Wyndham holders still focused on bonds; Adelphia drops as Moody's cuts bank debt ratings

By Sara Rosenberg and Paul A. Harris

New York, June 5 - Trading in Wyndham International Inc.'s bank loan paper remained light as the structure of the company's bond deal changed Wednesday. Bank loan market participants are watching the bonds carefully since proceeds are going to be used towards the repayment of bank debt. Meanwhile, Adelphia Communications Corp. declined after Moody's Investors Service issued yet another ratings downgrade.

Wyndham International Inc. held a bank call regarding the usage of proceeds from the bond issuance after news of a restructured and downsized bond deal hit the market, according to market sources. Details of what was said during the call are "not public information," a fund manager said.

The Dallas, Tex. lodging company's B loan traded at around 93, according to a trader. "As for the increasing rate loans, no one knows where they are," the trader said, adding that nothing could be determined until the bank call was over.

"It's a locked market right now," the fund manager said.

Proceeds from the bonds were supposed to be used to repay certain bank debt, which includes the increasing rate loans, according to market sources. The deal is expected to price midday Thursday.

Wyndham's bond deal was downsized to $500 million from $750 million, a syndicate source informed Prospect News, adding that price talk was widened to 11% from the 10¾% area. Also the call lockout was lengthened to four years from three years.

JP Morgan and Bear Stearns & Co. are joint bookrunners.

Following release of a Moody's downgrade, Adelphia dropped by about four or five points in secondary trading, with the Adelphia Century loan trading at 84. However, according to a trader, the Coudersport, Pa. cable company's bank debt did bounce back slightly and started to stabilize. In fact, during late trading, Adelphia Century saw bids at 861/2.

"Adelphia was jumping all over the place," the trader said. "It appears to have found a floor at about 85, 86."

Moody's downgraded the bank debt of Adelphia's subsidiaries, including cutting FrontierVision Operating Partners senior secured bank debt to B2 from B1, Olympus Cable Holdings senior secured bank debt to B2 from B1, Century Cable Holdings senior secured bank debt to Caa1 from B1, Century-TCI senior secured bank debt to B3 from B1, Parnassos senior secured bank debt to B3 from B1 and UCA et al senior secured bank debt to Caa1 from B1.

The rating actions reflect "our estimated relative expected loss severity for the company's many different instruments from the top to the bottom of its capital structure. Under the now much more certain bankruptcy scenario as currently anticipated, and on a potentially imminent basis, expected credit losses in general will likely be greater than previously anticipated," Moody's said.

According to Moody's, creditors of Olympus Cable Holdings and FrontierVision Operating Partners are in the best relative recovery position. Creditors of Olympus and FrontierVision's holding companies are also fairly well protected, Moody's said. Century Cable Holdings and UCA bank debt have a perceived risk of absorbing some losses. Parnassos bank debt is expected to fare better than Century and UCA, however, it is still seen as carrying some risk, Moody's said.

WorldCom Inc.'s bank loan levels have remained relatively consistent in the mid-90s for the 2002 debt and higher 80s for the drawn down facility.

"[WorldCom] is still trading like there isn't a new bank deal," the trader said. "It won't price higher until the new bank loan is completed."

The Street, at this point, does not foresee any problems with the Clinton, Miss. communications company's ability to negotiate new credit facilities and the loans are expected to get done, the trader added.

The banks have proposed larger, secured facilities, as opposed to unsecured, short-term loans, WorldCom officials revealed in a press conference on May 9, adding that negotiations are expected to conclude within the next 30 days.

In a press conference on May 15, WorldCom officials stated that the company is hoping to obtain a $2.65 billion secured credit facility maturing in June 2005 and a $2.35 billion secured credit facility maturing in June 2006. The $5 billion in new loans is intended to give people more confidence in WorldCom's liquidity. The company is close to finalizing terms and, once completed, the terms will be delivered down throughout the syndicate.

In primary activity Wednesday, Riverwood Holding Inc. launched its $250 million add-on term B. The term B expires in approximately 5.8 years and has an interest rate of Libor plus 250 basis points. Deutsche Bank and JPMorgan Chase are lead banks on the deal. Proceeds from the Atlanta, Ga. paperboard and packaging company's loan will be used to repay outstanding debt.

Also on Wednesday Buffets Inc.'s held a bank meeting regarding its new $255 million senior secured credit facility (BB-), according to a syndicate source. Credit Suisse First Boston is the lead bank on the deal and Fleet Securities is the syndication agent.

The Eagen, Minn. restaurant chain's loan consists of a $205 million seven-year term B with an interest rate of Libor plus 350 basis points, a $30 million five-year revolver with an interest rate of Libor plus 325 basis points and a $20 million five-year letter of credit facility with an interest rate of Libor plus 325 basis points, a syndicate source said.

Proceeds are being used to refinance existing debt and to pay sponsor dividends.

The deal, according to the syndicate source, is expected to go well, however, he had not yet received feedback from the bank meeting.

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