The loan market is watching Fleming Companies this week as rumors circulated that the company had cancelled a meeting with its banks, drawn down on its revolver and could ultimately end up filing for bankruptcy. The company's "B" loan traded in the 94-95 context today and the revolver was offered at 90 with no bids. The food distributer's 10 1/8% notes also tumbled, falling more than 15 points since last week to the 38 range. While the bank meeting was postponed, dealers said the company only drew down on a portion of its revolver, which it needed to fund its capital-intensive business. Fleming financial officials did not comment by Wednesday afternoon.
Adelphia Communications' bank debt regained ground this week after Bank of America released an extensive research report on the company touting its Century Cable Group as the "steal of the century." Levels for Century Cable's term loans rallied from the mid-60s where pieces of the paper traded last week, into the 70-73 range. The B of A report notes that $2.48 billion of Century Cable bank debt, which the bank rates a buy, trades at distressed levels because of its high leverage and its tag as one of the facilities to which a Rigas co-borrowing arrangement is attached.
B of A notes, however, that the loan is substantially backed. "We would highlight that not only do we believe that the high-quality 1.32 million [subscribers] supporting the facility provide more than adequate collateral, but we would also note that Century derives an estimated $150-200 million of incremental value from its equity interest in western Connecticut systems," stated the report. Calls to the company were not returned.
Additionally, National Equipment's bank debt was active last week with a $20 million piece changing hands in the 64 context and another $14-15 million block moving in the low 60s. The bank debt is now silent with no trades this week. Last week's seller is probably done with his spree, commented one dealer. National Equipment's debt has been sliding as investors fear the company might be close to covenant violation and will miss a May 31 coupon payment. Questions to Michael Milligan, cfo, were referred to the company's controller, who did not return calls by press time.