Unfolding Adelphia story mesmerizes market; Trinity oversubscribed

By Sara Rosenberg

New York, May 29 - There is still a lot of focus on Adelphia Communications Corp. in the secondary bank loan market as the company's saga continues to grow on a daily basis. Only a couple of small trades took place on Adelphia's paper Wednesday and prices fluctuated "sideways" throughout the day, according to a trader.

The Adelphia Century loan was trading in the high 80s and the Olympus loan was trading in the low 90s, the trader said.

Meanwhile the Coudersport, Pa. cable company's stock continued its downward momentum, dropping by 42.01% or $0.8402, at market close. The stock had a high of $2 and a low of $1.06. The last sale was at $1.1598.

The performance of the company's stock will not directly affect the bank loan paper's performance, according to the trader.

"There's a huge amount of cushion because of the bonds and the convertibles," the trader explained. "The banks are at the top of the capital structure. They'll get paid back first so (bank loans) will be less volatile than equities."

However, an indirect impact will eventually be felt, he said. The poor equity performance implies uncertainty and "by implication the debt will go down," the trader added.

Adelphia's activity on Wednesday was in reaction to media reports that the company may run out of money in the near future and that the company is in talks to sell certain assets to Charter Communications Corp.

Additional recent news plaguing the company's performance includes investigations into the use of funds by the Rigas family and the resignation of the entire Rigas family from management of the company.

Elsewhere, Trinity Industries Inc. said its $400 million credit facility is oversubscribed. The new loan is being led by JPMorgan and will include a combination of banks and institutional investors. The Dallas, Tex. industrial company's loan consists of a $250 million three-year revolver and a $150 million five-year term loan and is expected to close in June. Proceeds will be used for general corporate purposes.

"We are extremely pleased with these commitments for our general corporate financing needs and greatly appreciate the support of JPMorgan in arranging this," said John Adams, executive vice president, in a news release. "In addition, we have also received a commitment from Credit Suisse First Boston on a separate railcar lease fleet financing facility which is scheduled to close by mid July. By separating our railcar lease financing requirements from our general corporate financing needs, our leasing company will be better able to pursue leasing opportunities without relying on our general corporate credit facility."

Some names to keep on eye out for include Vertex Aerospace LLC, which is anticipating entering into a new bank loan, and United Defense Industries Inc., which is expecting to add $300 million to its existing bank loan.

Vertex Aerospace LLC is hoping to obtain a new credit facility, which would be guaranteed by Vertex Aerospace Inc., according to a filing with the Securities and Exchange Commission. The new loan is anticipated to close concurrently with the completion of the company's initial public offering. Credit Suisse First Boston, Goldman Sachs & Co., Lehman Brothers and CIBC World Markets are the lead banks for the IPO. Vertex is a Madison, Miss. provider of aerospace and other technical services to the U.S. Department of Defense and other government agencies.

United Defense Industries Inc. is anticipating amending its current credit facility by the end of June. The amendment would allow for $300 million in additional available borrowings to help fund the acquisition of U.S. Marine Repair Inc., according to treasurer Mark Manion. Official notification to the banks is anticipated to occur within the next two weeks. Deutsche Bank and Lehman Brothers are expected to be the lead banks for the deal. United Defense is an Arlington, Va. provider of combat vehicles, artillery, naval guns, missile launchers and munitions.

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