NTL dips on asset sale news as investors fear paydown; Charter active at firmer levels

By Sara Rosenberg

New York, Dec. 2 - NTL Inc.'s bank debt was slightly lower on the day, moving closer to par, as the potential for a paydown looms with news of a pending asset sale. Meanwhile, Charter Communications Inc.'s bank debt was still somewhat active and felt firmer, a trend that was sparked Wednesday as the company decided to quickly price some floating-rate notes.

NTL's bank debt was quoted at par 3/8 bid, par 7/8 offered, down from around par ¾ bid, 101 offered as the company announced that it entered into a definitive agreement to sell its broadcast business to a consortium led by Macquarie Communications Infrastructure Group, according to a trader.

However, the market is still uncertain as to whether the company will actually use proceeds from the sale to repay bank debt and if they do, how much bank debt will be repaid.

"NTL is currently evaluating alternative uses of the proceeds generated from the sale. These alternatives include a special dividend to shareholders and/or stock repurchases, debt repayment and general corporate purposes. The decision regarding use of proceeds, which will be designed to maximize shareholder value, will be made after the sale is completed, taking into account tax, legal and structural considerations," a company news release said.

The £1.27 billion sale is subject to regulatory approval and is expected to close in the first quarter of 2005.

NTL is a New York-based provider of communications and entertainment services.

Charter firmer

Charter's bank debt was trading around with the term loan A quoted at 99 1/8 bid, 99¼ offered and the term loan B quoted at par bid, par 1/8 offered, according to a trader, who said that levels were definitely a touch stronger on the day.

On Wednesday, a different trader had the term loan A quoted at 99 bid, 99¼ offered and the term loan B quoted at 99¾ bid, par 1/8 offered.

The impetus behind the movement seems to be Charter's ability to quickly access the capital markets with an upsized $550 million senior floating-rate note offering priced at Libor plus 412.5 basis points.

Proceeds from the St. Louis-based cable company's bond deal will be used to repay debt and for general corporate purposes.

Level 3 closes

Level 3 Financing Inc. closed on its new $730 million senior secured term loan due 2011 (B3/CCC/B-) on Thursday that was used to help fund tender offers for debt securities due 2008. The company upsized the term loan from $450 million when the tender cap was increased to $1.105 billion from $450 million.

Pricing on the term loan is set at Libor plus 700 basis points. No price talk had officially been in the market regarding the deal before it allocated, but rumor had it that the term loan - when sized at $450 million - was subscribed at Libor plus 675 basis points.

Merrill Lynch was the lead bank on the deal.

The tender offers were for the 9 1/8% senior notes, the 11% senior notes, the 10½% senior discount notes and the 10¾% senior euro notes. The expiration of each tender offer was extended to Dec. 1 from Nov. 29 because of the change to the tender cap.

In addition to the term loan, the company also issued $345 million 5.25% convertible senior notes (upsized from $200 million) for tender funding.

"Today, Level 3 announced that we completed the purchase of $1.105 billion aggregate principal amount of our outstanding debt securities due 2008," said Sunit Patel, chief financial officer, in a company news release.

"As a result of these purchases, we have reduced the aggregate principal amount of our outstanding indebtedness maturing in 2008 to approximately $1.3 billion, a reduction of approximately 46%, based on current euro exchange rates. In addition, we estimate that we have reduced our annual cash interest expense by approximately $28 million, reduced our total outstanding debt by approximately $30 million and that approximately $20 million in cash proceeds remain from the capital raising transactions that we completed today after payments under the debt tender offers and the related transaction expenses.

"These reductions are consistent with our previously announced goal of addressing our outstanding indebtedness maturing in 2008 in a disciplined manner, and we are pleased that these transactions demonstrate our ability to raise the necessary capital to complete the debt tender offers."

Level 3 Financing Inc. is a subsidiary of Level 3 Communications, a Broomfield, Colo., communications and information services company.

Propex closes

Propex Fabrics Inc. completed the acquisition of BP's Amoco Fabrics and Fibers subsidiary and its associated assets, according to a company news release.

The transaction was sponsored by an investor group comprised of The Sterling Group LP, Genstar Capital LP and Laminar Direct Capital LP.

To help fund the transaction, Propex got a new $175 million credit facility (B3/B+) consisting of a $110 million seven-year term loan B and a $65 million five-year revolver, both priced with an interest rate of Libor plus 225 basis points. These two tranches underwent two 25 basis point reverse flexes earlier this week to bring pricing down from original talk of Libor plus 275 basis points.

BNP Paribas was the sole lead bank on the deal.

Propex is an Austell, Ga.-based producer of synthetic fabrics.

MMM Healthcare closes

The Straus Group completed its acquisition of a controlling interest in MMM Healthcare in a transaction valued at more than $200 million, according to a company news release.

To help fund the transaction, MMM got a new $138 million credit facility consisting of a $10 million term loan A and a $128 million term loan B with an interest rate of Libor plus 700 basis points.

Deutsche Bank was the lead bank on the Puerto Rico-based healthcare provider's deal.

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