Nextel heads back up; Charter regains ground as investor comfort grows

By Sara Rosenberg

New York, March 19 -Nextel Communications Corp.'s bank debt rebounded a bit in secondary trading Wednesday after what some considered an inexplicable dip by about one point on Tuesday. Charter Communications Inc.'s quotes also improved during market hours as people became more comfortable with the most recently announced management change.

Nextel's term loan B and term loan C traded at 95 5/8 and at 96, compared to the previous trading level of 95 3/8. The Reston, Va. wireless company's term loan A traded at 93.

Charter's bank paper was better bid on Wednesday with quotes of 86½ bid, 87½ offered on the term loan.

During the previous day's activity the St. Louis cable company's loan dropped by about half a point to 86 bid, 87 offered on news that Ralph G. Kelly, senior vice president and treasurer, resigned from his position March 14. Eloise Schmitz, vice president of finance and acquisitions has assumed interim responsibility until a permanent replacement is named.

Kelly's resignation was attributed to the pursuit of other career interests, according to a filing with the Securities and Exchange Commission.

"People panicked and then realized it's not that big a deal," a trader said explaining Charter's improved levels.

In the primary, Town Sports International launched a $100 million credit facility on Wednesday as part of its recapitalization plan, according to a syndicate source. Deutsche Bank and BNP Paribas are the lead banks on the deal.

The loan consists of a $50 million five-year revolver and a $50 million five-year term loan, both priced with an interest rate of Libor plus 400 basis points, the syndicate source said.

Town Sports is a New York owner and operator of health clubs.

The size of the two tranches that make up Dan River Inc.'s proposed $200 million asset-based senior secured credit facility was revealed on Wednesday. The deal will contain a $160 million revolver and a $40 million term loan, both carrying a five-year tenor, according to a syndicate source.

Pricing on the tranches is not yet available, the syndicate source added.

The facility is currently scheduled to launch on March 25 via Deutsche Bank as sole agent on the deal.

Proceeds from the facility, combined with proceeds from a $150 million offering of senior notes due 2009, will be used to repay all borrowings outstanding under the company's existing credit agreement, redeem all of its outstanding 10 1/8% senior subordinated notes due 2003 and pay related fees and expenses.

Dan River is a Danville, Va. designer, manufacturer and marketer of products for the home fashions and apparel fabrics markets.

In follow up news, Hexcel Corp. closed on a new $115 million revolving senior credit facility. Fleet Securities was sole lead arranger on the loan.

Obtaining the facility was just one part of the company's recapitalization plan. In addition to the closing on the loan, Hexcel completed its previously announced sale of convertible preferred stock for $125 million and issued $125 million of 9 7/8% senior secured notes due 2008. Fleet was co-manager on the bonds.

"Fleet brought together a complete financing package - an asset-based loan, a high yield bond placement and risk management solutions that met the unique needs of our multinational business. This loan structure also enabled us to maximize our total borrowing capacity by incorporating assets from our foreign subsidiaries," said David E. Berges, chairman, president and chief executive officer, in a news release.

As a result of the successful completion of these transactions, the company will have no significant scheduled debt maturities until 2008.

Proceeds from the sale of the convertibles have been used to provide for the redemption of the company's 7% convertible subordinated notes due 2003 and to reduce outstanding debt under the existing senior credit facility. Proceeds from the note sale were also used to reduce debt under the existing credit facility.

Total debt as of Feb. 28, after giving pro-forma effect to the financing transactions and their related costs, is approximately $530 million.

"With today's actions, we have now right-sized our capital structure, and positioned the Company to weather the current down cycle in our electronics and commercial aerospace markets. With no significant scheduled debt maturities or principal amortization for the next 5 years, we can better apply our energies to positioning for what we believe will be long term growth markets," Berges said in a second release.

Hexcel is a Stamford, Conn. producer of advanced structural materials.

Market talk is that the syndicate on Weight Watchers International Inc.'s $100 million six-year term loan B is currently involved in discussions with potential investors due to a clause in the credit agreement that allows the company to layer in additional debt at a later time, sources said.

Investors are concerned over the potential for additional debt since there is no clause in the agreement stipulating that the additional debt would have to be priced in line with the existing debt, sources said, adding that this information has not yet been confirmed with the syndicate. If new debt is issued in the future at a different rate, there is the potential that the existing debt would trade lower in the secondary market, as was seen in September 2002 when Terex Corp. launched a term loan C that was priced 50 basis points higher than its existing term loan B.

The term loan B, which will be used for acquisitions, is priced at Libor plus 250 basis points and is being led by Credit Suisse First Boston and Bank of Nova Scotia.

Weight Watchers is a Woodbury, N.Y. global branded consumer company and a provider of weight-loss services.

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