Toys "R" Us term loans weaken even further in wake of disappointing financials

By Sara Rosenberg

New York, Dec. 23 - In trading on Monday, Toys"R"Us Inc.'s term loan continued their downward spiral that began last week after weak quarterly results were announced, and Answers Corp.'s term loans held steady from breaking levels that emerged late in the prior session.

Toys "R" Us slides

Toys "R" Us saw its term loans retreat even further in the secondary on Monday as investors continue to react to negative third-quarter financial results that surfaced on Dec. 17, according to a trader.

The term loan B-1 was quoted at 90 bid, 91 offered, down from 90¾ bid, 91¾ offered, and the term loans B-2 and B-3 were quoted at 84 bid, 85 offered, down from 84½ bid, 85½ offered, the trader said.

By comparison, on Dec. 16, the day before financials were released, the B-1 loan was seen at 93 3/8 bid, 94 offered, and the B-2 and B-3 loans were seen at 87¾ bid, 88¾ offered, the trader added.

For the third quarter, the company reported net sales of $2.5 billion, a decrease of $118 million or 4.5% versus the prior year, an operating loss of $140 million, versus an operating loss of $75 million in the 2012 quarter, a net loss of $605 million, compared to a net loss of $105 million in the previous year, and adjusted EBITDA of negative $37 million, compared to $31 million in the prior year.

Toys "R" Us is a Wayne, N.J.-based toy retailer.

Answers holds steady

Answers' $175 million five-year first-lien term loan B quoted was quoted at 99 bid, 99½ offered and its $100 million 61/2-year second-lien term loan quoted at 98 bid, 98½ offered, in line with where they freed up late Friday, a market source remarked.

Pricing on the first-lien loan is Libor plus 550 basis points with a 1% Libor floor and it was sold at an original issue discount of 99. There is 101 soft call protection for one year.

The second-lien loan is priced at Libor plus 1,000 bps with a 1% Libor floor and was sold at a discount of 98. This debt has call protection of 102 in year one and 101 in year two.

During syndication, pricing on the first-lien term loan was increased from revised talk of Libor plus 525 bps and initial talk of Libor plus 450 bps, the call protection was extended from six months, the maturity was shortened from seven years and amortization was sweetened to 5% per annum from 1%.

Also, pricing on the second-lien term loan was raised from revised talk of Libor plus 925 bps to 950 bps and initial talk of Libor plus 850 bps, the discount was moved from 98½ and the maturity was shortened from 7½ years.

Answers lead banks

SunTrust Robinson Humphrey Inc. and Silicon Valley Bank are leading Answers' $295 million credit facility, which also includes a $20 million revolver.

Proceeds will be used to refinance existing debt and fund an acquisition.

Senior leverage is 2.5 times and total leverage is 3.9 times on a last-quarter annualized basis.

Answers is a St. Louis-based wiki-based search engine company for consumers and provides subscription-based SAAS services to enterprise companies and retailers.

Chrysler closes

In other news, Chrysler Group LLC completed the repricing of its existing term loan, according to a news release.

The repriced $2,932,500,000 senior secured term loan B due May 24, 2017 was completed at Libor plus 275 bps with a 0.75% Libor floor and was issued at par. There is 101 soft call protection for six months.

During syndication, the Libor floor on the loan firmed at the tight end of the 0.75% to 1% talk.

The transaction took term loan pricing down from Libor plus 325 bps with a 1% Libor floor.

Morgan Stanley Senior Funding Inc., Citigroup Global Markets Inc., Bank of America Merrill Lynch and Goldman Sachs Bank USA led the deal.

Chrysler is an Auburn Hills, Mich.-based automotive company.

Cumulus wraps

Cumulus Media Holdings Inc. closed on its $2,225,000,000 credit facility (B1/B+) consisting of a $200 million five-year revolver and a $2,025,000,000 seven-year term loan, both priced at Libor plus 325 bps with a 1% Libor floor, a news release said. The term loan was sold at an original issue discount of 99.

During syndication, pricing on the term loan firmed at the low end of the Libor plus 325 bps to 350 bps talk and the discount widened from 991/2.

J.P. Morgan Securities LLC led the deal that was used to refinance existing bank debt.

Cumulus is an Atlanta-based radio broadcaster.

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