The market for NorthWestern Corp.'s "B" loan fell from its premium level as the market anticipates a restructuring for the company. The paper had been trading solidly in the 102 range but slumped to the 99100 context last week, following the company's bonds. "The preferreds and the subordinated bonds have really [fallen] off the table," noted one high-yield market player. The bank debt was able to sustain its close-to-par levels because the market believes the debt is well secured. "The secured debt--on a recovery basis--is pretty well covered by the value of the utility assets," noted Hugh Welton, a Fitch Ratings' analyst. NorthWestern completed the $390 million senior secured term loan in February via lead bank Credit Suisse First Boston.
On Aug. 26, the company will hold its annual shareholders meeting where NorthWestern will ask its shareholders to approve an amendment to the company's Restated Certificate of Incorporation. The amendment will increase the authorized number of shares of common stock from 50 million shares to 250 million shares and reduce the par value of the common stock from $1.75 per share to $.001 per share. Fitch refers to this move as a "prelude to a potential debt for equity exchange offer." Calls to William Austin, NorthWestern's chief restructuring officer, were referred to Roger Schrum, the company's v.p. of investor relations. Schrum noted that the company told its shareholders that the increased stock capacity could be used for a potential debt swap or issuance of additional shares.