Charter trades higher ahead of Friday's bank meeting on amendment

By Sara Rosenberg

New York, May 29 - Charter Communications Inc.'s term loan B underwent a notable move up on Thursday, with market participants quoting the loan anywhere from a point to over two points higher on the day. None of the traders was quite sure why the loan jumped higher but there was some speculation that it had a lot to do with the upcoming bank meeting on Friday regarding an amendment, although the specifics of the amendment were unknown.

"There has been an amendment out there which involved Allen putting in more equity and covenant relief so it's possible that the bank meeting is coming up and the amendment is passing. But I don't know. I'm guessing this would have been priced in already since that was why it popped up out of the 80s," one trader said.

In April, Charter entered into a commitment letter with Vulcan Inc., an affiliate of Paul Allen, under which Vulcan would lend Charter Communications VII, LLC up to $300 million. This credit facility includes a subfacility of up to $100 million for the issuance of letters of credit.

The loans and letters of credit could only be used to repay loans or replace letters of credit under the operating subsidiaries' credit facilities in order to remain in compliance with leverage ratios or to create cushions in excess of the minimum amount necessary to comply with the ratios.

The proposal from Paul Allen for the loan was received in February and was approved by the Special Committee and the board of directors on April 11. The facility is subject to the negotiation and execution of definitive documentation by June 30.

According to market talk, the amendment would also provide for an increase of 50 basis points in the interest rates on Charter's loans.

The company declined to comment on the bank meeting or even confirm that one would be taking place.

According to one trader, the term loan B traded at 921/2, up from trading at 91½ previously. According to a second trader, who saw the tranche bid at 92 5/8 and offered at 93 5/8 by one person and bid at 92 by another person, the B loan was up 2 1/8 points on the bid side and 2½ points on the offer side.

The other possible impetus behind the higher levels could be Thursday's asset sale announcement, although it could be argues that the asset sales in general, like the possible amendment, were also expected so it should have been priced in to the paper previously as well, according to a trader.

The St. Louis cable company announced that it signed a definitive agreement with WaveDivision Holdings, LLC for the sale of its Port Orchard, Wash. system in a transaction valued at $91 million. The sale, which is expected to close by year-end, is subject to certain closing conditions, price adjustments and regulatory review.

Western Wireless Corp.'s bank debt was said to be very active on Thursday, trading as low as 92¼ and then trading as high as 93, according to a trader.

The bank debt has basically been strengthening in a response to a run up in the sector in general, a second trader explained.

In the primary, Fairchild Semiconductor International Inc.'s $300 million five-year term loan B was oversubscribed prior to the bank meeting on Thursday and had something like $1 billion in commitments by the end of the launch day, according to a syndicate source.

"The book is huge," the source said. "It's a good market. A good company. Lots of cash on the balance sheet. Leverage is low. Well diversified. Good market leadership position. [And] investors have a lot of money to invest."

The term loan B was priced with an interest rate of Libor plus 300 basis points and is being offered at par.

There is also a $175 million four-year revolver with an interest rate of Libor plus 250 basis points in the credit facility. The upfront fee is 50 basis points for a commitment of $15 million.

Deutsche Bank and Fleet are the lead banks on the deal.

Proceeds will be used by the South Portland, Me. semiconductor company to retire high-yield bonds.

infoUSA obtained a new $145 million senior credit facility, consisting of a $100 million term loan and a $45 million revolver. Bank of America was the lead bank on the deal.

Now that the company has successfully restructured its credit facility, increasing the size from $115 million, the company can use the increased availability to redeem its 9½% senior subordinated notes.

"As we've stated many times, one of our most important goals is to de-leverage the company. By repurchasing our senior subordinated notes, we plan to have more cash flow available after paying the lower interest expense to continue to reduce our credit obligations. We also intend to continue to apply a portion of our sizable internal cash flow for additional debt repayment. We anticipate that these actions will increase earnings per share over the long term," said Vin Gupta, chairman and chief executive officer, in a news release.

infoUSA is a Omaha, Neb. provider of business and consumer information products, database marketing services, data processing services, and sales and marketing solutions.

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