Loral Space & Communications' bank debt jumped from the 85 range to the 94 - 95 context after the company announced it was not only filing for bankruptcy but also using the proceeds from satellite sales to pay down all of its bank debt. "The general perception is that [the bank debt] will be taken out at par," said one buysider. Market players noted that the paper traded actively. A $10 million piece changed hands in the 93 - 94 3/4 context, according to traders. Loral has about $959 million outstanding on its bank debt and expects the sale of six North American satellites to bring in about $1.1 billion in cash, according to a written statement.
The bankruptcy filing came in conjunction with the sale of the satellites, commented Harvey Miller, a managing director at Greenhill and also a financial advisor to Loral. The bankruptcy process will allow the company to sell the satellites unencumbered. This is a typical strategy used to in effect sanitize the sale, Miller explained. Loral's bankruptcy filing was also precipitated by the substantial interest payment that the company had coming due. Miller noted that bonds held by the Loral Orion subsidiary had a $35-36 million payment that was due on July 15.
Meanwhile, Charter Communications bank debt ticked up into the 95 1/4 - 95 3/4 range following the company's announcement that it is offering $1.7 billion of senior notes and anticipates $500 million of the proceeds to pay down the company's credit facilities. But investors "are not 100% sure what is going to get paid back," said another trader, noting that Charter has a number of different facilities. Still one trader noted, "We have seen more interested buyers." As of March 31, Charter had roughly $8 billion of credit facility debt, according to the company's most recent 10-Q. Calls to a Charter spokesman were not returned by press time.