Reception May Be Improving On Cable Names
The market for cable names could be showing signs of life as one deal wraps and another comes out of the woodwork, indicating that the bank market and the troubled sector may finally be back on speaking terms. Bank of New York has filled, after over a three-month effort, its $165 million Patriot Media and Communications acquisition credit. TD Securities and J.P. Morgan plan to launch, after icing the deal for a similar length of time, broadband communications provider Bresnan Communications' ballpark $400 million acquisition deal.
Bresnan will launch after waiting out the anti-cable market since the summer. "When the bond market in general fell away last summer, we waited," said Margot Bright, v.p. of finance at Bresnan. But the market seems to have shifted. "Bank debt paper in the cable sector has traded up," she said. "So far, people are showing interest." She explained that initially there was to be a bond portion to the deal as well, but she could not say if this would still happen. A TD official and a J.P. Morgan spokesman declined to comment.
Unlike Bresnan, BNY did decide to test the waters with Patriot last October, coming to market with a $100 million "B" piece, a $40 million revolver and a $25 million "A" loan. The deal backs the leveraged buyout for $265 million of RCN's New Jersey cable systems business by Steve Simmons and Spectrum Equity Investors (LMW, 11/4). Investors came in quick to the deal at the agent level, said a banker familiar with the credit, but the "B" tranche filled up only after a flex up from LIBOR plus 4% to LIBOR plus 41/ 2% with an original issue discount of 11/ 4%. The pro rata priced at LIBOR plus 33/ 4% with a 75 basis point up-front fee. National City Bank, General Electric Capital Corp. and Société Générale committed at the agent level, he noted, adding that the deal finished syndication this month.
The credit for White Plains, N.Y.-based Bresnan is viewed a bit more favorably than Patriot, bankers said, but may not be a cake walk. Many market players have their books full with cable debt from in-the-dog house companies such as Charter Communications and Adelphia Communications, one buysider noted. "Can you get a [cable] deal done?" the investor said. "Yeah, probably." He noted that Bresnan's leverage figures will not be too severe and that William Bresnan, founder and ceo, has a good reputation as an operator. Bankers and buysiders noted that there are other cable names that are gaining steam, citing Insight Communications and Mediacom Communications as names that are trading stronger.