Young Broadcast up again on TV sale news; Calpine funding delay roils investors; Kamps upsizes

By Paul Deckelman and Paul Harris

New York, Feb. 13 - Young Broadcasting's debt was up for a second consecutive session Wednesday on news that the TV station group owner sold its coveted Los Angeles station for $650 million. On the downside, investors were dismayed by the news that Calpine Corp. had not closed as expected on a $1 billion credit line, and that it had amended its third-quarter financial report at the request of the Securities and Exchange Commission to include some additional information.

In the primary market, German baker Kamps AG was rolling in dough after upsizing its planned issue of seven year senior notes.

In the secondary market, Young Broadcasting Inc. - whose bonds rose about four points in Tuesday's dealings on news reports that it was in talks to sell its KCAL-TV station in Los Angeles, the nation's Number-Two television market - made it official Wednesday, announcing that it had agreed to sell the station to CBS owner Viacom for $650 million - even more than the news reports had suggested. The company's announcement called it one of the largest single TV station deals ever. Late in the session, the New York-based station ownership groups' 10% notes due 2011 were being quoted at bid levels as high as 98.50, up more than seven points on the session and about 11 points over the past two days. Young shares were meanwhile up $2.19 (11.27%) in Nasdaq dealings, to $21.69. Volume of about 1.4 million shares was ten times the usual turnover.

Calpine, meanwhile, was headed in the opposite direction, as its shares and bonds both headed south on the double dose of bad news.

The San Jose, Calif.-based independent power producer's 8.5% notes due 2011 bounced around in a range of 74 to 78 during the session, before going home quoted at around the 75 level. The 8 5/8% notes due 2010 ended down more than two points at around 75.5.

Meanwhile, the company's shares lost 58 cents, or 6.78% on the New York Stock Exchange to close at $7.98. Volume of 19 million shares was only a bit above normal.

Calpine said during the session that it had amended its third-quarter results to include extra information at the request of the SEC, but said that the additions would not change previously reported financial results in its consolidated condensed balance sheets, statements of operations or statements of cash flows. Calpine further said that it would provide updates and elaborations to certain notes to the financial statements and other items of current interest.

Nonetheless, a trader said, "this is the last thing they need," with the financial markets in general jittery over accounting problems at such companies as the bankrupt Enron Corp. and Calpine itself taking some investor heat - as well as some SEC scrutiny - over reports that it had revealed certain information to analysts before announcing it publicly. The company has denied any improprieties in the latter matter.

The trader quoted Calpine's bonds "trading up and then trading down" before going out near the levels they had held Tuesday. The bouncing around, he said, "was no real surprise. They're having problems - but the whole (energy generation and trading) sector is having problems."

Calpine also mentioned in the amended SEC filing with that it expects the $1 billion of unsecured financing, which was announced last month, to close by the end of the first quarter, at the end of March. The company said in its Jan. 10 announcement of the facility that it expected the credit facility from the Bank of America-led seven-bank consortium to be completed by the end of last month.

Also on the downside, Polymer Group's 8¾% notes due 2008 were quoted down eight points, at 29 bid. There was no immediate fresh news heard out on the North Charleston, S.C.-based textiles company, which earlier this month announced that its banks had given the company additional time - until Feb. 22 - to come up with a restructuring plan, and had agreed to exercise forbearance on taking any action against it till then.

In the telecommunications sector, Williams Communications Group Inc. Bonds "got crushed, as usual," a trader said, noting that its widely traded 10 7/8% notes had fallen as low as 20 bid from prior levels in the 23-24 area. "They were all over the place today" before ending lower, he said.

The Tulsa, Okla.-based long-distance operator gave out guidance for its expected first-quarter results, projecting revenues in the $328-$347 million range - well down from Wall Street expectations or around $367.85 million.

Breaking the anticipated revenue pie down by sectors, Williams quarterly network revenues in a $285-$300 million range, up 20% from a year ago, while emerging market revenues would come in between $43 million and $47 million, about a 6% gain. It expects network EBITDA (earnings before interest, taxes, depreciation and amortization, a key bond market measure of cash-flow generation capacity and potential ability to service debt) of between a $10 million loss and breakeven, while emerging markets EBITDA is likely to be negative $9-11 million.

Telecommunications operator Flag Telecom's 11 5/8% notes were quoted down two points on the session at 20 bid and its 8¼% paper was off seven points, at 25, after the international carrier posted a fourth-quarter operating loss of $36.6 million, about double a year ago, and a net loss of $63.7 million, versus $26.5 million a year ago.

Back on the upside, Kaiser Aluminum debt was seen "a little better" the day after its widely expected bankruptcy filing, a trader said, quoting its 9 7/8% and 10 7/8% senior notes around 73 bid, up around a point or so. Its 12¾% paper continued to languish around 20 bid.

Overall market activity was restrained, a trader said, ahead of the impending Presidents' Day holiday weekend (an early close Friday and a market shutdown on Monday), and with many players still enjoying the sun in Boca Raton, Fla., site of the well-attended Morgan Stanley Global Leveraged Finance Conference.

Wednesday morning the high yield primary market heard terms on Kamps's upsized offering of €325 million seven-year senior notes via JP Morgan. The deal, which was increased from €300 million, priced at par, to yield 8½% "right at talk" in the 8½% area, according to a syndicate official.

Thomas Sterz of Kamps's investor relations expressed the company's satisfaction and told Prospect News the issue was three times oversubscribed.

Also Wednesday, official price talk of 98.75 emerged on Williams Scotsman, Inc.'s $100 million add-on to its 9 7/8% senior notes due June 1, 2007, via Deutsche Banc Alex. Brown. The deal, according to a syndicate official, will price on Thursday.

The Baltimore, Md.-based mobile classroom, office-space and storage space company announced in a Feb. 7 8-K filing with the Securities and Exchange Commission that it is required to refinance its existing revolver "on or before its May 21, 2002 maturity date,"and is currently negotiating a new senior secured credit facility.

Scott Becker, a spokesman for Williams Scotsman, told Prospect News on Wednesday that proceeds from the add-on will be used to pay part of the debt under the company's existing credit agreement.

"We are currently negotiating to refinance the existing facilities," Becker said. "That credit facility has outstanding $500 million or $600 million, currently. Obviously this new notes offering isn't going to pay that off."

Diane Keefe, portfolio manager of the Pax World High Yield Fund, told Prospect News on Wednesday that she would not be playing William Scotsman.

"I am buying that Graphic Packaging deal," Keefe said, referring to Graphic Packaging International Corp.'s $250 million of 10-year senior subordinated notes (B2/B+). The deal is talked at 8¾% and is expected to price Thursday afternoon via joint bookrunners Credit Suisse First Boston and Morgan Stanley.

"They're in a relatively defensive business in the sense that they're doing food and beverages. And they're not in the pulp part of the business, they're a converter."

Keefe also noted that Graphic Packaging carries on significant recycling activity and thus clears the Pax World Fund's social screens.

And Keefe told Prospect News that she also likes Collins & Aikman Floorcoverings, Inc.'s planned sale of $175 million eight-year senior subordinated notes (B2/B) via joint bookrunners Credit Suisse First Boston and Banc of America Securities. That deal is also set to price Thursday according to syndicate sources and its talked at 10%-10¼%.

She compared Collins & Aikman Floorcoverings to Interface Inc., another floorcovering issuer that priced $175 million of eight-year 10 3/8% senior notes via Salomon Smith Barney on Jan. 11.

Keefe stated that she prefers the Collins & Aikman paper to that of Interface.

"Their margins have been much better than Interface," she said.

"And I think for a 10-handle yield it's a much better play than Interface."

In addition to Williams Scotsman, Graphic Packaging and Collins & Aikman Floorcoverings, the primary market anticipates hearing terms Thursday on American Achievement Corp.'s $175 million of five-year notes via Deutsche Banc Alex. Brown. Price talk is 11¾%-12%.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.