Pegasus Media & Communications' loans saw some action last week with the bank debt trading on concerns over the bankruptcy process and the potential value of Pegasus' subscribers. The initial incremental term loan is said to have traded at the 94-94 1/2 level. The $300 million "D" loan was being quoted at 97-98, traders said. At the start of the month, when Pegasus Satellite Communications and Pegasus Media filed for bankruptcy the "D" loan was quoted at 99 (LMW, 7/6).
Market participants said there is a strong belief the senior lenders will receive par recovery, as long as the company gets sold. But one trader, explaining why the debt is trading at a discount, said "Are [lenders] scared? Yes, of course. If Pegasus digs in for a long bankruptcy, then the CLOs have to mark the loans down for a year." He said this could cause some selling pressure.
Another concern is over the value of the company's subscribers and that competitor DirectTV could put in a low bid to buy these assets. Pegasus has 1.1 million subscribers and DirectTV has previously offered to pay $675 per subscriber to transfer the assets by Aug. 31. Last week Judge James Haines denied Pegasus' request that DirectTV could not market its services in areas served by Pegasus. A Pegasus spokeswoman did not return calls by press time.