Nextel trades at 96 1/8, Charter trades at 86½ in quiet bank loan market

By Sara Rosenberg

New York, March 13 - A few of the usual suspect, including Nextel Communications Corp. and Charter Communications Inc., were active during Thursday's relatively quiet session in the secondary bank loan market, according to market sources. Nextel's term loan B and C bank debt traded at 96 1/8 and Charter's term loan B traded at 861/2.

According to some, activity was pretty light since many people were focusing on the stock market rally.

Nextel's trading level was basically sideways to previous levels, according to a trader. The Reston, Va. wireless company's paper has been active for quite some time now since the company gained the reputation of being a good credit due to never disappointing investors with regards to earnings announcements and its ability to add customers.

Charter' trading level was also basically in line with the previous day's quotes. The bank debt spent the first half of the week rallying along with the rest of the cable sector, according to sources. On Monday, the loan was up about a point, trading at 85 7/8. On Tuesday, quotes moved into the mid-86's. And on Wednesday, the paper settled at 85½ bid, 86½ offered.

There was "a lot of talk" about Magellan Health Services Inc.'s bank debt on Tuesday, according to a trader, who said that the loan was quoted in the mid-to-high 80's.

"There hasn't been any trading in it," the trader added. "Just some interest. Probably sparked by the Chapter 11 filing."

Earlier this week, the company made a prepackaged Chapter 11 bankruptcy filing in the U.S. Bankruptcy Court for the Southern District of New York. The company's proposed restructuring agreement is supported by creditors holding 52% of its senior notes, 35% of its senior subordinated notes, 45% of its senior secured bank debt, and the company's largest customer, Aetna.

Under the restructuring plan, the company's secured bank debt, consisting of term loans of $115 million, revolver borrowings of $45 million and outstanding letters of credit of $75 million, will be converted to secured term loans having maturities of Nov. 30, 2005.

The Columbia, Md. behavioral managed care organization anticipates emerging from Chapter 11 by the end of the third quarter of this calendar year.

El Paso Corp.'s new $1.2 billion two-year term loan has remained at basically the same levels after dipping earlier this week on market technicals, meaning that the secondary market was oversaturated with the company's paper. The bank debt is currently being quoted with a 98 5/8 bid and a 99 offered, according to a trader.

On Friday, the Houston provider of natural gas services bank paper was quoted in the low-to-mid 99's, with one trader saying that he saw a Street trade at 991/4. The loan was issued at 981/2.

The new term loan, which launched on Feb. 24 via Credit Suisse First Boston and Salomon Smith Barney and was priced at Libor plus 625 basis points, closed on Thursday, according to a new release.

Proceeds from the loan were used to retire the approximately $825 million net balance of the Trinity River financing.

"This is an important step to simplify El Paso's balance sheet and provide the company with significant additional flexibility and liquidity," the release said. "As previously disclosed, the cash generated from the assets that had supported Trinity River was restricted so that El Paso did not have full access to these funds."

Furthermore, El Paso announced that it completed the sale of its Mid-Continent properties for $500 million. Currently, the company has signed agreements for or closed approximately 45%, or $1.5 billion, of the $3.4 billion of non-core asset sales expected in 2003. Proceeds, combined with cash on hand, will be used to retire the $1 billion Limestone Electron notes on the scheduled March 17 maturity.

In follow-up news, syndication on Dole Food Co.'s $1.15 billion credit facility (Ba3/BB+) may close next week, according to a source close to the deal. Deutsche Bank, Scotia Capital and Bank of America are the lead banks on the loan.

Currently, the term loan B is oversubscribed and the syndicate is "comfortable on the pro rata", the source said.

There has been some market talk that the deal has been moving slower than expected, however, market professionals seem to agree that this is due to the facility's complicated structure and the desire of potential investors to study and understand the deal before committing to it.

In fact, following the managing agent launch in February, a call was held to discuss the structure of the deal at length, one fund manager previously told Prospect News. He explained that Dole's facility is uniquely structured since there are U.S. and foreign borrowers and foreign assets are being used to secure the loan.

A subsidiary of Dole based in Bermuda will be the borrower of the $600 million 51/2-year term loan B with an interest rate of Libor plus 375 basis points. A U.S. subsidiary will be the borrower of the $250 million five-year term loan A with an interest rate of Libor plus 325 basis points, according to the fund manager.

The loan also contains a $300 million five-year revolver in dollars and euros with an interest rate of Libor plus 325 basis points.

Positive factors influencing syndication of the deal include relatively low leverage on a senior basis and on a total basis, the company's ability to generate cash, history of paying down debt quickly and seasoned management team, sources explained.

Proceeds from the facility will be used to help fund the buyout of Dole by DHM Acquisition Co., which is wholly owned by David H. Murdock.

Dole is a Westlake Village, Calif. producer and marketer of fresh fruit, vegetables and flowers.

AmeriPath Inc. made some changes to its credit facility (B1/B+) on Wednesday, according to market sources, including reducing both tranches in size and changing pricing on the institutional portion.

More specifically, the seven-year term loan B was reduced to $225 million from $290 million and pricing on the tranche was flexed up to Libor plus 450 basis points from Libor plus 400 basis points. The six-year revolver was reduced to $65 million from $75 million. Pricing on the revolver remained at Libor plus 350 basis points.

During Thursday's session, AmeriPath priced its concurrent offering of 10-year senior subordinated notes to yield 10½% and upsized them to $275 million from a planned amount of $210 million.

Credit Suisse First Boston and Deutsche Bank are the lead banks on the credit facility. Proceeds of the facility and notes will be used to help fund the leveraged buyout of AmeriPath by Welsh, Carson, Anderson & Stowe.

AmeriPath is a Riviera Beach, Fla. provider of cancer diagnostics, genomic, and related information services.

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