Secondary continues run up with Allied Waste, Reliant, Nextel, Mission and Adelphia all higher

By Sara Rosenberg

New York, Jan. 6 - Once again it was reported to be a very strong day in the bank loan market with, generally speaking, everything quoted higher in secondary trading as investors sought vehicles in which to place their cash. Some notable names mentioned in the surge included Allied Waste Industries Inc., Reliant Resources Inc., Nextel Communications Inc., Mission Holdings and Adelphia subsidiary bank paper.

Allied Waste's revolver ended the day at 98 bid and traded in the Street at both 97½ and 97¾ on Tuesday, according to a trader, who placed the paper at 97 offered on Monday.

"It's going through the roof. I've been looking for a reason, but I can't find one. They completed an asset sale but it's like $200 million, which doesn't seem like a lot," the trader said.

The Scottsdale, Ariz., waste services company announced on Tuesday that it completed the first phase of the divestiture of its northern and central Florida operations to Capital Environmental Resource Inc. for about $76 million of proceeds. The sale of the remaining Florida operations is expected to close during the first quarter of 2004 and result in about $44 million of proceeds, according to a company news release.

Capital Environmental Resource financed the acquisition of Allied Waste's Florida operations through a new $220 million senior secured credit facility that consists of a $195 million term loan and a $25 million revolver. Lehman Brothers Inc. arranged the loan, and Lehman Commercial Paper Inc. funded it.

Remaining proceeds under the facility were used by Capital Environmental Resource to repay the company's existing senior credit facility and pay related fees and expenses, according to a company news release.

Allied Waste also announced that it completed the sale of certain non-integrated operations in Virginia, Idaho and Wyoming to two separate private companies for combined proceeds of about $100 million.

As of Dec. 31, Allied Waste said it successfully completed its 2003 divestiture program aimed at generating $300 million of proceeds for debt repayment.

"We are pleased to have successfully completed the 2003 Divestiture Program, and to have done so at valuations exceeding our original expectations," said Tom Van Weelden, chairman and chief executive officer, in the news release. "The proceeds from the divestitures of these non-integrated operations have been used to repay debt."

Reliant Resources' bank debt traded just north of 99 on Tuesday, compared to trading levels around 98 to 98¼ on Monday, according to a trader, who placed the name as "one of the biggest movers" over the course of the day.

Reliant is a Houston energy and electricity company.

Nextel's term loan A headed slightly higher to trade at 99¼ compared to a previous trading level of 98 7/8, according to a trader.

"It's following the [term] Es up," the trader added.

On Monday the Reston, Va., wireless company reaffirmed its 2003 guidance and strong business trends. The company said that it anticipates net subscriber additions of 2.2 million or better, operating income before depreciation and amortization of $4.1 billion or more, free cash flow of $1 billion or more, earnings per share of $1.15 or more and capital expenditures of $1.8 billion or less for 2003.

Meanwhile, Mission Holdings' bank debt was quoted at 94½ bid, 95 offered on Tuesday compared to quotes of 93 bid, 94 offered prior to the holiday break, according to the trader, primarily due to market technicals. "The bonds are trading over par now," the trader added.

Adelphia's FrontierVision loan was quoted at 98¾ bid compared to previous levels of 97 bid, 98 offered prior to the break, according to the trader. The TCI paper was up about half a point at 97½ bid, 98½ offered, and the Century paper was at 94 bid, 95 offered, basically unchanged from Monday's levels. And, the Olympus term loan A traded at 94½ on Tuesday compared to a previous trading level of 933/4, according to a second trader.

However, the Century bank debt was not as active as the FrontierVision and TCI paper in the secondary on Tuesday, the first trader added.

When asked whether the activity in Adelphia had anything to do with a recent article discussing the possibility of the Denver-based cable company being a takeover target in 2004, the trader explained that the buzz was probably not much of a factor rather "people are looking to deploy cash."

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