The bank debt levels for aaiPharma's $156 million term loan "B" have been sliding down over the last couple of weeks as the company comes under scrutiny for unusual pharmaceutical sales in the second half of 2003. The name was quoted as low as the 94-96 context after tumbling from levels north of 101, where the paper was trading a month ago. The company is currently conducting an inquiry into the matter, and has discovered the necessity to materially adjust the financial information contained in a February release as well as statements in its quarterly report for the period ended Sept. 30.
In addition, aaiPharma is working to establish a short-term credit facility after its lenders cut off access to a $100 million revolver. This move comes as aaiPharma announced it will be unable to file its 10-K report by the end a 15-day grace period. Failure to file the 10-K will result in default under the terms of the company's senior secured credit. Bank of America, Wachovia Securities and CIBC World Markets lead the company's syndicated credit facility.
aaiPharma also has an interest payment of $9.6 million due on April 1 for its senior subordinated bonds. Lenders have the right to block the company from making the payment. An aaiPharma spokesperson declined comment.
Meanwhile, Charter Communications announced that it is pursuing a massive $6.5 billion refinancing of its credit facilities. The deal is being done on a best-efforts basis so there is risk that the deal will not be completed. But market participants said the loan is "trading like it's going to get taken out." Traders said the various loans under the Charter umbrella were changing hands in the 99 1/2-100 range.
J.P. Morgan, Bank of America, Citigroup and Credit Suisse First Boston are among the firms leading the credit. The deal is currently slated to include a $1.5 billion revolver, a $2 billion "A" loan, and a $3 billion "B" loan. Price talk is LIBOR plus 3% on the pro rata and LIBOR plus 3 1/4% on the "B." In addition to a plusher coupon, lenders will get reduced leverage at the senior level. Senior leverage is slated to decrease from 3.4 times to 2.7 times with the transaction. Calls to a company spokesman were not returned by press time.