Charter heads higher as CFO is named; Auto sector continues to see good buying interest

By Sara Rosenberg

New York, Jan. 24 - Charter Communications Inc.'s term loans crept their way to stronger levels on Tuesday as the market reacted positively to the company's appointment of a chief financial officer.

Meanwhile, in other secondary doings, the auto sector as a whole continued to see good buying interest from market players, keeping bank debt levels feeling firm at their recent highs.

Charter's bank debt forged its way into higher territory as the St. Louis-based broadband communications company announced the hiring of Jeffrey T. Fisher to the position of executive vice president and chief financial officer, effective Feb. 6.

The newly named CFO most recently served as senior vice president for Delta Air Lines, overseeing the company's corporate restructuring group.

Fisher is replacing the interim chief financial officer, Paul E. Martin, who will continue as Charter's senior vice president and controller until at least March 31.

In reaction to this Monday night management change announcement, Charters' term loan A and term loan B bank debt gained about a quarter of a point on the day, according to a trader, with the company's term loan A closing the session quoted at par ½ bid, par ¾ offered and the company's term loan B closing the session quoted at par ¾ bid, 101 offered.

In addition, after the close Tuesday, Charter filed preliminary fourth-quarter numbers with the Securities and Exchange Commission in an 8-K.

The company currently expects actual revenue for the fourth quarter of $1.335 billion to $1.345 billion, which is an approximately 4.6% to 5.4% increase compared with actual fourth quarter of 2004. On a pro forma basis, fourth-quarter revenue is expected of $1.34 billion to $1.35 billion, which is an approximately 5.5% to 6.2% increase compared with pro forma fourth quarter of 2004.

Charter currently expects actual adjusted EBITDA for the fourth quarter of $485 million to $495 million, which is an approximately 3.3% to 5.3% decrease compared to actual fourth quarter of 2004. On a pro forma basis, fourth-quarter adjusted EBITDA is expected to be $490 million to $500 million, which is an approximately 2% to 3.7% decrease compared with pro forma fourth quarter of 2004.

And, capital expenditures for the fourth quarter of 2005 are expected to be about $270 million to $280 million, which is lower than fourth quarter of 2004 capital expenditures of $285 million and similar to the third-quarter 2005 capital expenditures of $273 million.

Autos remain in spotlight

The auto sector in general has been a strong focus in the secondary over the past two to three weeks as levels were originally pushed higher by the previous uncertainty over where year-over-year financials might fall out - creating a flight to quality out of bonds and into more secure bank debt by investors, according to a trader.

And then, with Ford Motor Co.'s release of better-than-expected numbers during Monday's session, a piggy back effect was created, with buying interest in various auto names continuing to grow, resulting in even more firmness to the recently elevated trading levels seen in the sector, the trader explained.

For example, Key Automotive's first-lien bank debt is now trading in the par 1/8 bid, par ½ offered context and its second-lien bank debt is now trading in the 98 bid, 99½ offered context, the trader said. Over the past two to three weeks both the first- and the second-lien levels have risen by about 2 points.

Another example is Hayes Lemmerz International Inc., whose first-lien bank debt is now trading in the 99¾ bid, par ¾ offered context and whose second-lien bank debt is now trading in the 98 bid, 99 offered context, the trader said. These first- and second-lien pieces have also seen a rise in levels of about 2 points over the past two to three weeks.

And, Visteon Corp.'s bank debt, which was stronger by about a quarter of a point on Monday immediately following the Ford results, continued to trade at its recent new highs in the 101 bid, 101½ offered range, a second trader added.

On Monday morning, Ford announced fourth-quarter and full-year 2005 financial results and outlined a plan to restore profitability to its automotive business in North America that includes material cost reductions of at least $6 billion by 2010, reducing capacity by 1.2 million units or 26% by 2008 and reducing plant-related employment by 25,000 to 30,000 people by 2012, in addition to salaried personnel reductions and a reduction in the company's officer ranks.

In the fourth quarter, Ford reported net income of $124 million, or $0.08 per share, compared with net income of $104 million, or $0.06 per share, in 2004. Excluding special items, fourth-quarter after-tax income from continuing operations totaled $511 million, or $0.26 per share, compared with $554 million, or $0.28 per share, a year ago.

Total sales and revenue in the fourth quarter were $47.6 billion, compared with $44.9 billion in the year-ago period.

Full-year 2005 net income was $2 billion, or $1.04 per share, compared with $3.5 billion, or $1.73 per share in 2004. Excluding special items, 2005 full-year after-tax income from continuing operations totaled $2.5 billion, or $1.28 per share, compared with $4.3 billion, or $2.11 per share, excluding special items, in 2004.

Lastly, Ford's full-year sales and revenue for 2005 was $178.1 billion, up from $171.7 billion a year ago.

Hayes Lemmerz is a Northville, Mich.-based supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. Visteon is a Van Buren Township, Mich., automotive supplier.

Kodak trades up with market

Eastman Kodak Co.'s bank debt traded up by another eighth of a point on Tuesday in sympathy with the overall loan market being up basically across the board by the same amount, according to a trader.

The funded term loan closed the day quoted at par ½ bid, par ¾ offered, the trader said.

Kodak is a Rochester, N.Y.-based digital imaging products, services and solutions company.

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