January bank loan pipeline continues to grow; Charter bid strengthens in quiet session

By Sara Rosenberg

New York, Jan. 6 - The bank loan market is expected to awaken with new life this week as deals continue to be revealed as part of the January pipeline. Some names that are anticipated this week include Jack in the Box Inc., American Media Inc., PlayPower Inc. and St. Mary Land & Exploration Co.

Meanwhile, in secondary activity, Charter Communications Inc.'s bank debt was stronger bid on Monday, according to a trader.

Jack in the Box is scheduled to hold a lender meeting for a new $300 million credit facility on Tuesday consisting of a $125 million 41/2-year term loan with an interest rate of Libor plus 350 basis points and a $175 million three-year revolver with an interest rate of Libor plus 250 basis points, according to market sources. Wachovia is the lead bank on the deal.

Jack in the Box is a San Diego operator and franchiser of hamburger restaurants.

St. Mary Land & Exploration Co. is scheduled to hold a bank meeting in Denver on Tuesday for a new $300 million three-year revolver, according to a syndicate source. Wachovia is the sole lead arranger and administrative agent on the deal.

St. Mary Land & Exploration is a Denver oil and gas exploration and production company.

American Media is scheduled to launch a $140 million term loan C on Wednesday to help fund the purchase of Weider Publications Inc., according to market sources. JPMorgan and Bear Stearns are the lead banks on the deal.

American Media is a Delray Beach, Fla. publishing company.

PlayPower is scheduled to hold a bank meeting on Thursday for a $150 million credit facility to help fund Investcorp's leveraged buyout of the St. Louis commercial play and recreation equipment manufacturer, according to a syndicate source. UBS Warburg and The Royal Bank of Scotland are the lead banks on the deal.

The loan consists of a $125 million seven-year term loan and a $25 million five-year revolver, the syndicate source said.

Charter Communications's bank debt was a little better bid on Monday in what was otherwise described a quiet uneventful day in the secondary bank loan market. The bank paper was quoted with an 84¼ bid and an 85½ offer. On Thursday the loan was quoted with an 83¼ bid and an 85¼ offer and demand for the paper was said to have tapered off.

People have been keeping an eye on Charter's performance following a string of bad news that was released before the holidays. The St. Louis cable company announced that David G. Barford, the executive vice president and chief operating officer, who had been placed on leave, was fired. Furthermore, Kent D. Kalkwarf, the company's executive vice president and chief financial officer was also fired.

The decision to terminate Barford and Kalkwarf's employment at Charter was made following a review of various matters, including the grand jury investigation, the company said.

In addition to the management changes, Charter also announced that it is proceeding with the re-audit of its 2000 and 2001 financial statements. The re-audits of 2000 and 2001, as well as the audit of 2002 results, are expected to be completed in the first quarter of 2003.

Last on Charter's list of news was the current anticipation that the growth rate of fourth quarter revenue will be at or near the low end of its prior revenue guidance of 8% to 9% and fourth quarter operating cash flow will be less than previous guidance.

In reaction to the company's expectation of lower revenue and cash flow guidance for the2002 fourth quarter, Standard & Poor's downgraded Charter and kept it on CreditWatch with negative implications. S&P cut CC VI Operating Co. LLC's $1.2 billion senior secured credit facility to B from B+, CC VIII Operating LLC's $450 million revolving credit facility due 2007, $500 million tranche A term loan due 2007 and $500 million tranche B loan due 2008 to B+ from BB- and Charter Communications Operating, LLC's $5.2 billion senior secured bank loan to BB- from BB.

S&P said it is concerned that the competitive pressure that has eroded the company's basic subscriber base could continue. Charter may be challenged to achieve operating improvement needed to stabilize deteriorating credit measures and generate break-even free cash flow in 2003.

S&P also said it is also concerned about the possibility of public debt restructuring transactions, given depressed debt trading levels. Completion of a sub-par exchange offer could be considered coercive to bondholders and tantamount to a default on initial debt issue terms.

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