The home run bond offering of Centennial Communications Corp. has lifted the levels on bank debt for wireless names. Centennial increased the offering of 10 1/8% senior unsecured notes due 2013 from $300 million to $500 million earlier this week, with one trader noting that other wireless companies will be encouraged to tap the market. "Anything wireless is up," said a dealer. Centennial's loans are said to be quoted in the 97-97 1/2 range, which is three to four points up from the most recent levels, said a trader. He noted that there have been a few trades, but the names of the participants could not be identified. Calls to Thomas Fitzpatrick, Centennial's cfo, were not returned by press time.
Proceeds of the upsized Centennial issue will be used to permanently pay down $300 million of the bank facility term loan and $170 million of the outstanding revolver. The bank facility has been permanently reduced to $735 million, according to Standard & Poor's. The rating agency adds that a value of approximately $800 million has been ascribed to Centennial's assets securing the bank loan. This represents a highly conservative cash flow multiple of nearly three times consolidated cash flow. The assets in the security pool include the stock of the subsidiaries holding the Federal Communications Commission wireless licenses, as well as the company's wireless properties in the U.S., Puerto Rico and the U.S. Virgin Islands. The combination of these assets provides just over one times coverage of the fully drawn bank facility.
Nextel Communications is also reported to be planning to tap the bond market with Credit Suisse First Boston and Deutsche Bank likely candidates to lead a deal (LMW, 6/16). Nextel has been pushing par for some time, the trader added.
Bankers were also focused on Mirant Corp. as a bank meeting was held today to discuss terms of the company's restructuring plan. One trader said the paper for the revolvers and the five-year revolver at the Mirant Americas Generation subsidiary were better bid, but there has been less activity.