The popularity of cable names was evident last week on the break of Bresnan Communications' first and second-lien term loans in the secondary market. The $275 million first lien broke at 101 1/8, while the $100 million second lien broke at 102 and traded up to 102 1/2. "The trading levels show how much investors like these cable names. It is a good period for them," said a trader. Bresnan is among several telecommunications providers that have deals either launching or breaking for trading recently. Cablevision, Cebridge Connections and WOW! are other cable names that have recently tapped the loan market.
Pricing on the first lien was cut 25 basis points to LIBOR plus 2%, while 50 basis points was shaved off the second lien, which is now priced at LIBOR plus 4 1/2%. Bank of America and Wachovia Securities lead the credit, which also consists of a $150 million revolver priced at LIBOR plus 2 1/4% and a $75 million term loan "A," also priced at LIBOR plus 2 1/4%.
Bresnan will use the proceeds to refinance debt and repurchase $150 million of sponsor-preferred equity. Moody's Investors Service assigned a B1 rating to the first lien and a B3 rating to the second lien. The ratings reflect the company's high leverage 6.8 times debt to EBITDA and no free cash flow from operations prior to 2008 because of high capital expenditures and cash interest expense. A Bresnan spokeswoman did not return calls by press time.