GM, Dynegy, Cablevision all fall with earnings; LCDX inches higher

By Sara Rosenberg

New York, Feb. 26 - General Motors Corp.'s term loan headed lower on Thursday after the company reported numbers and more questions over the company's liquidity position surfaced into investors' minds.

Also coming out with earnings were Dynegy Inc. and Cablevision Systems Corp., with Dynegy's strip of institutional bank debt and Cablevision's term loan both dropping on the news.

In more secondary happenings, LCDX 10 was slightly stronger, while the cash market was unchanged to a touch heavier.

General Motors slides

General Motors' term loan softened in trading as the company came out with earnings results that were, according to the company, impacted by the dramatic deterioration in global economic and market conditions during the year, declining consumer confidence and a 50-year low in per-capita auto sales in the United States.

According to a trader, the term loan was quoted at 37 bid, 39 offered, down from previous levels of 38 bid, 40 offered.

For the fourth quarter, General Motors reported a net loss of $9.6 billion, or $15.71 per diluted share, compared to a net loss of $1.5 billion, or $2.70 per diluted share, in the year-ago period.

Adjusted net loss for the quarter was $5.9 billion, or $9.65 per diluted share, compared to adjusted net income of $46 million, or $0.08 per diluted share, last year.

Fourth-quarter results reflect special items totaling $3.7 billion.

And, revenue for the quarter was $30.8 billion, down from $46.8 billion in the fourth quarter 2007.

General Motors liquidity worsens

Also weighing on peoples' minds is the question about General Motors' liquidity, which the trader said was a factor in term loan levels falling on Thursday.

As of Dec. 31, General Motors had cash, marketable securities and readily available assets of the Voluntary Employees Beneficiary Association trust totaling $14 billion, down from $27.3 billion on Dec. 31, 2007.

Adjusted automotive operating cash flow was negative $5.2 billion in the fourth quarter, and the company ended the 2008 calendar year with adjusted automotive operating cash flow of negative $19.2 billion, largely due to lower volume across the company's global operations and negative working capital.

"Two thousand eight was an extremely difficult year for the U.S. and global auto markets, especially the second half," said Rick Wagoner, chairman and chief executive officer, in a news release. "These conditions created a very challenging environment for GM and other automakers, and led us to take further aggressive and difficult measures to restructure our business.

"We expect these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions," Wagoner added.

GM expects "going concern"

Along with its earnings release, General Motors said that it anticipates receiving a "going concern" opinion from its auditors in the 2008 10-K.

On Dec. 31, the company entered into a loan agreement with the U.S. Department of Treasury for funding of $13.4 billion, payable in three tranches. The initial installment of $4 billion was provided on Dec. 31, 2008, followed by subsequent installments of $5.4 billion on Jan. 21 and $4 billion on Feb. 17.

In a viability plan filed with the Treasury on Feb. 17, General Motors included a request for additional government funding, as well as support from other governments outside of the United States.

The company said that it requires this additional funding in 2009 to continue operations until global automotive sales recover and its restructuring actions generate benefits.

"Until they get the money, everyone is wondering when will it come. Uncertainty about overall liquidity," the trader added.

General Motors is a Detroit-based automaker.

Dynegy tumbles

Dynegy's strip of institutional bank debt gave up over a point during the trading session following the company's release of its fourth-quarter results and a reduction in full-year guidance, according to a trader.

The strip of debt was quoted at 81¼ bid, 83¼ offered, down from Wednesday's levels of 83 bid, 85 offered, the trader said.

For the quarter, the company posted a net loss of $7 million, or $0.01 per diluted share, versus to net loss of $46 million, or $0.06 per diluted share, in the comparable period in 2007.

Revenues for the quarter were $795 million, compared to $724 million last year

And, adjusted EBITDA for the quarter was $129 million, compared to adjusted EBITDA of $249 million in the fourth quarter of 2007.

Dynegy liquidity around $2 billion

Dynegy's liquidity, as of Feb. 20, was about $2 billion, consisting of $858 million in cash on hand and about $1.2 billion in unused availability under its credit facility.

This is an improvement from about $1.8 billion - comprised of $693 million in cash on hand and about $1.1 billion in unused credit facility availability - at Dec. 31.

"Dynegy has built a strong capital structure that serves as a hedge against changes in commodity prices and financial uncertainty," said Bruce A. Williamson, chairman, president and chief executive officer, in a news release.

"With available liquidity that currently stands at about $2 billion, a low-cost bank facility that extends to 2012 and no significant debt maturities until 2011, we have no immediate requirements to access the capital markets during the current economic downturn. This allows us to concentrate on the operational and commercial aspects of our business, while positioning us to capitalize on future power market improvements, as we believe long-term market fundamentals remain intact," Williamson added.

Dynegy lowers guidance

Also on Thursday, Dynegy said that it reduced its 2009 guidance estimates, largely to reflect lower commodity prices, partially offset by lower South American coal costs and favorable fuel oil spreads that are expected to benefit its Northeast segment.

The new estimates are a range of adjusted EBITDA of $700 million to $825 million, a range of adjusted cash flow from operations of $160 million to $285 million, and a range of adjusted free cash flow of negative $300 million to negative $175 million.

The new guidance estimates for the most directly comparable measures on a GAAP basis include a range of net loss of $140 million to $65 million, and a range of cash flow from operations of $140 million to $265 million.

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

Cablevision dips on earnings

Cablevision's term loan also struggled a little on Thursday as quarterly results emerged, with the debt quoted at 90 bid, 92 offered, down a half a point on the day, according to a trader.

For the fourth quarter, Cablevision's net loss was $321.41 million, or $1.11 per share, compared to net income of $6.636 million, or $0.02 per share in the 2007 fourth quarter.

Consolidated net revenues for the quarter were $2.052 billion, up 11.4% from $1.842 billion last year.

"Cablevision delivered strong results for 2008. Despite the economic downturn, the company reported full year, double-digit increases in revenue and AOCF," said James L. Dolan, president and chief executive officer, in a news release.

"Also noteworthy in 2008, was that Cablevision generated more than $500 million in free cash flow, compared with $158 million in 2007. The proceeds from our recent successful debt financings, our cash flow and the capacity we have under existing credit facilities have positioned us well from a near-term liquidity perspective," Dolan added.

Cablevision is a Bethpage, N.Y.-based media and entertainment company.

LCDX gains ground

In more trading news, LCDX 10 was better on the day, but the cash market was described by traders as unchanged to down anywhere from a quarter to a half a point depending on the name.

The index was quoted at 74.05 bid, 74.20 offered, up from Wednesday's levels of 73.85 bid, 74.15 offered, traders said.

Meanwhile, stocks were lower with Nasdaq closing down 33.96 points, or 2.38%, NYSE closing down 40.15 points, or 0.84%, S&P 500 closing down 12.07 points, or 1.58%, and Dow Jones Industrial Average closing down 88.81 points, or 1.22%.

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