Idearc slips as new CEO resigns; MetroPCS, Dynegy up with numbers; FairPoint structure surfaces

By Sara Rosenberg

New York, Feb. 27 - Idearc Inc.'s term loan B came under some pressure in trading on Wednesday after the company revealed that its newly appointed chief executive officer had to resign.

In other news, both MetroPCS Communications Inc. and Dynegy Inc. saw their institutional bank debt strengthen after the two companies came out with earnings results, and Charter Communications Inc.'s term loan B was better shortly after numbers were announced, but the paper then came back in to end the day lower.

Moving to the primary market, details on FairPoint Communications Inc.'s credit facility emerged as the deal gears up for its upcoming bank meetings, and rumor has it that Credit Suisse has started talking to people about Clear Channel Communications Inc.'s credit facility in an attempt to get some early interest.

Idearc's term loan B was softer during market hours after news emerged that John J. Mueller resigned as chairman and chief executive officer for unforeseen health reasons, according to traders.

Just last week, Mueller was appointed chief executive officer after Kathy Harless was removed from the position.

The Idearc board of directors appointed Frank P. Gatto, currently executive vice president, as interim chief executive officer in Mueller's place while a search is conducted for a permanent replacement.

"Jack was instrumental in establishing Idearc as a public company following its spin-off from Verizon Communications. Despite the fact that Jack was just recently appointed to the role of CEO, the board fully understands and supports his decision to focus on his health as a top priority," said Donald B. Reed, lead independent director of Idearc, in a news release.

"Frank Gatto is a proven leader with 30 years of experience in the directory, telecommunications, and manufacturing industries. The board is confident that Frank's extensive knowledge of our business and his executive experience are strong assets to the company during this time of transition," Reed concluded in the release.

In response to this news, one trader said that Idearc's term loan B dropped to 82¾ bid, 83¾ offered from 83¾ bid, 84¾ offered on Tuesday.

A second trader had Idearc's term loan B quoted at 83½ bid, 84 offered, down from 83 7/8 bid, 84¼ offered.

Idearc is a Dallas-based provider of yellow and white page directories and related advertising products.

MetroPCS inches higher

MetroPCS's term loan gained a little ground during the trading session on the back of fourth quarter and full year financial results being released, according to a trader.

The company's term loan was quoted at 91 5/8 bid, 92 5/8 offered, up from previous levels of 91½ bid, 92½ offered, the trader said.

For the fourth quarter, the company reported total revenues of $591 million, an increase of 30% over the fourth quarter of 2006, income from operations of $92 million, an increase of 38% when compared to the fourth quarter of 2006, and a net loss of $47 million, or $0.14 per common share, as compared to a net loss of $17 million for the same period last year.

The fourth quarter results include an impairment charge of $83 million related to the company's investment in auction rate securities. On a non-GAAP basis excluding the impairment charge, net income would have been $36 million, or $0.10 per common share.

For full year 2007, MetroPCS reported total revenues of $2.2 billion, an increase of 45% over the same period in 2006, income from operations of $460 million, an increase of 94% from 2006, net income of $100 million versus $54 million last year, and diluted net income per common share of $0.28 per common share compared to $0.10 per common share in 2006.

"We have produced strong financial and operational results in 2007. For the second consecutive year, we recorded over 1 million net subscriber additions, and we currently have over 4 million subscribers. Our focus continues to be on effectively managing our costs and generating adjusted EBITDA. I am proud to say this focus has resulted in 69% year-over-year growth in consolidated adjusted EBITDA," said J. Braxton Carter, executive vice president and chief financial officer, in a news release.

"While we are closely monitoring the trajectory of the overall United States economy, we believe our service, which offers an affordable and flexible solution, is a compelling value proposition to a large segment of the U.S. population and uniquely positions us even if there is a sustained economic downturn. In addition, with a fully funded business plan and approximately $1.5 billion in cash and cash equivalents at the end of 2007, we are well positioned to continue our aggressive growth in 2008," Carter added in the release.

For full year 2008, the company reaffirmed its guidance of net subscriber additions to be in the range of 1.25 to 1.52 million on a consolidated basis. Consolidated adjusted EBITDA is currently expected to be in the range of $750 to $850 million, inclusive of an adjusted EBITDA loss in the range of $125 to $175 million in the AWS markets. And, capital expenditures are expected in the range of $1.1 to $1.3 billion.

MetroPCS is a Dallas-based provider of unlimited wireless communications service for a flat-rate with no signed contract.

Dynegy moves up

Dynegy also announced earnings on Wednesday, spurring its institutional bank debt to climb higher, according to a trader.

The strip of term loan and synthetic letter-of-credit facility debt was quoted at 90½ bid, 91½ offered, up from 90¼ bid, 91¼ offered, the trader said.

For 2007, the company reported net income applicable to common stockholders of $264 million or $0.35 per diluted share, which included a net loss of $46 million for the fourth quarter. This compares to a net loss applicable to common stockholders of $342 million, or $0.75 per diluted share for 2006, which included a net loss of $58 million for the fourth quarter 2006.

"Two thousand seven was a significant year for the company as we continued our track record of operational excellence and successfully completed the integration of the assets acquired from LS Power, while maintaining a strong and flexible balance sheet," said Bruce A. Williamson, chairman, president and chief executive officer, in a news release.

"The acquisition greatly increased our generating capacity and diversified our geographic reach and the fuels and technologies we use to generate electricity. During this year of integration, we produced record generation sales volumes, high levels of in-market availability and one of the best records in our company's history for safety and environmental performance. We believe our environmental performance will continue to improve as a result of our ongoing investment of hundreds of millions of dollars in advanced control systems for reducing emissions.

"We believe Dynegy is strategically positioned for continued growth in 2008 and beyond," Williamson added. "We will continue to execute our strategy of leveraging our strong operational capabilities and investing in high-return projects to enhance the long-term value of the company. Additionally, we will continue to explore opportunities to participate in the construction or expansion of power plants, while evaluating potential transactions to grow our diversified portfolio and create value for investors."

The company also updated its guidance for 2008. It now expects operating cash flow of $510 million to $610 million, down from the previous estimate of $585 million to $685 million, free cash flow of $100 million to $200 million, down from the previous estimate of $250 million to $350 million, and EBITDA of about $1.0 billion to $1.1 billion, down from the previous estimate of $1.1 billion to $1.2 billion.

The previous estimates were based on quoted forward commodity price curves as of Oct. 30. The new guidance reflects quoted forward commodity price curves as of Jan. 29 and assumptions regarding, among other things, sales volumes, fuel costs and other operational activities.

Dynegy is a Houston-based producer and seller of electric energy, capacity and ancillary services.

Charter seesaws

Charter Communications's term loan B was all over the place in trading as levels were stronger after numbers came out, but weaker by the close, according to a trader.

The term loan B was quoted at 88¾ bid, 89¾ offered in the morning hours, but then it dropped to 88 3/8 bid, 89 1/8 offered, where it closed out the day, the trader said. On Tuesday, the debt went out at 88½ bid, 89½ offered, the trader remarked.

"The whole market was down. Maybe some profit taking. Good two way flow. More of a correction than a trend," the trader said regarding the secondary market in general on Wednesday. Overall, traders put cash levels down by anywhere from an eighth to three eighths of a point. The LCDX 9 was quoted at 92.60 bid, 92.70 offered, down from 93.35 bid, 93.50 offered.

For the fourth quarter, Charter reported pro forma revenue of $1.548 billion, an increase of 10.6% year over year, actual revenue of $1.553 billion, an increase of 9.9%, pro forma adjusted EBITDA of $563 million, an increase of 12.6% from fourth quarter 2006, and actual adjusted EBITDA of $565 million, an increase of 12.3%.

Also in the fourth quarter, actual operating income from continuing operations was $85 million, compared to $163 million in the fourth quarter of 2006, and net loss was $468 million, or $1.27 per common share, compared to net loss of $396 million, or $1.08 per common share, last year.

For full year 2007, pro forma revenues were $5.971 billion, an increase of $588 million, or 10.9%, from 2006, actual revenues were $6.002 billion, an increase of 9%, pro forma adjusted EBITDA totaled $2.101 billion, an increase of 11.9% compared to full year 2006, actual EBITDA was $2.111 billion, a 10.3% increase compared to the year-ago period, pro forma net cash flows from operating activities were $317 million, compared to $267 million in 2006, and actual net cash flows from operating activities were $327 million, compared to $323 million for the full year 2006.

Other full year results include operating income from continuing operations of $548 million, compared to $367 million in the full year 2006, and net loss was $1.616 billion, or $4.39 per common share, compared to net loss of $1.37 billion, or $4.13 per common share last year.

Charter is a St. Louis-based broadband communications company and cable operator.

FairPoint sets structure

Meanwhile, in primary happenings, FairPoint saw structural details surface on its $2 billion credit facility (Ba3/BB+) now that the Friday senior managing agent bank meeting and March 6 retail bank meeting are fast approaching, according to a market source.

The facility consists of a $200 million revolver, a $500 million term loan A, a $200 million delayed-draw term loan B and a $1.1 billion term loan B, the source said.

This structure is slightly different than what the company had previously outlined in filings with the Securities and Exchange Commission. Those filings had the deal comprised of a $200 million revolver, an up to $200 million delayed-draw term loan and an up to $1.68 billion term loan B.

Lehman Brothers, Morgan Stanley, Bank of America, Deutsche Bank, Wachovia, Merrill Lynch and CoBank are the lead banks on the deal, with Lehman the left lead.

Proceeds will be used to help fund the merger with Verizon Communications Inc.'s wireline operations in Maine, New Hampshire and Vermont.

In the merger, FairPoint will issue about 53.8 million of its common shares to be distributed in a tax-free Reverse Morris Trust transaction to the shareholders of Verizon as well as assume roughly $1.7 billion of debt. The transaction will give FairPoint's shareholders 40% ownership and Verizon's shareholders 60% ownership of the combined company.

On Tuesday, FairPoint announced that the New Hampshire Public Utilities Commission issued a written order approving the acquisition of Verizon's wireline business in New Hampshire. With this approval, FairPoint has now received written orders from all three states approving the transaction, and the necessary approvals from the Federal Communications Commission have already been obtained as well.

FairPoint is a Charlotte, N.C., provider of communications services to rural communities.

CS rumored to be peddling Clear Channel

Market chatter on Wednesday was that Credit Suisse, one of the lead banks on the massive Clear Channel leveraged buyout credit facility, has started talking to some accounts so as to try and get some early interest, according to a market source.

No official timing on the launch of the credit facility has been announced as of yet, the source added.

According to filings with the Securities and Exchange Commission, the $19.525 billion credit facility consists of a $1 billion receivables-backed revolver, a $2 billion senior secured revolver, a $1.25 billion senior secured term loan A, a $12.65 billion senior secured term loan B, a $625 million senior secured delayed-draw term loan and an up to $2 billion senior secured term loan C that will be reduced by proceeds from asset sales prior to closing.

Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, RBS and Wachovia are the lead banks on the deal.

Proceeds will be used to help fund the leveraged buyout of the company by Thomas H. Lee Partners, LP and Bain Capital Partners, LLC for $39.20 per share.

Clear Channel is a San Antonio media and entertainment company specializing in "gone from home" entertainment and information services.

Nasdaq closes

Nasdaq Stock Market, Inc. completed its combination with OMX AB, creating the world's largest exchange company, Nasdaq OMX Group, Inc., according to a news release.

To help fund the transaction, Nasdaq got a new $2.075 billion senior secured credit facility (Ba1/BBB-) consisting of a $1.05 billion term loan A, a $650 million delayed-draw until July 31 term loan A at Libor plus 200 bps for the PHLX purchase, a $300 million delayed-draw for six months term loan A for the purchase of Nord Pool assets and a $75 million five-year revolver.

All tranches are priced at Libor plus 200 bps.

During syndication, the amount of delayed-draw and funded term loan A debt was increased from $1.5 billion as the $300 million delayed-draw term loan A was added to the deal and a bond offering - later replaced by convertibles - was downsized by $200 million.

Bank of America and JPMorgan acted as the lead banks on the deal.

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