The bank debt of cable companies received a five- to 10-point boost in the secondary market following the news that RCN had sold its New Jersey-area cable systems for $245 million. "It's the first time the market has seen a valuation of a cable property in a long time," one trader said, adding that the market received the news positively.
As a result, Charter Communications' bank debt firmed up with a bid-ask spread quoted in the 84-88 range last week. That was up from the low 80s, where it was seen trading the previous week after the company revealed that it received a grand jury subpoena from the U.S. district attorney's office for the Eastern District of Missouri (LMW, 8/26). Kent Kalkwarf, cfo of Charter, did not return calls by press time.
Even scandalized Adelphia Communications benefited from good industry buzz. Traders said that Adelphia's Century Cable term loan was bid in the low 70s last week, up from the mid-60s the previous week. No trades could be confirmed in the thin summer market. Calls to Adelphia were not returned by press time.
The latest news relieved some of the pressure that had been placed on cable names over the past month. RCN's sale works out to roughly $3,000 million per subscriber, a trader noted. Although valuations are lower than they had been, people are happy to see that there is interest in the assets, he said. Calls to Jeffrey White, cfo of RCN, were referred to a spokesman, who could not be reached by press time.