Wyndham strengthens on market technicals; Charter Communications bid weakens

By Sara Rosenberg

New York, Aug. 6 - Wyndham International Inc.'s bank loan paper firmed up slightly in secondary activity Tuesday despite second quarter losses. The minimal gain was attributed to market technicals, in which buyers outweighed sellers, according to a trader. Charter Communications Inc.'s debt also experienced a minor change as the bid was quoted weaker by about a point.

Wyndham's B loans were bid at approximately 85 and offered at approximately 87, up about a point from Monday's quotes, according to the trader. "The IRL's were quoted at 86/88 today, but I haven't heard of any trades taking place," a fund manager said.

"People expected [second quarter results] to be soft. No one is surprised by them," the trader said in explanation of why the bank paper did not weaken following the earnings news.

On a comparable pro forma basis, total revenues for second quarter 2002 were $508.7 million, an 8.7% decrease from the same period in 2001. On a pro forma basis, EBITDA as adjusted was $112.1 million for the three months ending June 30, 2002, versus $149.5 million for the same period in 2001. Total company comparable owned and leased revenue per available room (RevPAR) was $79.11, a 9.8% drop versus the same period in 2001. This decline consisted of an 8.5% decline in average daily rate, created by the slower than expected return of the independent business traveler, and one percentage point decline in occupancy, according to a company press release.

The Dallas, Tex. hotel operator's debt decreased by $33.8 million due primarily to repayments associated with the reduction in cash and the application of net sales proceeds. As of June 30, total debt was $3.318 billion, consisting of a $213.5 million revolver, $482.1 million IRL, $1.284 billion term loan B and $1.339 billion in mortgage and other indebtedness. In the beginning of the year, Wyndham had about $280 million of maturities coming due in 2002. These maturities were reduced to about $23 million through extensions and refinancings and the company is in negotiations to refinance the remaining 2002 maturities, expected to close by the end of August, the press release said.

"[Also], I saw an article that someone wants to buy some of Wyndham's properties for $1 billion. I don't know if it's true, but if it is that should help," the trader added.

The bid on Charter Communications Inc.'s bank debt "dropped back slightly" into the area of 86 from 87, but the offer remained at around 88, a trader said.

"The loan is basically sideways," the trader said. "The bid dropped but it will firm back up to meet the offer again."

The St. Louis, Mo. cable operator also released its second quarter results on Tuesday. Revenue increased 14.3% to $1.158 billion and operating cash flow increased 13.8% to $501 million compared to pro forma results for the same period last year. Basic and diluted loss per share was $0.69 for the quarter, compared to a loss per share of $1.07 for the second quarter of 2001, an improvement primarily due to the adoption of the new accounting standard relating to the amortization of goodwill and other intangible assets, according to a company press release.

In primary news, U.S. Shipping Acquisition LLC, a New York, N.Y. petroleum tanker company, is scheduled to launch a $140 million senior secured credit facility (Ba2/BB) Wednesday. The loan consists of a $130 million six-year amortizing term loan with an interest rate of Libor plus 325 basis points and a $10 million five-year revolver with an interest rate of Libor plus 325 basis points, according to market sources. CIBC World Markets is the lead bank on the deal.

Furthermore, Rayovac Corp., a Madison, Wis. battery and lighting device company, is expected to launch a new $675 million credit facility in early September, consisting of a $200 million revolver, a €100 million term loan and a $375 million term loan B, according to market sources. Bank of America and Citigroup are the lead banks on the deal.

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