Autos soften on sales results; Hexion, Huntsman drop, R.H. Donnelley rises; MBF, 19X deals fade away

By Sara Rosenberg

New York, Nov. 3 - General Motors Corp., Ford Motor Co. and Chrysler Financial Services LLC all saw their term loans slide lower in trading on Monday as the companies reported disappointing October sales numbers.

Also in trading, Hexion Specialty Chemicals Inc. and Huntsman Corp. saw declines in their bank debt levels in reaction to the recent news that the financing commitment for their pending merger was not extended by the court, and R.H. Donnelley Corp.'s term loan rose on paydown chatter.

In other news, MBF Healthcare Acquisition Corp.'s acquisition agreement with Critical Homecare Solutions Holdings Inc. was terminated, resulting in the cancellation of the proposed credit facility that was going to help finance the deal, and 19X Inc.'s buyout of CKX Inc., which was going to involve bank debt financing, was canceled.

GM, Ford, Chrysler weaken

General Motors, Ford and Chrysler Financial saw a drop in term loan levels during Monday's trading session as all three companies came out with October sales results that were hurt by a drop in retail demand, according to a trader.

General Motors, a Detroit-based automotive manufacturer, saw its term loan quoted at 49½ bid, 52½ offered, down from 52½ bid, 56½ offered on Friday, the trader said.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 51½ bid, 54½ offered, down from Friday's levels of 54 bid, 55½ offered, the trader continued.

And, Chrysler Financial, a provider of automotive financial products and services, saw its first-lien term loan quoted at 65½ bid, 68½ offered, down from 67½ bid, 70½ offered on Friday, the trader added.

GM, Ford, Chrysler sales numbers

In October, General Motors delivered 170,585 vehicles, down 45% compared with a year ago. Truck sales were 97,119, down 51%, and car sales were 73,466, down 34%.

Ford delivered 132,838 vehicles in October, down 30.2% compared to 190,195 last year. Truck sales were 88,267, down 30.3% from 126,622, and Ford, Lincoln and Mercury car sales were 40,854, down 26.8% from 55,812.

Lastly, Chrysler LLC, the producer and seller of Chrysler, Dodge and Jeep vehicles, saw its October sales go to 94,530 vehicles, down 35% from 145,316 vehicles last year.

Hexion, Huntsman dip with merger problems

Hexion and Huntsman both saw their term loan levels slide lower in trading as investors continued to react to Friday's late day news that the court decided not to force the banks to extend the debt financing commitment for the merger of the two companies past the Nov. 1 expiration date, according to a trader.

Then on Monday, news emerged that the companies are fighting to force the banks to fund the debt even though the commitment has now expired, while the banks are claiming that they shouldn't have to. A trial on the matter is expected to kick off on Jan. 8.

In reaction to these happenings, Hexion's term loan was quoted at 64 bid, 67 offered on Monday, down 4½ points on the day, the trader said.

And, Huntsman's term loan was quoted at 80½ bid, 83½ offered, also down 4½ points on the day, the trader added.

Hexion credit facility commitment

Under the original commitment, Credit Suisse and Deutsche Bank had agreed to provide Hexion with a $9.4 billion credit facility, consisting of an $8.4 billion term loan and $1 billion revolver, or a $7.4 billion term loan and $2 billion asset-based revolver, according to previous filings with the Securities and Exchange Commission.

Hexion's acquisition of Huntsman was previously hoped to close last Tuesday, but the closing was delayed as the banks refused to fund the debt financing, claiming that the solvency opinion of American Appraisal Associates and the solvency certificate of Huntsman's chief financial officer did not meet the condition of the commitment letter.

On July 12, 2007, Hexion agreed to acquire Huntsman in an all-cash transaction valued at $10.6 billion, including the assumption of debt. Huntsman shareholders approved the deal in October 2007.

Hexion is a Columbus, Ohio-based thermoset resins company. Huntsman is a Salt Lake City-based manufacturer of differentiated chemicals and pigments.

R.H. Donnelley up on tender

R.H. Donnelley's term loan D gained some ground on Monday as the company launched a tender offer for $20 million of the debt, according to a trader.

The term loan was quoted at 65½ bid, 69½ offered, up six points on the day, the trader remarked.

Last month, the company had revealed that it obtained a waiver under its senior secured credit facility to permit voluntary prepayments of its term loan D-1 and term loan D-2 at a discount to their principal amounts.

The company said that the waiver is for a period of 270 days, and that it would hold a Dutch tender offer in a series of increments in connection with the bank debt.

R.H. Donnelley is a Cary, N.C.-based Yellow Pages and online local commercial search company.

MBF credit facility disappears

Moving to the new deal front, MBF Healthcare's proposed $209 million senior secured credit facility has been removed from the list of upcoming/pending deals as the acquisition that the debt was going to help fund, was canceled, according to a market source.

On Monday morning, MBF announced that it mutually terminated its proposed purchase of Critical Homecare from Kohlberg & Co. LLC on Oct. 31.

The market source explained that the transaction was done away with because most of the equity for the deal was coming from a special-purpose acquisition company, and there was no realistic chance of getting the special-purpose acquisition shareholders, which are mostly hedge funds, to approve the acquisition.

The enterprise value of the transaction was estimated at $479 million. Originally, it was estimated at $534 million, but was restructured this summer.

The credit facility itself was not a factor in the termination of the agreement, as the company had a firm commitment from the banks, the source added.

CIT and Jefferies were going to act as the lead banks on the deal, with CIT the left lead.

At one point it was thought that the credit facility might launch with a bank meeting on Oct. 1, but that meeting never ended up taking place because of market volatility.

MBF credit facility details

The proposed credit facility for MBF was expected to consist of a $25 million revolver, a roughly $142 million funded term loan and a $42 million delayed-draw term loan, with pricing on all tranches outlined in the commitment letter as Libor plus 500 bps with a 3% Libor floor.

Other financing for the acquisition was going to come from about $67 million of mezzanine debt, which, according to the filings, was expected to be priced at 14.5%, comprised of somewhere between 12% to 12.5% in cash and the rest in PIK.

Originally, the company had received a commitment for an up to $285 million senior secured credit facility from Jefferies, consisting of a $25 million revolver, an up to $155 million first-lien term loan, a $20 million first-lien delayed-draw term loan, and an up to $85 million second-lien term loan.

This initial credit facility commitment, however, expired on July 31, so the parties worked to get a new commitment and achieved their goal on Aug. 28, a day before the deadline that would have allowed for the termination of the acquisition.

In connection with getting the new financing commitment, the acquisition agreement was amended to extend the termination date to Oct. 31.

MBF Healthcare is a Coral Gables, Fla., blank check company formed to acquire businesses in the health care industry. Critical Homecare Solutions is a Conshohoken, Pa., provider of comprehensive home infusion therapy and specialty infusion services.

19X drops off calendar too

Another deal to disappear from the upcoming loan calendar was 19X, as the company announced that it has canceled its acquisition agreement, under which it was going to pay $12 per share in cash for CKX.

In terminating the agreement on Nov. 1, 19X cited the extraordinary national and global economic conditions that made it impossible to consummate the transaction, according to an 8-K filed with the SEC on Monday.

To help fund the transaction, 19X was planning on getting a new credit facility from Credit Suisse and Deutsche Bank.

The original commitment letter called for a $50 million revolver expected at Libor plus 450 bps, with a 75 bps commitment fee, a $400 million first-lien term loan expected at Libor plus 450 bps and a $200 million 51/2-year second-lien term loan expected at Libor plus 750 bps, with the term loans expected to be sold at an original issue discount of 97.

However, that commitment was obtained in November 2007, before the purchase price for CKX was revised downwards from $13.75 per share.

19X is a private company owned and controlled by Robert F.X. Sillerman, chairman and chief executive officer of CKX, and Simon R. Fuller, a director of CKX and the CEO of 19 Entertainment Ltd., a CKX subsidiary. CKX is a New York-based company engaged in the ownership, development and commercial use of entertainment content.

Vonage closes

Vonage Holdings Corp.'s $202.3 million senior secured credit facility led by Silver Point was funded on Monday, according to an S-3 filed with the SEC.

The facility consists of a $130.3 million five-year first-lien facility priced at Libor plus 1,200 bps with a 4% Libor floor that was sold at an original issue discount of $7.2 million, and a $72 million seven-year second-lien loan priced at 20% PIK beginning Dec. 31 until the third year, at which time it will convert into 20% in cash.

Originally, the company was planning on getting a $95 million initial first-lien credit facility priced at Libor plus 1,000 basis points with a 4% Libor floor and an original issue discount of 981/2, and then the lead bank, Silver Point Finance, was going to use commercially reasonable efforts to assemble a syndicate of other lenders to provide up to $30 million of incremental first-lien debt.

However, the original debt commitment was revised and definitive agreements on the new commitment were entered into on Oct. 19.

In addition, the company sold $18 million of 20% convertible secured third-lien notes due 2015 with an initial conversion price of roughly $0.29 per share of common stock.

Under the initial plans, the company was going to sell $90 million of convertible secured second-lien notes due 2015 priced at 10% PIK plus 4% cash through the first 12 quarterly interest periods, and thereafter at 14% cash.

Proceeds are being used to repurchase about $253 million of existing convertible notes in a tender offer that started in July.

Vonage is a Holmdel, N.J.-based provider of broadband telephone services.

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