Charter rebounds after last week's drop, moving up more than a point

By Sara Rosenberg

New York, Aug. 18 - Charter Communications Inc.'s bank debt bounced back on Monday after dropping at the end of last week on news of the company's decision to pull its $1.7 billion bond offering. The term loan B was quoted at 92 1/8 bid, 92 5/8 offered, compared to quotes in the 91 bid, 92½ offered range last week, the term loan A was quoted at 91½ bid, 92¾ offered, up slightly from Thursday's quote of 91¼ bid, 92¼ offered and the incremental loan was quoted at 91 bid, 92½ offered, according to a trader.

"It's pretty wide, which indicates lack of volume and lack of liquidity. I think people are trying to figure out where it's all going to fall in," the trader added.

Late Thursday, the St. Louis cable company pulled its planned bond offering and announced that it and its subsidiary Charter Communications Holdings LLC terminated their previously announced tender offers for some of their convertible senior notes, senior notes and senior discount notes, citing poor market conditions as the impetus behind the decision.

Following the news, Charter's term loan B dropped by about 50 basis points, heading lower despite the lack of enthusiasm previously shown in the bank loan market when the bond deal was still being marketed.

Overall, the secondary bank loan market was "extremely quiet" Monday, according to a trader. "It's carry over from Friday, which was dead. It's a true summer Monday and then you add in the mess last week. I think some people are just taking a long weekend.

"It's surprising because usually the bank loan market falls off earlier but volume was okay up until about last week. Now, I think we're entering that true summer slowdown," the trader added.

Following up, Jarden Corp.'s $215 million term loan B (B+) due 2008 has received about $100 million in commitments since launching on Aug. 12, according to a fund manager.

"I think people are a little slower on this one because the company has only two years of operating history under the current management. They're new to the leveraged loan market so it takes people some time to get comfortable with the credit. When a new borrower surfaces people are generally reluctant to throw their commitments in, but once they see it's getting done there will be a pile-up. Nobody wants to be one of the first few commitments," the fund manager said.

Another factor being considered is that the company has no sponsor to fall back on. On the plus side though, the company does have a bond issue outstanding "so that's good because there's some sort of cushion below the bank debt," the fund manager added.

The term loan B is priced with an interest rate of Libor plus 300 basis points and is being offered at par.

CIBC and Bank of America are the lead banks on the deal, which will be used to help fund the acquisition of Lehigh Consumer Products Corp. for approximately $155 million in cash. The company also plans to draw on its $80 million revolver to help finance the transaction. The acquisition is expected to close during the third quarter, subject to Hart-Scott-Rodino approval and other customary conditions. The acquisition is expected to be accretive to earnings in 2003.

"We continue to execute our acquisition strategy to grow and diversify our portfolio of niche consumer products used in and around the home," said Martin E. Franklin, Jarden's chairman and chief executive officer, in a news release Monday. "Lehigh's stable, proven management team, history of strong earnings, and leading market shares in its respective niche markets fits perfectly with our established criteria for growth. Not only does this acquisition further diversify our revenue stream but it also provides significant cross-selling opportunities to our established retail customer base and adds complementary distribution channels to our existing distribution network."

Meanwhile, Foamex International Inc. closed on its $320 million credit facility, consisting of a $240 million asset-based credit facility and an $80 million secured term loan.

The $240 million asset-based facility contains a $190 million revolver and a $50 million term loan, both due in April 2007. Bank of America arranged and syndicated the deal.

The $80 million term loan, which also matures in April 2007, was provided separately by Silver Point Finance LLC.

Proceeds are being used to replace the company's existing $262 million credit facility and provide increased availability to fund operations. The refinancing extends approximately $190 million of debt payments, which would have been due at various times between 2004 and 2006, into 2007.

"This refinancing significantly strengthens our financial position. It provides a major reduction in debt maturities over the next three years and gives us substantially increased financial flexibility and liquidity," said Thomas Chorman, president and chief executive officer, in a news release. "We are pleased to have the support and confidence of the financial institutions that are providing these facilities."

Foamex is a Linwood, Pa. manufacturer and distributor of flexible polyurethane and advanced polymer foam products.

Reddy Ice Group Inc. (formerly known as Packaged Ice Inc.) closed on its $170 million credit facility (B1/B+), consisting of a $35 million five-year revolver with an interest rate of Libor plus 300 basis points and a 50 basis points commitment fee, and a $135 million six-year term loan B with an interest rate of Libor plus 300 basis points, stepping down to Libor plus 275 basis points at a leverage grid of 3.75 times. Credit Suisse First Boston, Bear Stearns and CIBC were the lead banks on the deal.

The facility was obtained in conjunction with the leveraged buyout of the Dallas packaged ice company by Cube Acquisition Corp., an entity created and controlled by Trimaran Capital Partners and Bear Stearns Merchant Banking.

Under the transaction, all shareholders of the company's common stock, par value $0.01 per share are entitled to receive approximately $3.638 per share of common stock. In addition, as of Monday morning, approximately $230.4 million of the $255 million aggregated outstanding principal amount of the 9¾% notes due 2005 were validly tendered and not withdrawn in response to the tender offer. The company plans to redeem all notes not tendered at a redemption price of $1,024.375 for each $1,000 principal amount of notes, plus accrued interest.

"We are pleased to be able to partner with management in a transaction which so clearly benefits the company and all of its constituencies. We support management's efforts to build on the company's tradition of leadership and in customer service, product quality, innovation and reliability," said Doug Korn, senior managing director of Bear Stearns Merchant Banking in a news release.

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