Hawaiian Telcom, Young Broadcasting break for trading; Primus plummets on first quarter losses

By Sara Rosenberg

New York, May 2 - Hawaiian Telcom and Young Broadcasting Inc. both freed up for trading on Monday, with Hawaiian Telcom's institutional paper wrapping around 101 and Young's institutional paper wrapping around par ¾ by day's end.

Meanwhile, Primus Telecommunications Group Inc.'s term loan fell a couple of points in trading as the company released disappointing earnings numbers.

Hawaiian Telcom's $450 million term loan B opened for trading with levels of par ¾ bid, 101¼ offered and remained in that context steadily throughout the session, according to a trader.

"There were a few trades. Nothing too crazy," the trader added.

The term loan, which was upsized from $400 million during syndication when the company decided to decrease its bond offering by $50 million to $500 million, is priced with an interest rate of Libor plus 225 basis points.

Hawaiian Telcom's $925 million credit facility (B1/B+) also contains a $175 million revolver and a $300 million term loan A, with both of these pro rata tranches also priced with an interest rate of Libor plus 225 basis points.

JPMorgan, Goldman Sachs and Lehman Brothers are the lead banks on the credit facility, with JPMorgan the left lead.

Proceeds from the loan and the bonds will be used to help fund The Carlyle Group's $1.65 billion acquisition of Verizon Hawaii from Verizon Communications Inc.

The $500 million bond offering is comprised of $200 million eight-year senior fixed-rated notes priced at par to yield 9¾%, in line with price talk that had been revised upward from 9% to 9¼%, $150 million eight-year senior floating-rate notes priced at par to yield six-month Libor plus 550 basis points, in line with price talk that had been revised upward from 475 to 500 basis points, and $150 million 10-year senior subordinated fixed-rate notes priced at par to yield 12½%, the wide end of the 12¼% to 12½% price talk that had been revised upward from initial talk of 150 basis points behind the senior fixed-rate notes.

Under the LBO agreement, which was announced around mid-year 2004, Carlyle will acquire Verizon's Hawaii-based local telephone operations as well as the print directory, long distance and internet service provider operations; Verizon Wireless is not included in the transaction.

The closing of the transaction is contingent on approvals from the Hawaii Public Utilities Commission, the Federal Communications Commission and the U.S. Department of Justice, and on obtaining financing.

Young breaks in high pars

Young Broadcasting's $300 million term loan due 2012 opened for trading around par 3/8 bid but crept upward from that initial level to close the session at par 5/8 bid, par 7/8 offered, according to traders.

The term loan, which was upsized from $275 million during syndication, is priced with an interest rate of Libor plus 225 basis points. Original price talk on the tranche had been Libor plus 250 basis points, but the spread came down on strong demand.

The $320 million amended and restated senior credit facility (B1/B) also contains a $20 million revolver due 2010.

Wachovia Securities, Lehman Brothers, Merrill Lynch and BNP Paribas are the lead banks on the deal.

Proceeds will be used to finance a cash tender offer and consent solicitation for all of the company's $246.89 million 8½% senior notes due 2008.

Young Broadcasting is a New York-based owner and operator of television stations.

Primus falls

Primus' term loan traded down to the high 80s bid, low 90s offered on Monday from levels that were previously in the mid-to-high 90s context as the company announced first quarter numbers that were far from stellar, according to traders.

One trader had the bank debt quoted at 87 bid, 94 offered. A second trader said he saw one guy offering $1 million of the paper for 92 on Monday and that same $1 million piece was being offered by the same guy on Friday at 97.

For the first quarter, Primus reported net revenue of $314 million compared to $348 million in the first quarter 2004, net loss of $35 million compared to net loss of $10 million in the first quarter 2004, and diluted loss per common share of $0.38 compared to basic and diluted loss per common share of $0.11 in the first quarter 2004.

Adjusted EBITDA was $6 million for the first quarter versus $25 million in the prior quarter and $44 million in the first quarter 2004.

Based upon results for the first quarter and potential continuation of similar trends, adjusted EBITDA for 2005 is now estimated to be in the range of $35 million to $50 million. When releasing fourth quarter 2004 numbers the company had said that 2005 adjusted EBITDA could vary within the relatively wide range of $70 million to $90.

"The sequential quarterly revenue decline was primarily due to a $23 million decline in our prepaid services revenue in Europe, a $15 million decline in high-margin core retail revenues, partially offset by $8 million of growth from our new product initiatives, $3 million of growth in our wholesale voice business and $4 million from the strengthening of foreign currencies," said Thomas R. Kloster, chief financial officer, in a news release.

Primus, a McLean, Va., telecommunications company, just obtained its $100 million senior secured term loan (B3/B-) in February of this year. The tranche carries an interest rate of Libor plus 650 basis points and is non-callable for the first year, callable at 103 in the second year, callable at 102 in the third year and callable at 101 in the fourth year.

Calpine gains continue

Calpine Corp.'s second-lien bank debt was stronger on Monday still on follow-through from Friday's somewhat reassuring pre-announced first quarter numbers, with levels moving up about a point to 74 bid, 75 offered, according to a trader.

"It's more of the same. Herd turns the other way and all of a sudden everybody wants to buy it," the trader remarked.

On Friday, the San Jose, Calif.-based power company released preliminary first quarter results to retaliate against recent bankruptcy rumors by assuring investors that numbers would be in line with expectations and that the company remains on track to achieve 2005 earnings goals.

The company said it would end the first quarter with cash and cash equivalents on hand of about $800 million, and restricted cash totaled approximately $500 million.

EBITDA, as adjusted for non-cash and other charges, is expected to be about $240 million for the quarter. And, for the year ended Dec. 31, Calpine still expects EBITDA, as adjusted for non-cash and other charges, to be in the range of $1.6 billion to $1.7 billion.

The company expects a fully diluted loss per share of about $0.38 for the first quarter. For the year ending Dec. 31, Calpine still expects loss per share in the range of $0.80 to $0.90 based on indications that market spark spreads are remaining in line with the company's earlier expectations.

After releasing these results on Friday, Calpine's second-lien paper moved up to around 73 bid, 74 offered, from 71½ bid, 73 offered.

Additional details on first quarter results will be provided in a Thursday conference call.

NewPage closes

NewPage Corp., a Cerberus Capital Management LP newly formed portfolio company, completed its acquisition of MeadWestvaco Corp.'s papers business and associated timberlands for $2.3 billion, according to a news release.

To help fund the acquisition, NewPage entered into a new $1.325 billion credit facility consisting of a $750 million term loan B (B1/B) with an interest rate of Libor plus 300 basis points, a $225 million Escanaba Timber Co. term loan (B3/BB-) with an interest rate of Libor plus 300 basis points and a $350 million asset-based revolver with an interest rate of Libor plus 225 basis points.

The company also sold $775 million of bonds.

Goldman Sachs and UBS were joint lead arrangers on the credit facility, with Goldman the left lead.

NewPage is a Dayton, Ohio, producer of coated and carbonless papers.

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