Owens-Illinois B loan subscribed on day of launch; Charter heads higher on earnings

By Sara Rosenberg

New York, May 7 - Owens-Illinois Inc.'s $750 million five-year term loan B was already subscribed by the end of Wednesday's launch date, according to a syndicate source. As for the secondary, Charter Communications Inc. was better bid following the release of earnings news, International Steel Group's B loan continued to move slightly higher and Allied Waste Industries Inc.'s B loan seemed to be hitting a par ¼ bid.

Owens-Illinois held a bank meeting for its $1.9 billion credit facility on Wednesday, which consists of a $650 million four-year revolver with an interest rate of Libor plus 325 basis points, a $500 million four-year term loan A with an interest rate of Libor plus 325 basis points and a $750 million five-year term loan B with an interest rate of Libor plus 350 basis points.

The upfront fee on the B loan is 25 basis points. On the pro rata, there is 100 basis points upfront fee for a commitment of $25 million and a 75 basis points upfront fee for a commitment of $15 million, according to a syndicate source.

"We're doing well," the syndicate source said. "There was a term loan outstanding so there's a bit of rollover. It's a huge company with EBITDA of $1 billion and change. If it weren't for the asbestos it would be investment grade. It's a rock solid credit. Once people get comfortable with the asbestos [issue] they realize it's a good credit. OI has a decent handle on it. It's a good story and people are buying into it."

Towards the end of April, the company reported first quarter results that included asbestos-related cash payments of $55.1 million, a reduction of $6.2 million, or 10.1%, from the first quarter of 2002. At the end of the first quarter of 2003, the number of asbestos-related claims pending against the company was approximately 24,000, down slightly from the number of pending claims at Dec. 31, 2002. The company went on to say that it anticipates cash flows from operations and other sources will be sufficient to meet all asbestos-related obligations on a short-term and long-term basis.

Deutsche Bank and Bank of America are the lead banks on the Toledo, Ohio manufacturer of packaging products' refinancing deal.

Charter's term loan B was "definitely better bid" on Wednesday following the release of first quarter results. The St. Louis cable company's bank debt was quoted by one trader at 90½ bid, 91½ offered, while a second trader quoted that paper at 90¾ bid, 911/4, offered, up from Tuesday's levels of 90¼ bid, 90¾ offered.

"It's been fluctuating up and down the past couple of days," the second trader said. "It's pretty wide right now for Charter historically. People are quoting it like a point apart."

The trader explained that the quotes are widening because market participants are having a hard time pinning levels down since the paper has been moving all over the place the past couple of days.

For the quarter ended March 31, Charter generated revenue of $1.178 billion, an increase of 9.7% over last year's first quarter revenue of $1.074 billion. Adjusted EBITDA was $458 million, up 7.5% over adjusted EBITDA of $426 million for the year ago quarter. Net loss applicable to common stock was $182 million and loss per share was $0.62 compared to the restated results for first quarter 2002 of net loss applicable to common stock of $317 million and loss per share of $1.08. Net cash flows provided by operating activities totaled $162 million, an increase of $60 million, or 59%, as compared to the first quarter of 2002. Cash flows from investing activities totaled $231 million, a decrease of $373 million from first quarter 2002. Cash required for all operating and investing activities totaled $69 million, compared to $502 million for the same period a year ago. Lastly, at March 31, cash on hand was $446 million.

"Charter made steady progress operationally. Our increase in revenues for the quarter as compared to last year is principally the result of our aggressive efforts to build our base of high-speed data customers, while also increasing service and package prices for our video and data product offerings, and reducing customer churn in all product categories," said Carl Vogel, president and chief executive officer, in a news release.

"With the recent restatements of prior results, Charter has a financial baseline against which to measure operational performance and key recurring financial metrics of our business," Vogel continued. "The results of the strategic restructuring of our operations are beginning to show positive trends, as evidenced by our improving revenue, cash flows from operations and adjusted EBITDA, as well as the decline in our capital expenditures as we focus principally on our goal of generating cash flow from all operating and investing activities."

Meanwhile, International Steel Group's new term loan B has been inching its way up since it broke for trading at the beginning of the week at par 1/8 bid, par ¼ offered, according to a trader. The B loan was quoted at par ¼ bid, par ½ offered on Wednesday. The initial price on the loan was 993/4.

The term loan A was quoted at par and the revolver was quoted at 98 on Wednesday, the trader added.

International Steel's credit facility consists of a $300 million two-year term loan A with an interest rate of Libor 325 basis points, a $400 million four-year term loan B with an interest rate of Libor plus 350 basis points and a $300 million three-year revolver with an interest rate of Libor plus 275 basis points.

UBS Warburg, Goldman Sachs and CIT are the lead banks on the Cleveland steel company's that is being used to help fund the acquisition of Bethlehem Steel Corp. assets and working capital.

Allied Waste's new term loan B was quoted at par ¼ bid, par 5/8 offered on Wednesday, according to a trader. The loan broke in late April at par ½ bid, par 5/8 offered but was expected to shortly thereafter to hit a quarter ceiling on the bid once the quick flurry of buying wound down.

"Last week no one was willing to step above about par to par 1/8 [on the bid side]," a trader said, adding that it currently appears as if the par ¼ bid has some strength to it.

"Some people may be positioning the paper to look stronger than it is given there was a lot of supply on the break," the trader added.

The Scottsdale, Ariz. solid waste management company's new loan consists of a $1.5 billion five-year revolver with an interest rate of Libor plus 300 basis points and a $1.2 billion seven-year term loan with an interest rate of Libor plus 325 basis points. Pricing on both tranches contain grid-based pricing improvements based on decreases in the company's leverage ratio. There is also a $200 million institutional letter of credit facility.

The synthetic letter of credit facility was quoted at par 1/8, par 5/8 on Wednesday, "but no one is hitting that bid," the trader said. The paper has been quoted at these levels for a while now and was previously reported to be heavy by market sources.

© 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.