Buysiders are cautiously eyeing the $500 million term loan "B" for Adelphia Communications as existing paper trades down in the secondary market. A banker familiar with the deal, which is lead by Bank of Nova Scotia and First Union, a division of Wachovia, said that the $2 billion pro rata portion is going smoothly as the company cajoles relationship lenders into the deal. But with existing paper trading in the secondary market below the price offered for the new "B" in syndication, investors are waiting on the sidelines. The banker added, not only is the paper trading down, but there is also lots of it. Pricing on the $1.5 billion revolver and $500 million term loan "A" is 2% over LIBOR, while the "B" carries a LIBOR plus 3% spread. The "B" also carries a 1/8% upfront fee, so in effect, it is offered at 997/ 8%, explained a banker.
Bank of Montreal is the administrative agent and Bank of New York and FleetBoston Financial, documentation agents. A banker at First Union said that though the paper is trading at below 99 in the secondary, the "B" is still expected to fill out. Calls to Timothy Rigas, cfo of Adelphia were not returned.