Wyndham holds firm despite Starwood earnings worries; war jitters quiet market

By Paul A. Harris

St. Louis, March 25 - Leveraged loan market sources unanimously invoked the adjective "quiet," to describe Tuesday's session which, they added, saw no new additions to the forward calendar. Sources attributed the calm seen Tuesday to jitters throughout the capital markets, as investors are presently more tuned in to television sets than market tickers, as they attempt to take a header on the momentum of the U.S.-led military effort in Iraq, to oust dictator Saddam Hussein.

Secondary market sources reported activity in the paper of Wyndham International, which held firm despite the recent news of missed earnings from its upscale lodging sector counterpart Starwood Hotels & Resorts Worldwide Inc. And sources also reported that the market continues to keep a weather eye on Fleming Cos.' paper.

"It's very quiet on both the primary and secondary sides," a source told Prospect News Tuesday. "It's probably due to the fact that the first quarter is usually fairly busy in the primary market for bank loans, and it tends to begin to slow down in the second quarter. This year I think it has slowed down a bit early because of global issues and the war.

"I know that a couple of potential new issues were sort of put on the back burner until we get a little more clarity on what's going on in Iraq," the source added.

Asked about activity in the secondary market this source told Prospect News that the paper of Wyndham International - which had been anticipated to soften on news that Starwood Hotels & Resorts Worldwide Inc. had withdrawn its earnings guidance for the first quarter and the full year, citing "significant deterioration" in business because of world events - had been holding up well.

"Wyndham is 73-5 on the B and 76-9 on the IRLs," the official said. "People thought that the announcement would affect Windham but it hasn't really. In fact Wyndham has remained firm.

"I'm hearing that there are some distressed investors and some smaller hedge funds that are just trying to get involved in Wyndham. And since the term loan B is cheaper than the IRL that's a more attractive piece of paper for them to buy just a very small sliver of, just to get involved in the situation.

"Because these hedge funds and distressed players want to get involved they seem to be supporting the secondary price."

Elsewhere a trader told Prospect News that during Tuesday's "quiet" session troubled food distributor Fleming - still reeling from the wake created when its biggest customer Kmart hit the tank and a Securities and Exchange Commission investigation - continued to generate discussion.

"There's always talk about Fleming to find out where those loans are and how those loans are. You hear there is a meeting today, a meeting tomorrow, a meeting next week. That's been keeping people pretty busy."

The trader quoted Fleming as having traded at 83 Monday but had seen no move in the company's paper Tuesday.

Another trader saw Charter Communications Inc. "better bid" Tuesday, having traded up at 87.5. The No. 3 U.S. cable company, which is the target of a grand jury accounting probe, took its latest broadside shot when news emerged that treasurer Ralph Kelly resigned on March 14.

This source also saw the term loan B of Central Parking Corp. - which recently signed contracts to perform on-street parking management services in Mobile, Ala., Durham, N.C. and Virginia Beach, Va. - trading at 100.375

Also firmer Tuesday was the bank debt of Sears Roebuck & Co., which announced it is planning to cut an unspecified number of jobs at its Hoffman Estates, Ill. headquarters. The trader quoted the Sears 364-day facility as having traded at 95.5, "up a half from the last trade."

Also trading better, the source said, was the term loan B of Alpharma, Inc., seen at par. Meanwhile, the source quoted Mandalay Resort Group's term loan as having traded at 99.375 and MGM at 99.75.

"The market in general is better bid," one official commented Tuesday. "It's tough to get paper though. There is a lot of money out there that people want to put to work but they can't get offerings.

Meanwhile on the new issuance side of the market, the only news to surface during Tuesday's session involved details on the new credit facility form Vivendi Universal Entertainment, which plans to refinance a $1.6 billion bridge loan; and will do a $700 million five-year securitization of accounts receivable, scheduled to close by the end of March; a $500 million five-year term loan, for which it has commitments for $300 million; and if necessary, seek an extension of the maturity to December 31, 2003, for the remaining portion of the existing bridge loan, for up to $420 million.

In a press release Tuesday the company announced that Banc of America and J.P. Morgan are the mandated lead arrangers for the refinancing.

In addition parent company Vivendi Universal SA announced its €2.5 billion credit facility will be led by BNP Paribas, Citigroup, Crédit Agricole Indosuez, Crédit Lyonnais, Goldman Sachs International, Natexis, The Royal Bank of Scotland and Société Générale.

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