Allied Waste bank debt moves up on news of bond sale

By Sara Rosenberg

New York, Nov. 12 - Allied Waste Industries Inc.'s bank debt rallied slightly Tuesday on news of a proposed bond sale - completed late in the day - which will be used to reduce bank debt.

The company's bank paper was quoted up by ½ to ¾ point at 97¾ bid, 98¼ offer.

Allied Waste North America Inc., a wholly-owned subsidiary of Allied Waste Industries, announced plans to sell $250 million in senior notes due 2012 and upsized the offering at pricing to $300 million. Proceeds from the sale will be used to repay portions of the company's senior secured term loans A, B and C, which would reduce debt maturities in 2003 by about $90 million.

Furthermore, the Scottsdale, Ariz. waste services company affirmed its previous 2002 financial guidance, including EBITDA of approximately $1.75 billion, free cash flow of approximately $350 million and total debt below $8.95 billion.

Meanwhile, Wyndham International Inc.'s bank debt "continues to settle" at around 70½ bid, 74 offer, a trader said. The bank debt didn't see much of a change from Friday's levels, which were characterized as the low 70s, despite news of lower-than-expected earnings.

On Tuesday, the Dallas hotel enterprise reported third quarter results including revenue of $386.8 million, down from $388.6 million in the third quarter of 2001 and EBITDA of $61.1 million. Net loss per common share was 68 cents for the quarter compared to analyst estimates of a net loss of 51c per share.

Other recent company news includes the announcement of some additional asset sales on Friday. The company sold the Ramada Inn and Conference Center in Nashville to a joint venture between Montclair Hotel Investors and Oaktree Capital Management for $8.4 million. Proceeds from the sale are being used to pay down debt.

"It's only $8 million," a trader previously told Prospect News, explaining that the net proceeds are too small to affect the secondary trading levels of the company's bank debt.

Tenet Healthcare Corp.'s multi-year tranche bank debt stabilized somewhat on Tuesday at 87 bid, 90 offer, compared to Friday's bid/offer around 85/90. "I haven't seen any actual trades on it," the trader added.

The company's bank debt saw a dramatic drop from quotes in the high 90s due to recent news of management changes, lawsuits and audits.

"The bid in the hospital sector has probably softened a little bit based on Tenet," another trader told Prospect News.

Last week, Tenet received an audit request from the Kansas City office of the Office of Audit Services of the Department of Health and Human Services. The objective of the audit is to determine whether outlier payments to Tenet hospitals were paid in accordance with Medicare laws and regulations.

Furthermore, the company restructured its management team naming Trevor Fetter as president, reporting to chairman and chief executive officer Jeffrey C. Barbakow. The company's chief operating officer, Thomas B. Mackey, retired and David L.Dennis, chief corporate officer and chief financial officer, resigned. Stephen D. Farber was promoted to chief financial officer from his previous position as treasurer and senior vice president corporate finance.

In addition to all this, the Santa Barbara, Calif. hospital chain also faces shareholder lawsuits.

In primary news, Wackenhut Corrections Corp. held a bank meeting for a new $175 million credit facility, according to market sources. BNP Paribas and Wachovia are the lead banks on the deal.

The loan consists of a $50 million five-year revolver and a $125 million six-year term loan B with an interest rate of Libor plus 350 basis points, market sources said.

"Theoretically it should be okay," a market professional said, adding that he didn't know enough about the company to give a full analysis of the deal.

Proceeds will be used to refinance outstanding debt.

Wackenhut Corrections is a Palm Beach Gardens, Fla. operator of private correctional facilities.

Recently National Waterworks Inc. reworked its credit facility, changing the pricing on the $250 million seven-year term loan B to Libor plus 400 basis points from Libor plus 375 basis points. In addition, upfront fees are now 50 basis points.

"I think the market is feeling a little bit tentative," the market professional said. "Everything is getting dictated by the investors nowadays."

The $75 million six-year revolver was left unchanged with an interest rate of Libor plus 300 basis points.

Goldman Sachs, JPMorgan and UBS Warburg are the lead banks on the deal, which will be used to help fund the acquisition of US Filter Distribution Group Inc. by a company jointly owned by JPMorgan Partners and Thomas H. Lee Partners.

National Waterworks is a Palm Desert, Calif. provider of water and wastewater systems.

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