drop to 93 5/8 bid, 94 1/8 offered from 93 7/8 bid, 94 3/8 offered, and its term loan B-3 drop to 93¾ bid, 94¼ offered from 94 bid, 94½ offered, the trader said.

Also, Alltel Communications Inc., a Little Rock, Ark., provider of wireless voice and data communications services, saw its term loan B-2 drop to 90½ bid, 91 offered from 90 5/8 bid, 91 1/8 offered, the trader added.

Auto slide progresses

Autos in general, which have been taking a hit for a couple of session now, were also lower on Monday with the rest of the market with Delphi Corp., Ford Motor Co. and General Motors Corp. all seeing levels fall off, according to a trader.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, saw its second-lien DIP term loan quoted at 98 bid, 98¾ offered, down from 98¼ bid, 99¼ offered, the trader said.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 89 bid, 89½ offered, down from 89½ bid, 90 offered, the trader continued.

And, General Motors, a Detroit-based automotive company, saw its term loan quoted at 90¼ bid, 91 offered, down from 90½ bid, 91½ offered, the trader added.

LCDX rises

LCDX 10, unlike the cash market, was actually better during Monday's trading hours, according to a trader.

The index went out around 98.55 bid, 98.70 offered, up from 98.35 bid, 98.50 offered, the trader said.

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