CalGen loses heaviness, Centennial Cellular up on earnings, Dobson up on amendment

By Sara Rosenberg

New York, March 17 - Calpine Generating Co. LLC's term loans moved around once again in the secondary bank loan market, this time with levels heading up and the paper seemingly shedding its previously reported heaviness. Other active names included Centennial Cellular Operating Co. LLC, which was up on financial results, and Dobson Communications Corp., on a proposed technical amendment to its credit agreement.

CalGen's $835 million five-year first lien term loan/note was quoted at par 1/8 bid, par ½ offered, compared to Tuesday's levels of 99¾ bid, par offered, according to a trader. Basically, the tranche rebounded to its breaking levels on Monday of par ¼ bid, par ½ offered.

Meanwhile, the $740 million six-year second lien floating-rate loan/note was quoted at 97 5/8 bid, 98 1/8 offered, compared to Tuesday's levels of 96 bid, 96½ offered and surpassing its Monday breaking levels of 97 bid, 98 offered, the trader added.

"A lot of people were playing in that today," the trader said. "Seems like [the heaviness] cleared out."

The trader went on to explain that the heaviness in CalGen and in the overall secondary bank loan market that was felt on Tuesday may be in large part due to there being a lot of portfolios being shown around the market. And that has been taking up institutional investors' time, leaving them with little time to focus on trading.

According to a different trader, the heaviness may have been caused by "a lot of new issues that are coming out soon" diverting investor attention.

The first lien paper due April 1, 2009 carries an interest rate of Libor plus 375 basis points, contains three-years of call protection and has a Libor floor of 125 basis points.

The second lien paper due April 1, 2010 carries an interest rate of Libor plus 575 basis points, has four years of call protection and contains a Libor floor of 125 basis points.

Proceeds, combined with proceeds two tranches of notes totaling $830 million, will be used to refinance the $2.5 billion CCFC II credit facility that matures in November 2004.

The new financing transactions are expected to close on March 23.

CalGen is a subsidiary of San Jose, Calif., power generator Calpine Corp.

Centennial up on numbers

Centennial Cellular's bank debt traded between 99 7/8 and par 1/4, according to a trader, compared to Tuesday's trading level of 993/4, on the release of earnings numbers by parent company, Centennial Communications Corp.

For the quarter ended Feb. 29, consolidated revenues grew 14% from the same quarter last year to $207.4 million, net loss was $30.3 million as compared to a net loss of $159.6 million for the same quarter last year, adjusted operating income was $81.3 million, a 19% increase from the same quarter last year, and wireless subscribers increased to 1.0275 million, compared to 929,700 on Feb. 29, 2003.

"Once again this quarter we are proud to report double-digit growth in both revenue and adjusted operating income. We are particularly proud of the performance of our retail business in the U.S., which generated service revenue growth of 17%. Our Caribbean operations also posted noteworthy results; revenue grew by 20% and adjusted operating income by 31% versus the same quarter last year," said Michael J. Small, chief executive officer, in a company news release.

Furthermore, the company raised its prior fiscal 2004 guidance "to reflect positive business trends through the third quarter," the release said. Adjusted operating income is now expected to grow by a minimum of 10% in fiscal 2004 over the $295.7 million result for 2003; compared to prior guidance of 5% to 10% growth.

Centennial is a Wall, N.J., wireless telecommunications service provider.

Dobson higher

Dobson's term loan B bank debt was quoted higher by about a quarter of a point on Wednesday with levels seen at 99 7/8 bid, par 1/8 offered.

On Tuesday morning, the company revealed that it would delay filing its 10-K for the year ended Dec. 31, 2003, since it first needs to straighten out some confusion in its credit agreement regarding the leverage ratio covenant.

"The language contained in the credit agreement with respect to the leverage ratio covenants is ambiguous and internally inconsistent as to whether the leverage ratios are to be calculated based on the registrant's last four fiscal quarters of operation, or on an annualized basis for the quarter ending March 31, 2004," said an NT 10-K filed on Tuesday with the Securities and Exchange Commission.

Based on financial projections, if the leverage ratios are calculated on an annualized basis for the quarter ended March 31, then the company may not be in compliance with the covenant, which could result in "a going concern" opinion in the financial statements for the year ended Dec. 31, 2003 from independent accountants, the filing explained.

Basically, Dobson is asking its lenders to rephrase the leverage ratio covenant to clarify that the ratio should be based on the last four quarters of operation, which in turn, would ensure the company's compliance with the covenant.

Dobson is an Oklahoma City provider of rural and suburban wireless communications services.

Charter refi rally slows

Charter Communications Inc.'s term loan bank debt was quoted at 98½ bid, 98 5/8 offered on Wednesday, pretty much flat on the day but down since last week's relatively big point and a half rally over the course of a couple of days.

Last Friday, the paper was quoted at 99 bid, 99½ offered.

The upward momentum spotted last week was attributed to rumors of a potential refinancing being in the works.

"There are always rumors about a refinancing," the trader said, adding that nothing concrete about the speculated on transaction has emerged. "There hasn't been any more movement in it."

Charter is a St. Louis cable company.

KCS to break Thursday

Kansas City Southern's $250 million credit facility (Ba3/BB+) is now expected to break on Thursday since allocations are still being finalized, according to a market source. Previously, the deal was anticipated to hit the secondary on Wednesday.

The facility consists of a $100 million revolver with an interest rate of Libor plus 225 basis points and a $150 million term loan B with an interest rate of Libor plus 200 basis points, reverse flexed from initial pricing of Libor plus 250 basis points last week.

Morgan Stanley and Scotia are the lead banks on the refinancing deal.

Kansas City Southern is a Kansas City, Mo., holding company with principal operations in rail transportation.

U.S. Shipping reception good

United States Shipping LLC's $225 million credit facility launch went pretty well as the bank meeting was said to have gone "very good" and the term loan was said to be "going well," according to a market source. No further details on the deal's progression were available prior to press time.

The facility, which is anticipated to get four-B ratings, consists of a $25 million revolver with an interest rate of Libor plus 225 basis points and a $200 million term loan with an interest rate of Libor plus 250 basis points.

CIBC is the lead bank on the deal.

At closing, the company is expected to have 3.5x all-senior leverage.

Proceeds will be used by the New York petroleum tanker company to purchase two ships.

Also launching Wednesday was Caribbean Restaurants Inc.'s proposed $262 million credit facility via Credit Suisse First Boston and Wachovia as joint lead arrangers, with CSFB listed on the left.

The facility consists of a $30 million five-year revolver, a $125 million five-year first lien term loan and a $107 million six-year second lien term loan. Price talk on the revolver and the first lien term loan is in the Libor plus 300 basis points area, and price talk on the second lien term loan is in the Libor plus 500 basis points area.

Proceeds will be used to fund a dividend recapitalization.

Caribbean Restaurants, an Oak Hill Capital company, is an operator of Burger King restaurants in Puerto Rico.

And, Dean Foods Co. launched its $300 million term loan C that is talked at Libor plus 175 basis points via Wachovia and Bank One.

Proceeds will be used to pay down the company's revolver and receivables-based facility.

As of Dec. 31, 2003, the company had $112.8 million of outstanding debt under its revolver, which carries an interest rate of Libor plus 125 to 200 basis points depending on leverage, and $302.5 million of outstanding debt under its receivable facility, according to a 10-K filed with the SEC on Monday.

Dean Foods is a Dallas processor and distributor of milk and other dairy products.

Microcell closes

Microcell Telecommunications Inc. closed on its new C$450 million senior secured credit facility consisting of a C$200 million seven-year first lien term loan (B-) denominated in U.S. dollars with an interest rate of Libor plus 400 basis points, a C$200 million 71/2-year second lien term loan (CCC-) denominated in U.S. dollars with an interest rate of Libor plus 700 basis points and a 2% Libor floor, and an undrawn C$50 million six-year revolver (B-) with an interest rate of Libor plus 400 basis points.

"In addition, due to the positive response from lenders, which resulted in commitments being oversubscribed, the company may increase, at a later date, its first lien term loan facility or revolving credit facility by an additional C$25 million and its second lien term loan facility by an additional C$50 million," a company news release said.

J.P. Morgan Securities Inc. and Credit Suisse First Boston arranged the facility, with J.P. Morgan acting as sole bookrunner and administrative agent and Credit Suisse First Boston acting as syndication agent.

Security is substantially all of the company's assets.

Proceeds were used to repay all outstanding borrowings under the previous bank credit facility in the amount of C$334 million. The new credit facilities have generated about C$80 million in incremental cash availability, which will provide for the continued investment in the company's future growth initiatives through funding capital expenditures and associated working capital, the release said.

Microcell is a Montreal, Quebec, telecommunications company.

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