The DOJ is going after everybody.
Primestar $400 mln junk bond delayed by DOJ action
------------------------------------------------------------------------
ÿÿÿÿ NEW YORK, May 12 (Reuters) - Primestar has delayed a $400 million debut junk bond deal after reports the U.S. Justice Department will oppose the direct broadcast satellite firm's planned purchase of satellite assets from News Corp. and MCI Communications Corp. , sources said.
ÿÿÿÿ "The deal will not happen today," said a source close to the issue, noting the deal was slated for Tuesday. "It has been delayed until the company finds out what is in the lawsuit."
ÿÿÿÿ Primestar declined to comment on the status of the offering but said it will issue a statement following a 1330 EDT/1730 GMT press conference by the Department of Justice.
ÿÿÿÿ Merrill Lynch & Co., the lead underwriter of the offering, declined to comment.
ÿÿÿÿ "(The Justice Department action) is a huge setback for Primestar and the underwriter," said one analyst. "Getting DOJ approval was a major strategic issue for the company."
ÿÿÿÿ Primestar, owned by a group of cable companies, had planned to purchase a key television satellite orbital slot as well as satellite assets from News Corp and MCI for $1.1 billion.
ÿÿÿÿ The purchase would have allowed Primestar to offer "high-power" direct broadcast satellite services, which is already offered by its two main competitors, analysts said.
ÿÿÿÿ Last month, Standard & Poor's said it believed that it was crucial for Primestar to offer high-power service in order for the company to expand channel capacity, use a smaller receiving dish and compete with other DBS operators.
ÿÿÿÿ Prospective investors in Primestar's first junk bond deal would certainly have been expecting the company to upgrade its services after completing the News Corp/MCI transaction, said one analyst.
ÿÿÿÿ "It's conceivable that Primestar may now scrap the (junk) deal," he added. "At a minimum, it requires some coupon adjustment to reflect the fact that Justice Department approval is now off the table."
ÿÿÿÿ As of this morning, Primestar's $400 million senior subordinated notes (Caa1/B) were expected to offer an 11 percent coupon, priced at a discount to yield 11-1/4 percent, one source said.
ÿÿÿÿ Price talk on the large deal had already been hiked several times for a variety of reasons, including this week's massive junk bond forward calendar, he added.
ÿÿÿÿ The company was expected to use the proceeds of the offering to repay existing debt, sources said. |
