Chrysler Financial lower on CEO comments; Clear Channel rumored as early January

By Sara Rosenberg

New York, Dec. 21 - Chrysler Financial Services LLC's first- and second-lien term loan debt were both weaker on Friday after the chief executive officer was quoted as making negative remarks about the company's financial state.

In other news, rumors are swirling that Clear Channel Communications Inc.'s gigantic leveraged buyout financing credit facility will be coming to market in early January. However, official word on timing has yet to emerge.

Chrysler Financial's term loan debt fell off in light trading during market hours in response to comments attributed to the company's chief executive officer, according to a trader.

The first-lien term loan went out at 95½ bid, 96½ offered, down from Thursday's levels of 95¾ bid, 96¾ offered, the trader said. Early on in the day, the debt was quoted as low as 95 bid, 96 offered, before inching back up.

The second-lien term loan went out at 88 bid, 89 offered, down from 88½ bid, 89½ offered, the trader continued. In the morning, the paper was seen as low as 86 bid, 88 offered before it partially rebounded.

The impetus behind the movement was an article that appeared in the Wall Street Journal on Friday morning that reported Chrysler LLC's chief executive officer Bob Nardelli as saying that the company is operationally bankrupt.

The Journal article went on to say that Nardelli remarked that the only thing keeping Chrysler out of bankruptcy is the $10 billion that was loaned to the company.

"Probably not the most tactful words for the CEO," the trader said. "Not something you would expect the CEO to say.

"Point is operationally they're not doing well and they need to improve. None of this is really news," the trader added.

Chrysler Financial is a provider of financial services for vehicles in the NAFTA region.

Clear Channel may hit soon

Clear Channel's proposed $19.525 billion credit facility is speculated by the market to be an early January launch, but informed sources are saying that timing is still fluid and nothing official has been decided as of yet.

"Rumor given the bond tender they started, but nothing concrete. I think that will be determined as we get into the new year," one source remarked.

Clear Channel recently commenced a cash tender offer for its $750 million 7.65% senior notes due 2010, and its subsidiary, AMFM Operating Inc., began a cash tender offer for its $644.86 million 8% senior notes due 2008. Both tender offers will expire on Jan. 16.

The proposed credit facility consists of a $1 billion receivables-backed revolver, a $2 billion senior secured revolver, a $1.25 billion senior secured term loan A, a $12.65 billion senior secured term loan B, an up to $2 billion senior secured term loan C and a $625 million senior secured delayed-draw term loan.

The size of the term loan C is expected to be reduced by the amount of net cash proceeds from certain specified asset sales received prior to the closing of the buyout.

To the extent that availability under the company's receivables-backed revolver is less than $750 million at closing, the term loan A would be increased by a corresponding amount.

Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, RBS and Wachovia are the lead banks on the deal.

There will be a consolidated senior secured net debt to consolidated adjusted EBITDA covenant in the credit agreement.

Proceeds from the credit facility will be used to help fund the leveraged buyout of the company by Thomas H. Lee Partners, LP and Bain Capital Partners, LLC for $39.20 per share. This buyout agreement was revised from an original offer of $37.60 per share.

Other buyout financing will come from $2.6 billion in high-yield bonds comprised of $1.1 billion in senior cash-pay notes and $1.5 billion in senior pay-in-kind option notes.

Backing the bonds is a commitment for a $1.1 billion senior unsecured cash-pay bridge loan and a commitment for a $1.5 billion senior unsecured pay-in-kind option bridge loan.

In late 2006, when the buyout was first announced, the company had received a debt financing commitment for a $1 billion receivables-backed revolver, $16.375 billion of senior secured bank debt and $4.1 billion of high-yield bonds that included a $1.5 billion senior subordinated tranche. However, that commitment was later revised.

The transaction is expected to be completed in the first quarter of 2008, subject to Federal Communications Commission consent and the expiration or termination of the Hart-Scott-Rodino waiting period. Clear Channel shareholders have already approved the deal.

Clear Channel is a San Antonio media and entertainment company specializing in "gone from home" entertainment and information services.

NewPage closes

NewPage Corp. completed its acquisition of Stora Enso Oyj's North American paper manufacturing operations, according to a news release.

To help fund the transaction, NewPage got a new $2.1 billion credit facility consisting of a $1.6 billion term loan due in 2014 (Ba2) that is priced at Libor plus 375 basis points and was sold at an original issue discount of 97 and a $500 million ABL revolver due in 2012 that is priced at Libor plus 200 bps.

During syndication, the discount on the term loan firmed up at the tight end of original guidance that was in the 96 to 97 area.

Goldman Sachs acted as the lead bank on the deal.

Other acquisition financing came from a $456 million add-on to the company's second-lien senior secured notes due 2012 and a $200 million super holdco PIK note that NewPage issued to Stora Enso.

Pro forma for the 12 months ended Sept. 30, the ratio of total debt to consolidated adjusted EBITDA is 6.0 times and the ratio of consolidated adjusted EBITDA to cash interest expense is 1.7 times.

"NewPage, majority owned by Cerberus Capital Management, completed the $2.556 billion financing arranged by Goldman Sachs in one of the most difficult credit markets in memory," Mark A. Suwyn, NewPage chairman and chief executive officer, said in the release. "This speaks well of the soundness of the business combination, the quality of the management team, and the strength of the support we've received from Cerberus and Goldman Sachs. This news is very exciting for the business. We've achieved regulatory approvals and other milestones more quickly than anticipated, and therefore were able to close ahead of schedule."

NewPage is a Miamisburg, Ohio, producer of coated papers.

Manor Care closes

The Carlyle Group completed its $6.3 billion acquisition of Manor Care Inc., under which Manor Care stockholders received $67.00 in cash per share, according to a news release.

To help fund the buyout, Manor Care got a new $900 million senior secured credit facility (Ba3) consisting of a $200 million six-year revolver priced at Libor plus 275 bps, with a 50 bps commitment fee, and a $700 million seven-year term loan B priced at Libor plus 275 bps that was sold at a discount of 961/4.

During syndication, the discount on the term loan B was revised from the 98 context to the 97 area, before settling at the final discount price.

JPMorgan, Credit Suisse and Bank of America acted as the lead banks on the deal.

The facility has a senior secured leverage test.

Manor Care is a Toledo, Ohio, provider of short-term post-acute services and long-term care.

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