Visteon up with tender; Mediacom dips on new debt; Fresenius rises; airlines, autos under pressure

By Sara Rosenberg

New York, May 20 - Visteon Corp.'s term loan headed higher in trading on Tuesday as the company announced plans to extend debt maturities through a tender and exchange offer, Mediacom Broadband LLC saw its existing term loan soften after the launch of a new incremental term loan and Fresenius Medical Care AG & Co. KGaA's term loan B was stronger following ratings upgrades.

Also in the secondary, the airline sector, including names like Delta Air Lines Inc., Northwest Airlines Corp., UAL Corp. and American Airlines Inc., was weaker as oil prices hit record highs, and autos, such as General Motors Corp., Ford Motor Co., Chrysler Corp. LLC and Chrysler Financial Services LLC, saw levels come in as the market in general felt heavier.

Meanwhile, in the primary, the original issue discount on LyondellBasell Industries' term loan B-2 seems to be focusing in on the low-90 context, as opposed to the mid-90 area.

Visteon's term loan jumped up by over a point following news that the company commenced a bond tender offer and a new notes exchange offer, according to a trader.

The term loan was quoted at 87 bid, 88 offered, up from previous levels of 85½ bid, 86½ offered, the trader said.

On Monday night, Visteon announced that it is tendering for up to $344 million of its 8¼% notes due August 2010.

Each eligible holder who tenders old notes is required to purchase a principal amount of Visteon's new 12¼% senior notes due 2016 equal to 60% of the amount they tender at a purchase price equal to 91.621%.

There is an early tender deadline of June 2 in order to get full consideration of $978.30 for each 1,000 principal amount of the old notes, plus a $40.00 early tender payment.

The actual expiration date of the tender offer, though, is June 16.

Prior to launching the tender offer, Visteon had discussions with holders of about $201 million of the old notes about the proposed terms and conditions of the tender and exchange offer.

The company said that based on those talks, it believes that the holders plan to tender all of their notes.

The tender offer is conditioned on $300 million of old notes being tendered, the completion of the new notes and satisfaction of certain general conditions.

Visteon is a Van Buren Township, Mich.-based automotive supplier that designs, engineers and manufactures climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers.

Mediacom slides as additional debt launches

Mediacom's existing term loan fell off in trading after the company held a conference call on Tuesday morning to launch a new $300 million 71/2-year incremental term loan (Ba3/BB-), according to a trader.

The existing term loan was quoted at 91½ bid, 93 offered, down from 93 bid, 94 offered, the trader said.

"A) the market was down in general; and B) you're getting crammed with debt and there's no MFN language [in the existing loan], so you're not getting any increased coupon," the trader explained.

The new term loan was presented to lenders with price talk of Libor plus 350 basis points to 375 bps with a 3% Libor floor. Investors are being offered the paper at an original issue discount of 98.

JPMorgan is the lead bank on the new deal that will be used to pay down revolver borrowings and for general corporate purposes.

Mediacom Broadband is a wholly owned subsidiary of Mediacom Communications Corp., a Middletown, N.Y., developer of cable systems to provide entertainment, information and telecommunications services.

Fresenius better with upgrades

Fresenius' term loan B traded up during market hours after Moody's Investors Service upgraded the company's ratings, according to traders.

One trader said that the loan was quoted at 97 bid, 97½ offered, up 5/8 on the news, while a second trader said the loan was at 97 bid, 98 offered, up from 96½ bid, 97 offered.

On Tuesday, Moody's announced that it upgraded parent company Fresenius SE's corporate family rating and senior unsecured notes to Ba1 from Ba2, and Fresenius Medical Care's corporate family rating to Ba1 from Ba2, credit facility rating to Baa3 from Ba1 and senior unsecured notes rating to Ba2 from Ba3.

The outlook was changed to stable from positive.

Moody's said that the upgrades reflect continued improvements in operating performance evidenced by strengthening profitability levels and cash flow generation driving a reduction in financial leverage metrics of both companies more in line with the requirements for the Ba1 rating category.

Moody's also said that it expects further improvements in operating performances given both companies' strategies to benefit from global growth potential for healthcare services and medical equipment, considering rising demand levels from the ageing population, penetration of new markets and the expectation that adequate reimbursement rates will be preserved.

Fresenius is a Bad Homburg, Germany, provider of dialysis products and services.

Airlines nosedive on oil prices

The airline sector as a whole got "crushed" in trading mainly because oil prices hit a new high of above $129 a barrel, according to a trader.

Atlanta-based Delta Air Lines saw its first-lien term loan quoted at 86½ bid, 88 offered, down from 87½ bid, 89½ offered and its second-lien term loan quoted at 77½ bid, 79½ offered, down from 78¾ bid, 80¾ offered, the trader said.

Eagan, Minn.-based Northwest Airlines saw its term loan quoted at 81½ bid, 83 offered, down from 83½ bid, 84½ offered, the trader continued.

Chicago-based UAL saw its term loan quoted at 80 bid, 81 offered, down from 80¼ bid, 81¾ offered.

And, Fort Worth, Texas-based American Airlines saw its term loan quoted at 93 bid, 94½ offered, down from 93¼ bid, 94¾ offered, the trader added.

Autos slide

Autos also came under some pressure on Tuesday, with General Motors, Ford and Chrysler all taking a step back, according to a trader.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 91¼ bid, 92¼ offered, down from 91¾ bid, 92¾ offered, the trader said.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 89¼ bid, 89¾ offered, down from 89 3/8 bid, 89 7/8 offered.

Chrysler Corp. (Chrysler Auto), a producer and seller of Chrysler, Dodge and Jeep vehicles, saw its term loan quoted at 65½ bid, 66½ offered, down from 65¾ bid, 66¾ offered, the trader continued.

And, Chrysler Financial, a provider of financial services for vehicles in the NAFTA region, saw its first-lien term loan quoted at 91 bid, 92 offered, down from 91¼ bid, 92¼ offered.

"Autos are down with the rest of the market. No real credit specific news out in that sector," the trader said. "Market in general was down at least a quarter of a point, probably three eighths. Fairly light volumes over the last couple of days. High oil prices were definitely a main driver behind everything."

Also down on Tuesday was LCDX 10 as levels dropped to 99.40 bid, 99.50 offered from 99.70 bid, 99.80 offered on Monday, the trader added.

LyondellBasell OID likely low-90s

The original issue discount on LyondellBasell's term loan B-2 is expected by some to end up in the low 90s and the thought is that the mid 90s context has pretty much gone away, according to a buyside source.

Talk is that the deal is oversubscribed at 92, but there is also buzz that some orders are now coming in at 91, the source said.

"OID range has changed from 93 to 94 to 91 to 93," the source continued.

The company held a conference call on Tuesday to discuss its earnings. The call was necessary because the numbers were a bit confusing as they were hard to match up with previous years since the company doesn't have pro forma numbers for the past year.

"Overall, I feel people were ok on the call, but it didn't generate a lot of excitement. People came in today because pricing started to zero in on 92 area, taking that 94 area off the table. People feel better at 92, with potential to be 91. It was because of the response on the call they lowered the OID," the source added.

LyondellBasell's term loan B-2, comprised of roughly $2.5 billion plus €433 million term loan B-2, is initially priced at Libor plus 375 bps, with a 3.25% Libor floor, and the paper carries call protection of 103 in year one and 101½ in year two.

Goldman Sachs, Merrill Lynch, ABN Amro and UBS are the joint lead arrangers and joint bookrunners on the already funded deal, with Goldman the left lead.

Originally, Citigroup was the left lead bank on the deal, but the bank sold off its 20% share already and, therefore, is no longer involved.

The term loan B-2 is part of about $9.5 billion in total term loan B debt that is currently in the company's possession.

The rest of the term loan B debt is divided between a term loan B-1 with no call protection and a term loan B-3 that is non-callable for two years, with each of these tranches also sized at roughly $2.5 billion plus €433 million and carrying pricing of Libor plus 375 bps, with a 3.25% Libor floor.

The term loan B-1 and term loan B-3 have yet to be launched into syndication. The assumption is that Citi's 20% was taken equally out of each B loan tranche.

Pricing on all three term loan B tranches can step down to Libor plus 350 bps if first-lien senior secured leverage is less than or equal to 1.625:1, according to a recent filing with the Securities and Exchange Commission.

The term loan B is part of a senior secured credit facility that funded in December and includes a cash flow revolver, a term loan A, an ABL receivables purchase program facility and an ABL inventory-based facility.

When the term loan B first funded, it was sized at $9.45 billion and was priced at Libor plus 325 bps.

In order for the term loan B debt to have a Libor floor, a three-tranche structure and a 50 bps increase in pricing from when it funded, the company agreed to amend and restate the credit agreement, effective April 30.

The amendment and restatement also modified certain debt covenants - including increasing the debt basket, eliminating an interest rate hedging requirement and adding a covenant prohibiting any reduction of aggregate commitments under the $750 million access group revolver before its initial maturity - upsized the company's ABL inventory-based facility to $1.6 billion from $1 billion by using the accordion feature and increased that accordion feature to $1.1 billion from $600 million, and raised pricing on the term loan A and cash flow revolver to Libor plus 350 bps.

Proceeds from the credit facility were used to help fund Basell AF SCA's acquisition of Lyondell Chemical Co. for $48 per common share in an all-cash transaction with a total enterprise value of about $19 billion, including the assumption of debt.

LyondellBasell is a Netherlands-based polymers, petrochemicals and fuels company.

Nortek closes, syndication still to come

Nortek Inc. closed on its new $350 million five-year senior secured asset-based revolving credit facility on Tuesday, according to an 8-K filed with the SEC.

However, syndication of the deal has not yet happened as a bank meeting is expected to take place sometime in the next few weeks.

Bank of America, Credit Suisse and Goldman Sachs are the lead banks on the deal.

Availability under the revolver is initially limited to $175 million.

Borrowings of $50 million under the revolver, along with $750 million in senior secured notes, were used to repay the company's existing senior secured credit facility.

Nortek is a Providence, R.I.-based manufacturer and distributor of building products for residential, light commercial and commercial applications.

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