TXU inches up on earnings; OSI Restaurant softens with numbers; Petrohawk pricing emerges

By Sara Rosenberg

New York, Aug. 15 - Texas Competitive Electric Holdings' (TXU) term loan debt experienced some positive movement in trading on the release of earnings by its parent company, Energy Future Holdings Corp.

Also in trading, OSI Restaurant Partners LLC's term loan saw its offer side come in on Friday after the company held a conference call to discuss second-quarter and first half of the year financials.

In other news, Petrohawk Energy Corp. came out with pricing on its proposed credit facility as the deal is getting ready to launch with a bank meeting on Monday.

Texas Competitive's term loan debt was slightly stronger during market hours as its parent company announced second-quarter and year-to-date numbers, according to a trader.

The Dallas-based energy company's term loan B-1 and B-2 were quoted at 93 1/8 bid, 94 offered, and the term loan B-3 was quoted at 93 bid, 93 7/8 offered, with all tranches up by about a quarter of a point on the day, the trader said.

For the quarter, Energy Future Holdings reported a net loss of $3.331 billion, compared to net income of $121 million in the second quarter 2007.

The company said that the net loss included net after-tax expenses of $3.08 billion that are not included in adjusted operating earnings, primarily reflecting $3.071 billion in unrealized mark-to-market net losses, virtually all related to forward natural gas positions in its long-term hedging program

By comparison, second quarter 2007 reported net income included net after-tax expenses of $267 million that are not included in adjusted operating earnings, primarily reflecting $269 million in unrealized mark-to-market net losses, virtually all related long-term hedging.

Adjusted operating earnings totaled a net loss of $251 million for the second quarter, compared to net income of $388 million for the same period last year.

For the six months ended June 30, consolidated net income was a net loss of $4.6 billion, compared to a net loss of $377 million for year-to-date 2007.

The net loss included net after-tax expenses of $4.109 billion that are not included in adjusted operating earnings, primarily reflecting $4.098 billion in unrealized mark-to-market net losses primarily related to long-term hedging.

By comparison, the net loss in the first half of 2007 included net after-tax expenses of $1.245 billion that are not included in adjusted operating earnings, reflecting $761 million in unrealized mark-to-market net losses primarily related to hedging and $512 million in charges associated with the cancellation of a program to develop eight coal-fueled generation units.

Lastly, adjusted operating earnings in the six-month period totaled a net loss of $491 million, compared to net earnings of $868 million last year.

In addition, Energy Future Holdings revealed some more specifics about the use of proceeds it will receive from the sale of a minority interest in Oncor Electric Delivery Company LLC that was announced earlier in the week.

In a 10-Q filed with the Securities and Exchange Commission late Thursday, Energy Future Holdings said that under the terms of its credit facilities, it must use proceeds from the sale to repay all outstanding intercompany loans from Texas Competitive, which totaled $468 million as of June 30.

Any excess proceeds may be retained by Energy Future Holdings for general corporate purposes, repayment of debt or for certain investments; or the funds can be contributed to Texas Competitive to be used for the same purposes.

As was previously reported, Energy Future Holdings is selling a roughly 20% interest in Oncor to an investor group led by Borealis Infrastructure Management and GIC Special Investments for $1.254 billion.

OSI Restaurant offer slips

OSI Restaurant Partners' term loan weakened on the offer side in a quiet summer Friday trading session following the company's earnings conference call that took place in the morning hours of the day, according to a trader.

The term loan was quoted at 79 bid, 80 offered, compared to Thursday's closing levels and pre-conference call levels on Friday of 79 bid, 81 offered, the trader said.

"Think earnings were sort of what was expected. [But], people can't really point to when things are going to turnaround so [the term loan] is just going to float out there," the trader remarked.

For the second quarter, OSI Restaurant reported a net loss of $176.7 million, compared to a net loss of $10 million during the second quarter of 2007.

EBITDA for the quarter was negative $124.1 million, compared to positive $24.1 million last year.

Adjusted EBITDA for the quarter was $73.6 million, compared to $82.8 million in the 2007 quarter.

And, adjusted EBITDAR for the quarter was $120.9 million, compared to $111 million last year.

For the six months ended June 30, net loss was $186.4 million, compared to net income of $17.6 million in the comparable 2007 period.

EBITDA for the six months was negative $56.5 million, compared to $109.1 million last year.

Adjusted EBITDA for the six-month period was $161.6 million, compared to $199.3 million in the first half of 2007.

And, adjusted EBITDAR for the six months was $254.8 million, compared to $254.7 million last year.

OSI Restaurant is a Tampa, Fla.-based casual dining restaurant company with a portfolio that includes Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, Fleming's Prime Steakhouse & Wine Bar, Roy's, Lee Roy Selmon's, Cheeseburger in Paradise and Blue Coral Seafood & Spirits.

Petrohawk pricing surfaces

Petrohawk Energy revealed pricing on its proposed $1.5 billion five-year revolving credit facility as the deal's Monday bank meeting in Houston is fast approaching, according to a market source.

The revolver pricing can range from Libor plus 125 basis points to 200 bps based on usage, the source said.

In addition, the commitment fee on the revolver can range from 30 bps to 37.5 bps, the source continued.

Upfront fees on the deal will be announced to potential lenders at the bank meeting, the source added.

The initial borrowing base on the revolver is set at $1.1 billion.

BNP Paribas is the lead bank on the deal that will be used to refinance existing debt.

Petrohawk is a Houston-based acquirer, developer, producer and explorer of oil and natural gas properties.

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