Chrysler firms Wednesday launch; structure rumored as $9 billion term loan

By Sara Rosenberg

New York, Nov. 5 -Chrysler Corp. LLC (Chrysler Auto) firmed up timing on the launch of its first-lien term loan debt with the scheduling of a bank meeting for Wednesday at 9:30 a.m. ET at the Grand Hyatt in New York, according to a market source.

As documented, the loan is structured as a $5 billion first-out term loan (Ba3/BB-) and a $5 billion second-out term loan (B3/B).

However, market sources are expecting that the deal will come to market with a different structure.

"I'm expecting it to be a single tranche of $9 billion," one source told Prospect News. "Documents haven't been released yet though."

JPMorgan, Goldman Sachs, Citigroup, Bear Stearns and Morgan Stanley are the joint bookrunners on the deal, with JPMorgan, Goldman and Citigroup the joint lead arrangers.

The term loan debt has already been funded by the lead banks to help fund the completed acquisition of a majority interest in the company by Cerberus Capital Management, LP from DaimlerChrysler AG.

Before being postponed in late July because of market conditions, the term loan B was structured as one tranche that was guided at Libor plus 375 basis points, after flexing up from original talk at launch of Libor plus 325 bps, with call protection of non-callable for one year then at 101 in year two.

Chrysler Auto also got a $2 billion delayed-draw seven-year second-lien term loan that was funded by Cerberus, which took down $500 million, and DaimlerChrysler, which took down $1.5 billion.

The second-lien term loan is delayed-draw for 12 months and must fund after that time. Originally, the tranche was expected to be funded at close.

The second-lien term loan will definitely not come back for broad syndication for at least a year from close.

Before being taken out of market, the second-lien term loan was being talked at Libor plus 700 bps, up from original talk of Libor plus 600 bps, with call protection of non-callable for one year, then at 103 in year two and 101 in year three.

Chrysler Auto is a producer and seller of Chrysler, Dodge and Jeep vehicles.

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