Celanese dips on numbers; Harrah's rises; Level 3 holds firm; General Motors climb continues

By Sara Rosenberg

New York, April 28 - Celanese Corp.'s term loan B softened during Tuesday's trading session as the company came out with earnings that showed a pretty steep decline in EBITDA, while Harrah's Operating Co. Inc. strengthened as its EBITDA results were better than expected, and Level 3 Communications Inc.'s financial results seemed to have little influence on its term loan.

Also in trading, General Motors Corp.'s term loan was a touch higher on the day, adding to its run-up at the start of this week that came about with news of a debt-for-equity swap.

Celanese down with earnings

Celanese's term loan B headed lower during market hours following the release of first-quarter numbers that included an over $200 million drop in EBITDA on a year-over-year basis, according to a trader.

The term loan B was quoted at 87½ bid, 88½ offered, down from Monday's levels of 88¼ bid, 89¼ offered, the trader said.

For the first quarter, the company reported operating EBITDA of $136 million versus $381 million in the 2008 comparable period.

Celanese also posted a net loss in the quarter of $20 million, or $0.16 per diluted share, compared to net earnings of $145 million, or $0.87 per diluted share, last year.

And, net sales for the quarter were $1.146 billion, down 38% from $1.846 billion in the prior year.

Celanese reduces debt

Celanese's net debt at the end of the first quarter was $2.319 billion, a $538 million decrease from the end of the fourth quarter of 2008, on positive adjusted free cash flow and an advance payment from Fraport AG.

Cash and cash equivalents at the end of the first quarter were $1.150 billion, compared with $763 million at the end of the first quarter of 2008.

The company expects to be free cash flow positive in 2009.

"Although general economic conditions at the consumer level remained weak, we began to realize the positive impacts of reduced inventory destocking throughout our customers' supply chains as the quarter progressed," said David Weidman, chairman and chief executive officer, in a news release.

"We do not currently expect any significant improvement in end-consumer demand throughout 2009. However, as we moved out of the first quarter, we believe that the majority of inventory destocking through our customer supply chains is behind us, with the possible exception of the automotive and electronics industries. As destocking in these areas abates, we would expect all of our businesses to perform at their 'normalized trough' profiles," Weidman added.

Celanese is a Dallas-based chemical company.

Harrah's gains ground

Harrah's Operating's term loan B debt jumped by a couple of points in trading with its earnings news as EBITDA, although down year over year, did not decrease by as much as people had feared and the drop in revenue was pretty much in line with expectations, according to a trader.

The term loan B debt was quoted at in the 68½ bid, 70½ offered context, up from Monday's levels in the 65½ bid, 67½ offered context, the trader said.

For the first quarter, Harrah's Operating's adjusted EBITDA was $407.3 million, down 8.3% from $444.3 million in the first quarter of 2008.

Revenues for the quarter were $1.756, down 10.4% from $1.955 in the prior year.

And, loss from operations was $218.2, down 24.6% from income from operations of $289.2 million in 2008.

Harrah's company wide results

Parent company, Harrah's Entertainment Inc. also reported declines in EBITDA, revenue and income for the first quarter.

The company's adjusted EBITDA was $547.3 million, down 12.6% from $626 million in the comparable period last year.

Revenues for the quarter were $2.255 billion, down 13.3% from $2.601 billion in the 2008 first quarter.

And, income from operations was $285.4 million, compared with income from operations of $401.0 million last year.

"Our first-quarter results continued to be impacted by the economic slump that has reduced consumer spending, but the improvement in our operating margins over those of the past few quarters indicates our expense-reduction efforts are paying off," said Gary Loveman, chairman, president and chief executive officer, in a news release.

Harrah's is a Las Vegas-based provider of branded casino entertainment.

Level 3 steady on numbers

Also releasing first-quarter results on Tuesday was Level 3. However, its term loan basically shrugged off the news, ending the day pretty much in line with previous levels, according to traders.

The term loan was quoted by one trader at 78¼ bid, 79¾ offered and by a second trader at 77 bid, 79 offered. The first trader remarked that the loan has been "stuck" in the upper-70 context for a few days now.

For the first quarter, Level 3 reported a net loss of $132 million, or $0.08 per share, compared to a net loss of $190 million, or $0.12 per share in the same period last year.

Consolidated revenue for the quarter was $980 million, compared to consolidated revenue of $1.09 billion for the first quarter 2008.

And, consolidated adjusted EBITDA for the quarter was $250 million, an increase of 18% from $211 million last year. In the fourth quarter of 2008, consolidated adjusted EBITDA had been $323 million, including a net benefit of $52 million from four adjustments.

Level 3 cash flow improves

During the first quarter, Level 3's unlevered cash flow was $43 million, an increase from negative $21 million for the first quarter 2008, and consolidated free cash flow was negative $82 million for the first quarter, compared to negative $160 million last year.

As of March 31, the company had cash and cash equivalents of about $672 million.

On April 16, the company's wholly owned subsidiary, Level 3 Financing Inc., closed on a $220 million senior secured term loan B that generated net proceeds of about $214 million. Including this term loan B, the company's cash and cash equivalents are now $886 million.

In addition, on Tuesday, the company reiterated its guidance for consolidated adjusted EBITDA for 2009 in excess of the $988 million reported in 2008, and the expectation of being free cash flow positive for the full year.

Level 3 is a Broomfield, Colo.-based leading provider of fiber-based communications services.

GM grinds higher

General Motors' term loan continued to make its way to better ground still on new that a notes-for-stock exchange offer is taking place in the hopes of completing an out of court restructuring, according to a trader.

The Detroit-based automaker's term loan was quoted at 63½ bid, 64½ offered, up from Monday's levels of 63 bid, 64 offered, the trader said. On Friday, the debt had been seen at 58 bid, 59 offered.

Meanwhile, the company's revolver was unchanged on the day at 53 bid, 55 offered. On Friday, this tranche had been seen at 47½ bid, 49½ offered.

On Monday, General Motors announced that it is commencing offerings to exchange 225 shares of its common stock for $27 billion of its unsecured public notes.

The exchange offers will expire on May 26.

If, prior to June 1, the company does not receive enough tenders of notes to consummate the exchange offers, it expects to file for bankruptcy.

LCDX retreats

The LCDX 12 index was a touch weaker on Tuesday in sympathy with equities, according to a trader.

The index was quoted at 78.65 bid, 78.95 offered, down from 78.80 bid, 79.20 offered on Monday, the trader said.

Meanwhile, the cash market overall was a little quiet, making it somewhat hard to read, although traders seemed to think that it was a mixed bag, with some things up and some things down.

As for stocks, Nasdaq was down 5.6 points, or 0.33%, Dow Jones Industrial Average was down 8.05 points, or 0.1%, S&P 500 was down 2.35 points, or 0.27%, and NYSE was down 19.98 points, or 0.37%.

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