Adelphia's Century loan continues to slide as news reports raise more doubts

By Sara Rosenberg

New York, June 7 - Adelphia Communications Corp. attracted more negative media attention as reports of inflated cable-TV subscriber numbers surfaced. Additionally, news emerged Friday that the company allegedly kept two sets of accounting books. The Adelphia Century loan traded as low as 83½ during the session before partially rebounding to around 85 on Friday, according to a market professional. The Olympus loan, however, moved up to trade at around 92 because "it's a better credit," he added.

Olympus Cable Holdings senior secured bank debt is rated B2 by Moody's Investors Service, Century Cable Holdings senior secured bank debt is rated Caa1 and the Century-TCI senior secured bank debt is rated B3.

On Thursday, the Coudersport, Pa. cable company held a "big bank call" to give banks an update on the company and to figure out how to keep lenders happy, a trader previously told Prospect News. IN Thursday's session Olympus was bid at 90, with no trades on the paper taking place during market hours, the trader said. The Century loan was bid at 851/2, offered at 87 and traded at 861/4.

On Wednesday, Moody's Investors Service outlined various rating actions taken against Adelphia. These rating actions reflected "our estimated relative expected loss severity for the company's many different instruments from the top to the bottom of its capital structure. Under the now much more certain bankruptcy scenario as currently anticipated, and on a potentially imminent basis, expected credit losses in general will likely be greater than previously anticipated," Moody's said.

Additional recent news plaguing the company's performance includes the alleged misuse of funds by the Rigas family leading to investigations and the resignation of the entire Rigas family.

In other news, Wyndham International Inc.'s long-awaited bond deal was shelved Friday. The bank loan market had been watching the Dallas, Tex. lodging company's deal all week since proceeds from the notes were going to be used to pay down bank debt.

"We found the market conditions not deep enough to issue the notes on terms that made sense to the Company and its shareholders," stated Fred J. Kleisner, chairman and chief executive officer, in a news release. "We appreciate the hard work of the underwriters and potential investors, but since the Company does not have any bank debt maturities until June 30, 2004 we feel it prudent to evaluate the market later and continue to execute our strategic plan."

In primary activity Friday , United Defense Industries Inc. held a bank meeting in regards to adding $300 million to its credit facility (Ba3/BB-). The new loan consists of a $250 million seven-year term B with an interest rate of Libor plus 275 basis points and a $50 million five-year term A with an interest rate of Libor plus 275 basis points, according to a syndicate source. Deutsche and Lehman Brothers are the lead banks on the deal.

Proceeds will be used to help fund the acquisition of U.S. Marine Repair Inc. Both the acquisition and the loans are targeted to close on the same date, which presently is anticipated by the end of June, a company spokesman previously told Prospect News.

Reasons for using bank debt to finance the majority of the acquisition include convenience, economic attractiveness, ability to obtain the money within a relatively short time and confidence by the banks that people are interested in the sector, the spokesman said.

United Defense is an Arlington, Va. provider of tracked, armored combat vehicles.

The syndicate was not immediately available to discuss the meeting.

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