Centennial Communications Corp.'s home run bond offering lifted the levels on bank debt for wireless names last week. Centennial increased the offering of 101/8% senior unsecured notes due 2013 from $300 million to $500 million, with one trader noting that other wireless companies will be encouraged to tap the market. "Anything wireless is up," said a dealer.
Nextel Communications is reported to be planning to tap the bond market with Credit Suisse First Boston and Deutsche Bank as likely candidates to lead a deal (LMW, 6/16).
Nextel has been pushing par for some time, a trader said. Another dealer cited Western Wireless Corp., Rural Cellular and American Cellular Corp., as likely candidates to come to market with bond offerings. Centennial's loans were quoted in the 97-971/2 range following the pricing last week, which is three to four points up from the most recent levels, said a trader. By last Thursday, a trade went off at 973/4 and the levels were quoted at 971/2 to 981/2. The names of the participants and size of the trades could not be determined.
Thomas Fitzpatrick, Centennial's cfo, said CSFB led the bond offering with J.P. Morgan and Bank of America also involved. "We had reason to believe it would go well," he said. 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 increase [of the bond] gives us complete financing visibility through to 2008," Fitzpatrick added. The next action will be to refinance the senior debt in 2006, but this will be so low given the big paydown, that this should not be an issue, he added.
S&P noted that a value of approximately $800 million has been given to Centennial's assets securing the bank loan. 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.