Avis jumps on better-than-expected results; DirecTV, MetroPCS, Charter better with numbers

By Sara Rosenberg

New York, May 7 - Avis Budget Group Inc.'s term loan B rallied during Thursday's market hours as the company's recent earnings news was better than people had been anticipating, with EBITDA not down as much and earnings per share beating estimates.

Also, DirecTV Group Inc., MetroPCS Communications Inc. and Charter Communications Inc. saw improvements in their bank debt levels after numbers were announced by the three companies. However, since the general secondary market was having an up day, it was hard to tell what was credit specific and what was market related.

In addition, the LCDX 12 index was up, moving to 83.25 bid, 83.50 offered from Wednesday's levels of 82.70 bid, 83.10 offered, despite stocks being lower, according to a trader. Nasdaq closed down 42.86 points, or 2.44%, Dow Jones Industrial Average closed down 102.43 points, or 1.2%, S&P 500 closed down 12.14 points, or 1.32%, and NYSE closed down 90.46 points, or 1.54%.

Avis skyrockets

Avis' term loan B jumped up by a number of points in trading on the back of the company's late Wednesday earnings release since financials came in a little better than expected, according to traders.

The term loan B was quoted by one trader at 59 bid, 61 offered, up from around 50 bid, 52 offered on Wednesday. The trader added that he had seen a high of 60 bid, 63 offered earlier in the Thursday session.

A second trader was quoting the term loan B at 59 bid, 62 offered late in the day Thursday. He said that late Wednesday afternoon, he had seen levels on the debt as high as 55½ bid, 56½ offered.

"EBITDA was slightly down but wasn't as bad as everyone thought. Stuff trading that low, gets kind of attractive," the first trader remarked.

For the first quarter, total company EBITDA was negative $9 million, compared to $31 million in the first quarter of 2008. Excluding unusual items, EBITDA for the quarter was negative $3 million.

Avis beats estimates

Although Avis' net loss did increase on a year-over-year basis, the company did perform better than estimates, the second trader explained.

Avis' net loss for the first quarter was $45 million, or $0.44 per share, compared to net loss of $12 million, or $0.11 per share, in the same period last year. Analyst estimates on per share net loss had been around $0.63 per share.

Revenues for the quarter were $1.194 billion, down 17% from $1.445 billion in the comparable 2008 period.

"Business conditions continued to deteriorate through the first two months of the quarter," said Ronald L. Nelson, chairman and chief executive officer, in a news release. "Although volumes seemed to stabilize in March, we nonetheless faced challenging conditions as both leisure and commercial demand declined significantly as a consequence of the overall economic environment.

"Our rigorous focus on cost-saving initiatives, combined with aggressive fleet management, allowed us to keep fleet levels in line with demand and deliver on our planned EBITDA performance," Nelson added.

Avis is a Parsippany, N.J.-based provider of vehicle rental services.

DirecTV inches up

DirecTV's term loan was a little stronger on Thursday, although it was unclear whether the strength was a result of earnings or the overall market being better, according to a trader.

The term loan B was quoted at 95¾ bid, 96¾ offered, up about a quarter of a point on the day, the trader said.

For the first quarter, DirecTV had net income of $201 million, or $0.20 per share, compared to net income of $371 million, or $0.32 per share, in the first quarter of 2008.

Revenues for the quarter were $4.901 billion, up 7% from $4.591 billion last year.

And, free cash flow for the quarter was $457 million, down from $544 million in the previous year's comparable period.

DirecTV is an El Segundo, Calif.-based provider of digital television entertainment services.

MetroPCS gains ground

MetroPCS' term loan rose to 94½ bid, 95½ offered on Thursday from 93¾ bid, 94¼ offered following news of its quarterly results, but again with cash up about a half a point to a full point on the day, the true culprit behind the lift was unidentifiable, according to a trader.

For the quarter ended March 31, the company saw net income of $44 million, or $0.12 per diluted share, compared to net income of $40 million, or $0.11 per diluted share, in the first quarter of 2008.

Total revenues for the quarter were $795 million, up from $662 million last year.

And, consolidated adjusted EBITDA for the quarter was $199 million, compared to $178 million in the prior year.

MetroPCS is a Dallas-based provider of unlimited wireless communications service for a flat-rate with no signed contract.

Charter also rises

Charter Communications' old first-lien term loan was another piece of debt that saw positive momentum during the session with first-quarter earnings and the general secondary strength, according to a trader.

The old first-lien term loan was quoted at 87 bid, 88 offered, up about a half a point on the day, the trader said.

For the three months ended March 31, Charter reported net loss of $203 million, or $0.54 per share, compared to net loss of $359 million, or $0.97 per share, in the same period last year.

Revenues for the quarter were $1.661 billion, up 6.5% from $1.56 billion in the comparable 2008 period.

Adjusted EBITDA for the quarter was of $616 million, up 13% from $545 million in the prior year.

And, pro forma net cash flows from operating activities for the first quarter of 2009 were $187 million, compared to $203 million for the first quarter of 2008 on a pro forma basis.

Charter is a St. Louis-based broadband communications company and cable operator.

General Motors mixed

Meanwhile, General Motors Corp.'s term loan was quoted all over the place, depending on who was asked, after the company came out with its first-quarter numbers that included net loss of $6 billion, or $9.78 per share, compared to net loss of $3.3 billion, or $5.80 per share, in the same period last year.

Excluding special items, the Detroit-based automotive company had an adjusted net loss of $5.9 billion, or $9.66 per share, in the first quarter, compared to an adjusted net loss of $381 million, or $0.67 per share, in the prior year.

Revenues for the quarter were $22.4 billion, down 47% from $42.4 billion in the first quarter of 2008.

Adjusted operating cash flow for the quarter was negative $10.2 billion, compared to negative $3.1 billion last year.

And, cash and marketable securities totaled $11.6 billion on March 31, down from $14.2 billion on Dec. 31.

Following the earnings news, some traders had the loan quoted at 58 bid, 59 offered, basically unchanged on the day, while other traders had it quoted at 60½ bid, 62½ offered, up from 59½ bid, 60½ offered.

Dynegy holds steady

Dynegy Inc.'s strip of institutional bank debt held firm on Thursday, despite its first-quarter net loss doubling since last year and another downward revision to full-year guidance, according to traders.

The strip of debt was quoted at 91½ bid, 93½ offered, unchanged from previous levels, traders said, with one trader remaking that even though results were bad, "liquidity is still okay with these guys."

For the first quarter, the company's net loss was $335 million, or $0.40 per diluted share, compared to net loss of $152 million, or $0.18 per diluted share, for the first quarter 2008.

Adjusted EBITDA for the quarter was $198 million, compared to $237 million for the first quarter of 2008.

As of March 31, liquidity was about $1.9 billion, consisting of $722 million in cash on hand and about $1.2 billion in unused availability under the company's credit facility. However, as of May 1, liquidity increased to about $2.1 billion, consisting of $829 million in cash on hand and about $1.3 billion in unused availability under the credit facility.

Dynegy lowers guidance

Also on Thursday, Dynegy reduced 2009 guidance ranges from the previous ranges presented on Feb. 26, primarily to reflect lower commodity and capacity prices, the accelerated timing of a Moss Landing plant outage from 2010 to 2009 and basis differentials, partially offset by the expansion of heat rates.

The new estimates are for adjusted EBITDA in the range of $680 million to $740 million, compared to a previously estimated range of $700 million to $825 million, adjusted cash flow from operations in the range of $140 million to $200 million, compared to a previously estimated range of $160 million to $285 million, and adjusted free cash flow in the range of negative $360 million to negative $300 million, compared to a previously estimated range of negative $300 million to negative $175 million.

The new guidance estimates for the most directly comparable measures on a GAAP basis include net loss in a range of $520 million to $480 million, compared to a previously estimated net loss range of $140 million to $65 million, and a range of cash flow from operations of $110 million to $170 million, compared to a previously estimated range of $140 million to $265 million.

Dynegy is a Houston-based producer and seller of electric energy, capacity and ancillary services.

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