Charter plans to file, debt heads higher; Sirius XM bonds recoup losses; Sands loan slips on numbers

By Stephanie N. Rotondo and Sara Rosenberg

Portland, Ore., Feb. 12 - Charter Communications, Inc. was the big news of the day Thursday, as the company confirmed that is was planning to file for bankruptcy.

Rumors of a potential filing had been circulating for weeks and many market players believed it was just a matter of time before the highly leveraged cable provider would be forced into Chapter 11. Once the news hit that Charter was indeed planning to file, the company's bonds advanced as much as 18 points on the day in active trading.

Meanwhile, bankruptcy buzz continues to surround Sirius XM Radio Inc. But word that the company was in talks with DirecTV regarding a potential buyout gave the bonds a boost. Traders said the news helped the bonds get back to Tuesday's levels.

Investors did not react well to Las Vegas Sands Corp.'s quarterly report, traders said. The poor numbers pressured the gaming operator's bank debt, though debt associated with its Macau property headed higher.

The market will close early on Friday and will be closed Monday for President's Day.

Charter plans to file

Charter Communications' bonds were "up very big," according to a trader, following news that the company was planning to file for bankruptcy.

The trader saw the 10¼% notes due 2010 gain 18 points on the day to around 72, with about $50 million trading. He also saw the 8¾% notes due 2013 at 75, a gain of 7 points, with $35 million trading.

Another trader quoted the 10¼% notes at 66 bid, 67 offered, up 10 points, while the 8¾% notes were up 9 points at 75 bid, 76 offered.

Charter's 8% notes due 2012 were deemed more than 5 points better at 89.5 bid by another source.

Charter's term loan also headed higher, according to traders. The "old" term loan was quoted at 78 bid, 80 offered, up from Wednesday's levels of 77 bid, 79 offered, the trader said.

St. Louis-based Charter, which is controlled by Microsoft co-founder Paul Allen, said it planned to enter Chapter 11 protections by April 1 as part of a restructuring deal with bondholders. Bankruptcy buzz hit the company hard when it announced late last year it was in negotiations with bondholders and were further plagued with rumors when it missed a coupon payment in January.

Through the restructuring, the company is planning to reduce its debt by $8 billion. The agreement provides that the notes and bank debt of Charter Communications Operating LLC and CCO Holdings LLC will remain outstanding.

Charter said that the funding required by the restructuring is expected to be satisfied by cash on hand - something many market players were expecting once the company drew down its revolving credit facility - as well as an exchange of debt of CCH II LLC and CCH I LLC for new notes issued by CCH II, the issuance of additional debt, and the proceeds of an equity offering for which the company has received a backstop commitment from certain noteholders.

Also, as part of the restructuring, holders of notes issued by CCH II will receive new notes issued by CCH II or cash on account of their claims, holders of notes issued by CCH I will receive the new notes issued by CCH II and shares of common stock, and holders of notes issued by CIH and Charter Holdings will receive warrants to purchase shares of common stock.

Holders of convertible notes will receive cash and preferred stock, while holders of common stock will not receive any amounts.

In addition, on Thursday, Charter announced preliminary results for the fourth quarter, which includes expected pro forma revenue of $1.653 billion, an increase of approximately 7% compared with the same period in 2007.

Actual revenue are expected to be $1.656 billion, an increase of approximately 6.6% for the period.

Pro forma adjusted EBITDA for the fourth quarter is anticipated to be approximately $619 million, an increase of approximately 10.1% from last year.

And, actual adjusted EBITDA is expected to be $620 million, an increase of approximately 9.7% compared with 2007.

Sirius XM recoups losses

Sirius XM Radio's debt regained most, if not all, of its losses incurred on Wednesday after rumors began circulating that DirecTV was interested in buying the satellite radio provider.

A trader said Sirius' 9 5/8% notes due 2013 were back to levels seen on Tuesday around 41. The 13% notes due 2013 linked to XM were also better at 44 bid, 45 offered.

Another trader pegged the 9 5/8% notes at 41 bid, 42 offered and the 13% notes at 40 bid, 42 offered.

At another desk, the 9 5/8% notes were quoted at 42.5 bid, 43.5 offered. Yet another source placed the XM bonds at 45 bid, a gain of 1.5 points.

News reports indicated that DirecTV, the country's largest satellite-television provider, was in talks with Sirius about some sort of investment. Some are speculating that DirecTV would buy out the company and repay all of its debt. But others are concerned that a possible bankruptcy filing could get in the way. If that were the case, then EchoStar Corp., which recently made an unsolicited bid for the company - it was later rejected - would be the frontrunner in any sort of takeover deal.

Sirius has $175 million in debt maturing on Tuesday, most of which is owned by EchoStar. Chatter is that Sirius is already preparing to file for Chapter 11 protections, though one news article noted that a person involved called the preparations "procedural."

Sands bank debt dips

Las Vegas Sands' strip of institutional bank debt weakened during the trading session as investors reacted to fourth quarter results that were released late Wednesday. However, Venetian Macao's term loan was stronger, according to traders.

The Las Vegas Sands strip of delayed-draw term loan and term loan B debt was quoted at 43 bid, 44 offered, down from previous levels of 44 bid, 45 offered, traders said.

Meanwhile, the Venetian Macao term loan was quoted at 58 bid, 60 offered, up from previous levels of 56 bid, 58 offered, traders continued.

"[Las Vegas Sands] is very heavy. Has been heavy for days," one trader remarked.

A second trader explained that Vegas numbers on a relative basis were weaker than Macao numbers, so overall, the earnings news for Venetian Macao was a little better than those for Las Vegas Sands, which is why there were different reactions in trading levels.

For the quarter ended Dec. 31, Las Vegas Sands reported a net loss of $111.32 million, or $0.27 per share, compared with net income of $39.88 million, or $0.11 per share, last year.

Net revenue for the fourth quarter increased 4.3% to $1.09 billion, compared with $1.05 billion last year.

And, adjusted EBITDA was $214.16 million, down from $259.76 million in the comparable 2007 period.

"Our fourth quarter results reflect a respectable operating performance against our first objective, as our properties in Las Vegas and Macao delivered solid cash flows in the face of challenging economic environments in both markets," William P. Weidner, president and chief operating officer, said in a news release.

"Our target for cost savings initiatives has been increased to $250 million on an annual basis and these savings are designed to reduce our structural costs for a leaner environment while preserving the service standards that our guests expect us to deliver," Weidner continued.

Also late Wednesday, Las Vegas Sands announced that its subsidiary, Venetian Macao, for the fourth quarter, posted net revenue of $471.4 million, down 5.8% from $500.4 in the fourth quarter of 2007.

Operating income for the quarter was $61.3, down 12.6% from $70.1 last year.

And adjusted property EBITDAR was $112.8, down 4.3% from $117.9 in the 2007 fourth quarter.

"The Venetian Macao continues to generate strong cash flow despite difficult operating conditions, particularly in the Rolling Chip segment of the Macao marketplace. Visitation to The Venetian Macao increased by 17.7% this quarter compared to the quarter one year ago, while visitation to Macao overall increased by approximately 2.6% in the same period," Weidner added in the release.

Las Vegas Sands is a Las Vegas-based developer of multi-use integrated resorts.

Elsewhere in the gaming arena, a trader called Wynn Las Vegas LLC's bonds "pretty active," with about $20 million of its 6 5/8% notes due 2014 trading at 71.5, a decline of half a point.

MGM Mirage's 6% notes due 2009 were deemed a couple points better at 78.5, the trader added.

Another trader said both Wynn and MGM were down in early trading, but "a late-day rally helped a bit." He MGM's 8½% notes due 2010 at 61 bid, 62 offered, down 8 points from "two to three days ago" when the debt was at 69 bid, 71 offered.

Revlon loan lower

Revlon Inc.'s term loan took a bit of a hit during market hours on disappointment over the company's quarterly financials, according to a trader.

The term loan was quoted at 73 bid, 75 offered, down from Wednesday's levels of 75 bid, 77 offered, the trader said.

For the fourth quarter, Revlon posted net income of $11.3 million, or $0.22 per diluted share, compared with net income of $40.8 million, or $0.80 per diluted share, in the same period last year.

Net sales in the quarter were $334.2 million, a decrease of $39.1 million, or 10.5%, compared with $373.3 million in the fourth quarter of 2007.

And adjusted EBITDA was $66.7 million, compared with $105.1 million in the year-ago period.

For full-year 2008, Revlon recorded positive free cash flow of $26 million compared with negative free cash flow of $17.1 million in 2007.

"During the year, net sales growth in Revlon brand color cosmetics, which was driven by strong new product introductions and a more focused allocation of advertising and promotional expenditures, along with continued rigorous cost control, resulted in significantly improved financial performance," David Kennedy, president and chief executive officer, said in a news release.

"Specifically, and as we forecasted, the company improved operating margins, profitability and generated positive free cash flow and net income. In addition, during 2008, we reduced debt by $110 million, improving our capital structure," Kennedy added.

Revlon is a New York-based cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and personal care products company.

Broad market mixed

General Motors Corp.'s 7 1/8% notes due 2013 lost a point to close at 13.5, while its benchmark 8 3/8% notes due 2033 gained more than a point to end at 14.5, a trader said.

Freeport-McMoRan Copper & Gold Inc.'s 8 3/8% notes due 2017 inched higher to 89.5.

Dynegy Holdings Inc.'s 8 3/8% notes due 2016 were seen falling 4.5 points to 75.5, while its 7¾% notes due 2019 dropped 3.5 points to 71.5 bid.

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