TransDigm up on numbers; LCDX stronger; Chrysler Auto may see new tranching on return to market

By Sara Rosenberg

New York, Aug. 6 - TransDigm Group Inc.'s term loan was stronger as the company released positive financial results and LCDX was better on Monday in a relatively quiet trading session.

Meanwhile, in the primary, Chrysler Corp. LLC's (Chrysler Auto) term loan B could end up coming back to market structured with first- and second-out subtranches because that is how the already funded deal has been documented.

TransDigm's term loan inched its way higher during market hours after the company reported fiscal third-quarter results and upwardly revised full-year guidance, according to a trader.

The term loan was quoted at 97½ bid, 99 offered, up from Friday's level of 96½ bid, the trader said.

On Monday morning, TransDigm announced third-quarter numbers that included net income of $22.1 million, or $0.45 per share, compared with a net loss of $13.4 million, or $0.30 per share, in the comparable quarter a year ago.

Adjusted net income increased 60.4% to $26.5 million, or $0.54 per share, from $16.5 million, or $0.35 per share, in the third quarter 2006.

Net sales for the quarter rose 42.2% to $157.6 million from $110.9 million last year.

EBITDA rose to $67.9 million from a loss of $0.5 million for the comparable quarter a year ago.

Year-to-date net income increased to $64.0 million, or $1.33 per share, from $9.9 million, or $0.21 per share, last year.

Year-to-date adjusted net income increased 65.0% to $73.8 million, or $1.53 per share, from $44.7 million, or $0.95 per share, in the comparable period a year ago.

Year-to-date net sales were $424.8 million, a 33.0% increase over net sales of $319.3 million in the 2006 comparable period.

Year-to-date EBITDA increased 119.1% to $185.3 million, compared with $84.6 million for the comparable period a year ago.

As for full-year 2007, guidance was raised from previous expectations based on the company's current backlog, performance to date and expectations for the fiscal fourth quarter ending Sept 30.

Revenues for the full year are now anticipated in the range of $584 million to $589 million, up from $575 million to $585 million; net income is now anticipated in the range of $86.3 million to $87.8 million, up from $82.5 million to $85.5 million; earnings per share are now expected to be in the range of $1.78 to $1.81, up from $1.72 to $1.78; adjusted earnings per share are now expected to be in the range of $2.04 to $2.07, up from $1.96 to $2.02; and EBITDA as defined is now anticipated in the range of $270 million to $273 million, up from $263.5 million to $268.5 million.

TransDigm is a Cleveland-based designer, producer and supplier of highly engineered aircraft components.

LCDX higher

LCDX was stronger on Monday in a relatively muted trading session, while cash was pretty much unchanged with a firm undertone, according to traders.

The index went out at 94.35 bid, 94.55 offered, up from Friday's levels of 93.50 bid, 93.75 offered, traders said.

"It was pretty consistent, pretty tight, all day," one trader remarked about LCDX.

"Cash market was basically unchanged. Definitely quiet," the trader continued.

"Stuff feels a little stronger but you're just not seeing a lot of movement in a lot of things," a second trader added about the cash market.

Chrysler Auto potential structure

Chrysler Auto's $10 billion in term loan B debt may have a new look when it returns to syndication upon an improvement in market conditions, with one strong possibility being a division into first- and second-out tranches, according to a market source.

As currently 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), the source said.

"There have been some discussions with accounts but it's not firm that this is the way it will come back to market," the source said. "But it could."

As for when the deal may be relaunched to institutional investors, according to the source, it could be as early as September.

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.

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

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

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.

Elder Health wraps up after changes

Elder Health Inc. wrapped up syndication on its credit facility after making some changes that included downsizing the institutional tranche and increasing pricing across the board, according to a market source.

The term loan B is now sized at $90 million, down from $125 million, the source said.

In addition, pricing on the term loan B, as well as on the $10 million revolver, was raised to Libor plus 325 bps from original talk at launch of Libor plus 275 bps to 300 bps, the source continued.

Bear Stearns acted as the lead bank on the $100 million (down from $135 million) credit facility (B2/B).

Proceeds are being used to help fund the acquisition of the Senior Partners Medicare line of business in Philadelphia and surrounding counties from Health Partners of Philadelphia Inc.

Elder Health is a Baltimore-based company that is focused on simplifying access to health care and improving service, outcomes and health care quality for seniors.

McMoRan closes

McMoRan Exploration Co. closed on its new $700 million revolving credit facility, according to a news release.

JPMorgan and Merrill Lynch acted as the lead banks on the deal.

Proceeds were used to help fund the acquisition of the Gulf of Mexico shelf oil and gas properties of Newfield Exploration Co. and to help repay a $100 million term loan.

McMoRan is a New Orleans-based explorer, developer and producer of oil and natural gas.

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