Huntsman trades about three points higher following better-than-expected earnings

By Sara Rosenberg

New York, April 28 - Huntsman's bank debt moved up a couple of points on Monday as investors reacted positively to the release of the better-than-expected first quarter earnings numbers, according to traders. The term loan A and B traded at 93, up from a previous trading level in the high 80s to 90 area.

"Everything is moving up," one trader explained. "But the release of better-than-expected earnings helped it out too."

On Monday, the combined Huntsman companies reported first quarter 2003 EBITDA of $106.6 million, compared to $134.7 million for the same period one year ago. More specifically, Huntsman International Holdings LLC reported first quarter EBITDA of $74.7 million, compared to $83.9 million in the first quarter of 2002 and Huntsman LLC posted first quarter EBITDA of $31.9 million, compared to $50.8 million for the same period one year ago.

For the three months ended March 31, Huntsman International had operating income of $17.5 million on revenues of $1,297.7 million compared to operating income of $24.5 million on revenues of $997.9 million for the same period in 2002.

For the same period, Huntsman LLC had an operating loss of $9.1 million on revenues of $831.9 million compared to operating income of $14.2 million on revenues of $588.2 million for the same period in 2002.

As of March 31, Huntsman International had borrowings of $201 million outstanding under its $400 million revolver in addition to approximately $3 million outstanding in letters of credit issued.

Huntsman LLC had borrowings of $105 million outstanding under its $275 million revolver in addition to $15 million in letters of credit issued. On Friday, the company amended certain financial covenants under its credit facility, including the leverage, interest coverage and fixed charge coverage covenants, through the end of 2004.

"We are very pleased with our overall financial performance, especially given the extremely volatile energy costs we faced in the first quarter. We saw natural gas prices spike to all-time highs in February, and sustained gas prices far higher than historical averages. Nevertheless, we were able to institute price increases for most of our products to help offset the significantly increased costs. We also established price increases for some of our products, independent of energy costs," said Peter R. Huntsman, president and chief executive officer, in a news release.

Huntsman is a Salt Lake City chemical company.

Moore Corp. also released favorable earnings and the company's bank debt was labeled as "strong" on Monday with the term loan B quoted at "par ½ at least", according to a trader, who added that paper has been performing well for a while now with quotes above par.

For the first quarter of 2003, the company reported net earnings of $29.2 million, or $0.26 per share, versus net earnings of $12.5 million, or $0.11 per share, for the same period in 2002. The company beat analyst estimates of net earnings of $0.18 per share.

Other results included income from operations of $35.9 million versus $21.9 million in 2002 and net sales of $511.1 million compared to $529.5 million in 2002.

Moore is a Mississauga, Ont. diversified printing company.

On its second day of trading, Allied Waste Industries Inc.'s term loan B traded closer to the bid side at par 3/8 plus, according to a trader. The paper was quoted with a par ¼ bid, par ½ offer at the end of the day.

The $1.5 billion seven-year term loan B, which was issued at par, broke for trading on Friday with a par ½ bid, par 5/8 offer.

The term loan B carries an interest rate of Libor plus 325 basis points and is part of a $3 billion facility (Ba3/BB/BB) that also includes a $1.5 billion five-year revolver with an interest rate of Libor plus 300 basis points.

JPMorgan, Citibank, Credit Suisse First Boston, Deutsche and UBS Warburg are the lead banks on the Scottsdale, Ariz. solid waste management company's refinancing deal.

Charter Communications Inc. was a bit better bid on Monday on the operating company bank debt, according to a trader, following a two point rise in the company's high yield bonds. The paper was quoted with a 90¾ bid, 91¼ offer. On Friday the St. Louis cable company's loan was quoted with a 90¼ bid.

Nextel Communications Inc.'s term loan B and term loan C traded at 98 3/8 on Monday and following that trade, the paper seemed a "bit better offered," a trader told Prospect News, adding, "There was not enough volume to really read much into it". On Friday, the Reston, Va. wireless company's term loan B and C started the day trading at 98½ and then backed down to 98¼ by late afternoon.

In addition, Nextel's term loan D traded at 97¼ and the revolver traded at 94, basically sideways with previous levels, according to a different trader.

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