Adelphia's Century loan loses ground as Century Communications files for Chapter 11

By Sara Rosenberg

New York, June 10 - Adelphia Communications Corp.'s Century loan dropped several points in the secondary bank loan market Monday as Century Communications Corp. filed for bankruptcy protection under Chapter 11. The Adelphia Century loan was bid at 77 and offered at 80 on Monday, according to a fund manager. On Friday, the Century loan was reported as trading at 85.

The Adelphia Century loan has traded lower than the Olympus loan due to the fact that the latter is a better credit, according to market professionals. For example, on Friday, while Century was trading at 85, Olympus was trading at 92.

Moody's Investors Service, following a ratings downgrade last week, rates Olympus Cable Holdings senior secured bank debt B2, Century Cable Holdings senior secured bank debt at Caa1 and the Century-TCI senior secured bank debt at B3.

The Olympus loan fell as well, with the bid at 88 and the offer at 90, a market professional said.

"I'm sure there was retail trading of the Century loan as people look to lighten their exposure," the professional said. "There's a lot of disappointment and a lot of frustration (with Adelphia)."

The entire sector felt the brunt of investor dissatisfaction as bank loans for cable companies in general went down with Adelphia. "It wasn't the friendliest day for cable companies," the professional added.

In addition to having one of its units file for Chapter 11, the troubled Coudersport, Pa. cable company filed its Form 8-K with the Securities and Exchange Commission Monday. Adelphia revised consolidated revenues downwards to $2.548 billion for 2000 from the previously reported $2.608 billion for 2000 and $3.51 billion for 2001 from $3.58 billion. Consolidated EBIDTA was preliminarily revised to $1.042 billion for 2000 from $1.202 billion and $1.199 billion for 2001 from $1.409 billion. For 2002, EBIDTA is anticipated at approximately $1.3 billion, the filing said. Lastly, the company's basic cable subscriber number was revised to 5.763 million at Dec. 31, 2001 from the original number of 5.810 million.

Furthermore, Deloitte & Touche LLP was removed as the company's independent accountants and Adelphia is currently looking for a new independent accounting firm, according to the SEC filing.

Other Adelphia news includes the resignation of Leonard Tow and Scott Schneider from the board of directors.

Coming up in the primary, Graham Packaging Corp. is scheduled to hold a bank meeting Tuesday regarding its new $700 million credit facility, according to a syndicate source. The loan consists of a $550 million seven-year term B with an interest rate of Libor plus 250 basis points and a $150 million five-year revolver with an interest rate of Libor plus 250 basis points, the syndicate source said. Deutsche Bank and Citibank are the lead banks on the deal.

Proceeds will be used to refinance existing debt.

The refinancing is designed to extend the maturities of the company's outstanding long-term debt, reduce interest expense and improve financial flexibility, according to a filing with the Securities and Exchange Commission.

The loan is expected to close upon completion of the company's initial public offering.

Graham Packaging is a York, Pa. designer, manufacturer and seller of customized blow molded plastic containers for the branded food and beverage, household and personal care and automotive lubricants markets.

Also Tuesday, Six Flags Inc. is scheduled to hold a bank meeting regarding its new $1.050 billion credit facility, according to market sources. Lehman Brothers is the lead bank on the deal.

The loan consists of a $600 million seven-year term B, a $300 million six-year working capital revolver and a $150 million six-year multi-currency revolver. The Oklahoma City, Okla. theme park operator will use the new credit facility to refinance existing debt. Basically all assets of the company are being used to secure the loan.

In other news, Veridian Corp. closed on its $200 million senior secured credit facility (Ba3/BB-). Wachovia acted as sole lead and administrative agent for the offering. The new loan consists of a $70 million five-year revolver with an interest rate of Libor plus 275 basis points and a $130 million six-year term B with an interest rate of Libor plus 325 basis points. Proceeds will be used to refinance existing debt, fund working capital needs and for other general corporate purposes.

On June 5, the company made its initial public offering by pricing 13.5 million shares of common stock at a price of $16 per share. Credit Suisse First Boston was the lead manager for the offering. Co-managers were Wachovia Securities, CIBC World Markets and SG Cowen.

Veridian is an Arlington, Va. provider of information-based systems, solutions and services to U.S. government.

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