Cablevision, an affiliate of CSC Holdings, is not in compliance with required financial filings and is at risk of default on its $3.5 billion term loan "B," according to a filing with the Securities and Exchange Commission. The company has 60 days to comply with the credit agreement covenants before term loan "B" lenders have the right to accelerate principal and interest on all outstanding loans, according to the filing.
The company has yet to file a quarterly report a violation of its credit agreement in the wake of a voluntary review of financial information that showed a discrepancy involving stock options and stock appreciation rights from 1997-2002. The company found that the grant date and exercise price for a number of stock options did not correspond to the actual grant date and closing price of the company's stock on that day, according to the filing. A spokeswoman declined to comment on why the voluntary review took place.
The tardy report is for the quarter ending June 30. Lenders for Cablevision's pro-rata loans agreed to waive any default on non-compliance until Sept. 22, at which point the company would have 30 days to cure the default, according to the filing. The company expects to satisfy the filing requirements, but cannot assure that it will.
The credit facility was Cablevision's second attempt at tapping the market to pay a $3 billion dividend and pay down a $400 million term loan taken out in February (CIN, 3/24). The $3.5 billion term loan is priced at LIBOR plus 1 3/4% and is led by Bank of America, Citigroup and Bear Stearns. The current deal runs pari passu with $2.4 billion of additional facilities the company has outstanding, according to an investor (3/24). The term loan was trading as high as 101.25 the week it broke, and was trading between 99.4-99.7 on Aug. 31, according to Markit.
Standard & Poor's announced the company's credit ratings will remain on CreditWatch with negative implications. The credit has a recovery rating of 2. Moody's Investors Service placed the company's B1 corporate family and other long-term ratings on review for downgrade following the announcement. Bethpage, N.Y.-based Cablevision is a cable television operator. A Bank of America spokeswoman declined comment. Calls to bankers at Citi and Bear Stearns were not returned.