UPC Ticks Up As Restructuring Winds Down

  • 31 Aug 2003
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United Pan-Europe Communications' (UPC) bank debt has been ticking up toward the 90 context as the company's restructuring process draws to a close. The U.S. loan is quoted by dealers in the 88-90 context, up from the 771/2 ­ 791/2 range, where the bank debt stood at the beginning of July, according to LoanX. UPC overcame its final obstacle to emerging from bankruptcy last week when the Dutch Supreme Court rejected an appeal by Intercomm Holdings, a creditor that appealed the court's ratification of UPC's plan of composition. The company received U.S. bankruptcy court confirmation for its plan of reorganization in February.

UPC has a multi-tranche U.S. dollar and euro denominated credit facility that will remain untouched by the company's reorganization. The U.S. dollar loan is quoted at a slight premium to the company's euro tranches because more domestic investors can buy the loan, leading to better liquidity, and it also carries a slightly higher coupon than its euro counterparts, explained one trader. The U.S. loan is priced at LIBOR plus 51/2% while the euro loans carry a 31/2% spread over LIBOR, said one buysider. The euro loans are quoted in the 861/2 ­ 881/2 range. No trades could be confirmed last week, but one trader noted that the paper was well bid.

The credit has not ticked up all the way toward par because the company still has leverage of around six times, said one trader. But the market for the loan has risen on the theory that if the company performs well over the next year it may be a candidate for a refinancing through a capital markets paydown, explained market players. In addition, the buysider noted, the asset is one of the credits in the market that presents upside and is still trading at a decent discount. Calls to a UPC spokesman were not returned by press time.

  • 31 Aug 2003

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