Qwest improves by a quarter point as financial restatement saga nears completion

By Sara Rosenberg

New York, Sept. 3 - Qwest Communications International Inc.'s bank debt moved up by about a quarter of a point across the board on Wednesday, as investors were moderately impressed with news that the company is close to completing the restatement of previous financial results.

The term loan A was quoted at 101¼ bid, 102¼ offered, the revolver was quoted at 98 bid, 99 offered and the term loan B was quoted at 96½ bid, 97½ offered, according to a trader.

Early morning Wednesday, Qwest revealed that it has essentially completed its restatement of its 2000 and 2001 financial statements. "The company and its independent auditor are in the process of completing their work, drafting and reviewing the company's form 10-K filing and performing due diligence procedures. In addition, the company would expect to have discussions with the Securities and Exchange Commission in the course of finalizing its financial statements," a news release said.

The Denver communications company also announced second quarter results that included a net loss of $91 million or $0.05 per share, compared to a net profit of $128 million or $0.07 cents per share in the first quarter.

Revenue was $3.6 billion, a 0.8% decrease from the first quarter. The decline was primarily attributed to competitive pressures in local voice services.

However, despite these seemingly negative numbers, management remained optimistic about the company's future and its ability to meet its 2003 financial objectives.

"During the quarter we made significant progress on our plans to position the company for solid, long-term profitable growth, and we now have the elements in place to offer businesses and consumers a wide-array of communications bundles," said Richard C. Notebaert, chairman and chief executive officer, in the release.

"Our disciplined approach to the business has us on track to meet our 2003 financial objectives," said Oren G. Shaffer, vice chairman and chief financial officer, in the release. "With the financial statements essentially complete, we will continue to focus on activities to grow our key lines of business profitably and strengthen our financial position."

Also during the quarter, cash and cash equivalents increased approximately $200 million to $2.8 billion as Qwest closed a $1.75 billion senior term loan at its Qwest Corp. subsidiary. The company also completed additional private debt-for-debt and debt-for-equity exchanges, reducing debt by $122 million during the quarter, paid down its credit facility to $1.6 billion from $2 billion and made scheduled maturity payments of $1.05 billion.

As for the QwestDex sale, the company is sufficiently confident that the transaction will close shortly that it pre-paid $750 million of its Dex term loan on Aug. 12. Upon completion of the sale of QwestDex subsidiary, Qwest expects its business plan to be fully funded, based on its ability to generate operating cash flow and continued access to the capital markets.

In follow-up news, Wabash National Corp. is expected to wrap up its $250 million credit facility next week, a syndicate source told Prospect News on Wednesday. Fleet Capital is leading and fully underwriting the new deal.

"It's going very well. We're waiting for a few more people to come in. But, it should be oversubscribed," the source said.

The new facility will be a three-year asset based revolver and term loan that will be used to replace existing indebtedness.

"We'll disclose the structure when it's done," the source added.

Wabash is a Lafayette, Ind. truck trailer and intermodal equipment company.

Jarden Corp. completed its acquisition of Lehigh Consumer Products Corp. for approximately $155 million in cash. Financing for the acquisition came from a newly obtained $150 million term loan B (Ba3/B+) due 2008 with an interest rate of Libor plus 275 basis points.

CIBC and Bank of America were the lead banks on the institutional tranche, which was offered to investors at par.

Jarden is a Rye, N.Y. producer of plastics for commercial and consumer markets, metals for home canning products and zinc strips and fabricated products.

Monitronics International Inc. closed on its $320 million credit facility (B1/B+), consisting of a $145 million five-year revolver with an interest rate of Libor plus 400 basis points and a $175 million six-year term loan B with an interest rate of Libor plus 450 basis points.

Initially, the deal was launched with a total size of $325 million, consisting of a $150 million revolver with an interest rate of Libor plus 375 basis points and a $175 million term loan B with an interest rate of Libor plus 400 basis points.

Fleet acted as administrative agent and co-lead arranger, Bank of America acted as co-lead arranger and syndication agent, and US Bank, LaSalle and Bank One acted as co-documentation agents.

There were also 12 other participating banks involved in the refinancing deal, according to a syndicate source.

Monitronics is a Dallas provider of monitored security alarm systems.

© 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.