Cinemark, Windstream up with numbers; Autos continue to drop; McJunkin, O'Reilly ready launches

By Sara Rosenberg

New York, May 9 - Cinemark Holdings Inc. and Windstream Corp. both saw their term loans gain some ground following their earning announcements, while Harrah's Entertainment Inc.'s numbers resulted in softer loan levels.

Also in trading, the auto sector took a particularly hard beating in an overall down market, with names like Delphi Corp., Ford Motor Co., General Motors Corp. and Accuride Corp. all seeing losses.

In other news, expected timing emerged on McJunkin Red Man Corp.'s holdco term loan and some price talk surfaced as well, and O'Reilly Automotive Inc. set a retail launch date for its asset-based revolver.

Cinemark's term loan was stronger on Friday after the company released first-quarter financial results, according to a trader.

The term loan was quoted at 95¼ bid, 96 offered, up from 95 bid, 95¾ offered, the trader said.

For the quarter, the company reported revenues of $401 million, a 6.1% increase from $378 million for the three months ended March 31, 2007. The increase was primarily related to a 1.0% increase in attendance, a 6.5% increase in average ticket prices and a 5.1% increase in concession revenues per patron.

Net income for the quarter was $5.3 million, compared to net income of $118.2 million last year. The 2007 net income number included an after-tax gain of $129.6 million related to the sale of a portion of the company's investment in National CineMedia, LLC and non-cash impairment charges of $49.7 million.

Adjusted EBITDA for the quarter was $84.2 million, up 5.1% from $80.1 million for the same period last year. Adjusted EBITDA margin was 21.0% for the quarter, compared to 21.2% last year.

"Cinemark had a solid start to the year, delivering growth in both revenue and adjusted EBITDA. We were particularly pleased with the robust growth of our international operations in the first quarter as we continue to take advantage of the opportunity to expand our theater network in Latin America and diversify our geographic footprint," said Alan Stock, chief executive officer, in a news release.

"The box office has been relatively resilient in past recessionary periods, and while second quarter comparisons are challenging, we look forward to a promising upcoming summer film slate. Furthermore, as we make progress on our digital cinema initiative plan, continue our organic growth in the U.S. and internationally with new theatre openings, and begin our 3-D rollout, we are well positioned to deliver strong operating performance in the future," Stock added in the release.

Cinemark is a Plano, Texas-based motion picture exhibitor.

Windstream inches higher

Windstream also came out with first-quarter numbers on Friday, which pushed its term loan to slightly longer levels, according to a trader.

The term loan was quoted at 98 3/8 bid, 98 7/8 offered, up from 98¼ bid, 98¾ offered, the trader said.

For the first quarter, Windstream reported total revenues of $811.7 million, up 4% from $783.7 million in the first quarter of 2007.

Net income for the quarter was $123.7 million, or $0.27 per diluted share, compared to $99.9 million, or $0.21 per diluted share last year. Earnings per share included $1.6 million in merger and integration expenses for a billing system conversion related to the acquisition of CT Communications.

And, operating income for the quarter was $298.7 million, up 11% from $269.6 million last year.

"Windstream continues to deliver strong operating and financial results in a challenging economic environment that, to date, does not appear to be having much effect on our business," said Jeff Gardner, president and chief executive officer, in a news release.

"We are successfully replacing residential voice revenue streams with growth in data, special access and long-distance. Our business channel is showing growth year-over-year, and our team continues to manage expenses and capital expenditures efficiently."

Windstream is a Little Rock, Ark.-based provider of voice, broadband and entertainment services.

Harrah's slides

Harrah's bank debt was a bit weaker in trading after the company came out with disappointing first-quarter results, according to a trader.

The term loan B-3 was quoted at 93¾ bid, 94¼ offered, down from 94 bid, 94½ offered, the trader said.

For the quarter, Harrah's reported total revenues of $2.6 billion, down 2.1% from 2.65 billion last year, property EBITDA of $650.5 million, down 6.9% from $698.4 million last year, and adjusted EBITDA of $626 million, down 9.9% from $694.6 million last year.

On a combined basis, the company's first-quarter income from operations was $401 million, compared with $451.2 million in the 2007 first quarter.

The company recorded a first-quarter loss of $187.8 million, compared with net income of $185.3 million last year. First quarter 2008 included $211.3 million in pretax charges for the early extinguishment of debt and $142.6 million in non-recurring pretax merger and integration costs.

"Our first-quarter results reflect the consequences of challenging economic conditions," said Gary Loveman, chairman, president and chief executive officer, in a news release. "However, we ended the first quarter with ample liquidity, and we continued to reduce expenses companywide.

"Thanks to those new projects and other revenue-generating initiatives, as well as our geographic diversification and industry-leading customer-loyalty program, we're well-positioned to benefit from the inevitable upturn in the economy," Loveman added in the release.

Harrah's is a Las Vegas-based provider of branded casino entertainment.

Leap steady on earnings

Leap Wireless International Inc. was yet another company to announce earnings during the session, and although its term loan didn't really move, the fact that it was stable was pretty positive being that the rest of the cash market was down by about a quarter of a point, according to traders.

The term loan was quoted at by one trader at 98½ bid, 99 offered, and by a second trader at 98 3/8 bid, 99 1/8 offered. On Thursday, the loan went out at 98½ bid, 99 offered.

For the first quarter, the company reported net loss of $18.1 million, or $0.27 per diluted share, compared to net loss of $24.2 million, or $0.36 per diluted share, for the prior year quarter.

The company pointed out that net loss was able to improve even with a $7.4 million increase in net interest expense due to a higher total debt balance and a $7.3 million increase in income tax expense.

First-quarter operating income was $26.1 million, up from negative $1.5 million last year. This increase was a result of a $43.6 million increase in adjusted OIBDA, offset by a $13.8 million increase in depreciation and amortization expense.

Adjusted OIBDA for the quarter was $118.7 million, up 58.1% from $75.1 million in the same period in 2007.

"The company had a successful first quarter as the momentum in customer growth we experienced in the fourth quarter continued into 2008 and helped deliver 230,000 net customer additions spread broadly across our business," said Doug Hutcheson, chief executive officer, president and acting chief financial officer, in a release.

Leap is a San Diego-based provider of innovative and value-driven wireless communications services.

Auto slide progresses

Autos as a whole continued to get beaten up more than the rest of the market as the sector is plagued by high oil prices and negative earnings, and Friday brought about more of the same with Delphi's first quarter results failing to impress, according to a trader.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, saw its second-lien DIP term loan quoted at 98¼ bid, 99¼ offered, down from 99 bid, 99½ offered, the trader said.

Some other auto names that took a noticeable drop in trading during the session included Ford, General Motors and Accuride.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 89¼ bid, 90¼ offered, down from 90¾ bid, 91¼ offered on Thursday and 92½ bid, 93 offered on Wednesday, the trader said.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 90½ bid, 91½ offered, down from 92 bid, 93 offered on Thursday and 93¼ bid, 94¼ offered on Wednesday, the trader continued.

And, Accuride, an Evansville, Ind.-based manufacturer and supplier of commercial vehicle components, saw its term loan quoted at 95 bid, 96 offered, down from 96¼ bid, 97¼ offered on Thursday and 97¾ bid, 98¾ offered on Wednesday, the trader added.

On Friday, Delphi announced first-quarter financial results that included revenues of $5.3 billion, down from $5.7 billion in the same period last year, and a net loss of $589 million, or $1.04 per share, compared to a net loss of $533 million, or $0.95 per share, last year.

Included in the net loss was $79 million of reorganization expenses for previously capitalized equity purchase and commitment agreement fees expensed and increased workforce transition program charges of about $42 million.

Cash flow used in operating activities was $290 million, as compared to $414 million in the first quarter of 2007. The year-over-year improvement was due to a net reduction in U.S. employee workforce transition program payments of $146 million.

Also on Friday, Delphi said that General Motors has agreed to advance amounts anticipated to be paid to Delphi upon the effectiveness of the General Motors settlement and restructuring agreements.

This action, plus the amended and restated $4.35 billion DIP the company recently negotiated, provide sufficient liquidity to support the ongoing implementation of Delphi's transformation plan.

McJunkin Red Man launch approaching

Moving to the primary, timing came out on McJunkin Red Man's $450 million holdco term loan (B3/B-), as the deal is currently expected to launch with a conference call on Tuesday, according to market sources.

Price talk on the term loan is Libor plus 325 basis points with an original issue discount that is still to be determined, sources said.

"The credit agreement that governs this loan is virtually identical to the opco. This has got significant structural protection that you don't normally see in a holdco deal," one source added.

Goldman Sachs and Lehman are the lead banks on the deal, with Goldman the left lead.

In connection with this holdco loan, McJunkin Red Man is also planning on getting a $50 million upsizing to its ABL revolver (Baa3/BB) that would bring the total revolver size to $700 million.

Proceeds from the term loan, along with a $25 million revolver draw, will be used to fund a $475 million dividend to Goldman Sachs Partners.

McJunkin Red Man is a Charleston, W.Va., distributor of pipe, valves and fittings.

O'Reilly sets launch

O'Reilly Automotive came out with timing on its proposed $1.2 billion asset-based revolving credit facility, as a bank meeting for Thursday morning was scheduled to present the deal to retail investors, according to a market source.

Bank of America and Lehman Brothers are the lead banks on the deal that will be used to refinance existing debt, fund the cash portion of the acquisition of CSK Auto Corp. and provide ample liquidity.

Under the transaction agreement, O'Reilly will purchase all of the outstanding common shares of Phoenix-based CSK in an exchange offer in a transaction valued at about $1 billion, including about $500 million of debt.

CSK shareholders will receive $12.00 in value per share, including $11.00 of O'Reilly common stock plus $1.00 in cash.

Following the close of the transaction, Springfield, Mo.-based O'Reilly will be the third largest national auto parts retailer with about 3,200 stores located across the United States. The combined company had pro forma revenues of $4.4 billion in 2007.

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