Clear Channel off with numbers; NRG dips; Earthbound canceled; Iowa Telecom pricing emerges

By Sara Rosenberg

New York, March 2 - Clear Channel Communications Inc.'s term loan was quoted lower on Monday as the company came out with earnings results and NRG Energy Inc.'s strip of institutional bank debt slipped on acquisition news.

Meanwhile, on the primary side of things, Earthbound Farm's new deal was pulled as result of its buyout falling through and Iowa Telecommunications Services Inc. came out with expected pricing on its proposed incremental term loan that is being obtained under the existing credit facility.

Clear Channel heads down

Clear Channel's term loan was seen at weaker levels in little to no activity following the release of fourth quarter numbers, according to a trader.

The term loan was quoted at 35 bid, 40 offered, down from Friday's levels of 40 bid, 43 offered, the trader said.

On Monday morning, CC Media Holdings Inc., Clear Channel's parent company, reported a net loss of $4.997 billion, compared to net income of $320.6 million is the same period last year.

The loss for the quarter before discontinued operations was $4.996 billion, compared to income of $228.3 million last year, primarily attributable to a pre-tax impairment charge of about $5.3 billion.

Revenues for the quarter were $1.6 billion, a decrease of 14% from the $1.9 billion reported for the fourth quarter of 2007.

And, trailing 12-month consolidated EBITDA was $2.144 billion.

Clear Channel has little revolver availability

Also on Monday, Clear Channel's parent company disclosed that as of Feb. 27, there was only about $18 million available on its revolving credit facility.

On Feb. 6, the company borrowed about $1.6 billion under its $2 billion revolver to improve its liquidity position as a result of continuing uncertainty in credit market and economic conditions.

At Dec. 31, secured leverage was 6.39 times.

"The current global economic slowdown has resulted in a decline in advertising and marketing services among the company's customers, resulting in a decline in advertising revenues across its businesses. This reduction in advertising revenues has had an adverse effect on the company's revenue, profit margins, cash flow and liquidity, particularly during the second half of 2008," the company said in a news release.

Beginning with the quarter ending March 31, Clear Channel will have to company with a maximum consolidated senior secured net debt to adjusted EBITDA ratio under its senior secured credit facility.

Clear Channel to draw on term loan

In addition, Clear Channel's parent company said that it expects to refinance its $500 million of 4.25% notes due May 15 with a draw under the $500 million delayed-draw term loan facility that is specifically designated for this purpose.

The company's remaining $69.5 million of debt maturing this year will either be refinanced or repaid with cash flow from operations or on hand.

Clear Channel is a San Antonio-based media and entertainment company.

NRG slides with acquisition

NRG Energy's strip of institutional bank debt lost some ground during the trading session as the company revealed that it is purchasing Reliant Energy Inc.'s Texas retail business, according to a trader.

The company's term loan and letter-of-credit facility strip was quoted at 91 bid, 92 offered, down from previous levels of 92 bid, 93 offered, the trader said.

NRG is purchasing the Texas retail business for $287.5 million in cash plus working capital.

Financing for the acquisition will come from Cash on hand.

Closing is expected to take place late in the second quarter, subject to customary conditions and regulatory approvals, including pre-merger notification under the Hart-Scott-Rodino Act.

NRG is a Princeton, N.J.-based owner and operator of diverse power generation portfolios.

Earthbound fades away

Switching to primary happenings, Earthbound Farm's proposed $135 million credit facility was terminated since Lindsey Goldberg decided to cancel its buyout of the company as a result of, among other things, equity valuations, according to a market source.

The credit facility, which has already been fully syndicated as of late last year, consisted of a $100 million term loan and a $35 million revolver.

Both tranches under the facility were going to carry pricing of Libor plus 500 basis points and were going to be issued at an original issue discount of 98.

RBC Capital Markets was acting as the lead bank on the deal.

Earthbound Farm is a San Juan Bautista, Calif.-based organic produce company.

Iowa Telecommunications floats loan pricing

Also on the new deal front, Iowa Telecommunications announced on Monday in a 10-K filed with the Securities and Exchange Commission that it anticipates pricing on its proposed $75 million term loan to be Libor plus 200 bps.

The incremental term loan will mature in November 2011.

Rural Telephone Finance Cooperative is the arranger on the deal and has provided a commitment to fully fund the loan if necessary.

Proceeds from the term loan, along with borrowings under the company's existing revolving credit facility and cash on hand, will be used to fund the $80.6 million acquisition of Sherburne Tele Systems Inc.

Iowa Telecommunications is a Newton, Iowa-based telecommunications service provider. Sherburner is a Big Lake, Minn.-based telecommunications company.

Talbots closes

Talbots Inc. closed on its new $200 million unsecured term loan facility from Aeon Co. Ltd., according to a news release.

Pricing on the loan, which was completed on Feb. 25, is Libor plus 600 bps.

The loan has an initial six-month term extendable at the company's option for up to five additional six-month periods, effectively maturing in 2012.

Proceeds were used to repay existing acquisition term debt.

In addition, the company entered into a revolving credit agreement with Bank of Tokyo-Mitsubishi to convert its existing uncommitted working capital line of $15 million to a committed line, effective immediately.

Talbots is a Hingham, Mass., specialty retailer and direct marketer of women's apparel, shoes and accessories.

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