Charter moves up on improved earnings; AES eases on loss

By Carlise Newman

Chicago, July 31 - There were varying fragments of news popping up on Thursday in the leveraged bank loan market, with earnings the focus in the secondary markets. Charter Communications Inc. bank debt firmed about a point after the cable operator reported a narrower quarterly net loss as it reduced spending.

The St. Louis company, whose former executives were indicted by the Justice Department for 14 counts of wire fraud, said it had a second quarter net loss net of $38 million or 13 cents per share, compared to a net loss of $161 million a year earlier or 55 cents per share. Revenues rose 7% to $1.22 billion, from $1.14 billion last year.

Analysts expected the company to report a net loss of 48 cents per share.

"The term loan B was stronger on the numbers but nothing spectacular," a trader said. "It was 951/4, then it traded at 96¼ after the numbers and stayed there," a trader said.

The company reported adjusted earnings before interest, tax, depreciation and amortization of $497 million, compared to $447 million in the year earlier.

As a result of a slow quarter, it also reported a net loss of 88,500 analog and digital video subscribers. It added 76,700 high-speed data customers.

Looking ahead, Charter said capital expenditures are expected to be $800 million to $925 million for the remainder of the year.

In other earnings news, AES Corp. on Wednesday reported a wide second-quarter loss, which appeared to still weigh on the bank debt.

AES' bank debt was seen sliding a ¼ point to 97¾ bid, 98¾ offered, a trader said. The debt had fallen a point on the news Wednesday.

AES said its net loss stretched to $129 million from $115 million a year earlier. Excluding charges, the Arlington, Va.-based company reported a profit of 11 cents per share, just below the analysts' average estimate of 12 cents.

Revenue rose 10% to $2.2 billion.

AES said in the release it has refinanced or raised about $5 billion of debt in the past nine months. It now has about $1 billion of cash on hand.

The company said it expects to show $1.5 billion of consolidated net cash flow for 2003, of which $737 million was generated during the first six months of the year.

"It looks like the numbers outweighed the news from Tuesday," a trader said.

On Tuesday, the company said it closed amended and restated credit facilities including a $250 million revolving loan and letter of credit facility and a $700 million term loan facility. The company said in a news release that the completed transaction reduces parent debt maturities through 2007.

Meanwhile, details emerged on Meow Mix's new $231 million senior secured credit facility, launched Wednesday.

The six-year facility consists of a $30 million revolver; a $176 million first-lien term loan bearing interest at 350 basis points over Libor; and a $25 million second lien term loan bearing interest at 650 basis points over Libor.

UBS is the bookrunner and lead arranger and CIBC is the syndication agent and co-arranger.

"I didn't hear of anything other than that coming out of the bank meeting," one market professional said.

The facility will assist in funding the acquisition of Meow Mix cat food brand by The Cypress Group LL from J.W. Child's Associates.

Meow Mix is a Secaucus, N.J. dry cat food company.

Elsewhere, Crown Holdings Inc. announced Thursday that it closed on its refinancing of $450 million of first priority term loans and reduced the interest rate to Libor plus 300 basis points from Libor plus 425 basis points.

The term loans were refinanced with the proceeds from new first priority term loans on substantially the same terms except that the new term loans bear interest at the lower rate and include a prepayment premium of 100 basis points if the new term loans are paid back in full within one year.

Crown Holdings is the parent of Crown Cork & Seal, a Philadelphia packaging company.

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