Foamex rise continues; Cumulus trades up; Retail sector under pressure; Abitibi, CB Richard talk emerges

By Sara Rosenberg

New York, March 13 - Foamex International Inc.'s second-lien was stronger again on Thursday on follow through from recent news of a proposed stock for debt exchange, Cumulus Media Inc. moved up as its change-of-control amendment passed, retail names took a hit after the release of February sales numbers and LCDX 9 was softer.

In primary news, Abitibi-Consolidated Inc. came out with pricing guidance on its term loan as the deal was launched to investors on Thursday and price talk surfaced on CB Richard Ellis Group Inc.'s term loan A-1 on the heels of its launch earlier this week.

Foamex's second-lien term loan continued to grind higher during the trading session as investors were still reacting to the company's plan to offer its second-lien loan lenders stock for debt and pay down first-lien borrowings, according to a trader.

The second-lien term loan was quoted at 81 bid, 83 offered, up from 78 bid, 82 offered, the trader said. Earlier this week, prior to the news of the debt exchange, the second-lien was being quoted at 74 bid, 76 offered.

Under the proposal, Foamex's second-lien loan lenders will be given the option to purchase common stock at $1.50 per share, using their second-lien loans at par value, and the company is also planning a rights offering to all of its stockholders to purchase common stock at $1.50 per share as well.

Proceeds from the rights offering would be used to prepay the loans under the company's first-lien credit facility and any second-lien loans that are used to purchase common stock would be canceled.

Foamex anticipates receiving collectively a minimum of $80 million in new equity, which would be through a combination of cash and an exchange of second-lien loans.

The company is proposing the offerings to, among other things, improve its credit profile, significantly deleverage, reduce interest expense, and improve trading levels on the first- and second-lien term loans.

Foamex is a Linwood, Pa.-based manufacturer of flexible polyurethane and advanced polymer foam products.

Cumulus better on amendment okay

Cumulus Media's term loan was higher as news emerged that the company's change-of-control amendment received lender approval, according to traders.

The term loan traded at 82 bid, 84 offered, "with the fee traveling to the buyer," one trader remarked. A second trader said that he saw the term loan quoted at 78 bid on Wednesday.

Cumulus did the amendment so that it could keep its credit facility in place following a buyout by management and Merrill Lynch Global Private Equity, instead having to come to market with a new deal.

As part of the amendment, lenders are getting a 75 bps increase in pricing and a 200 bps amendment fee, traders said.

The company needed 50.1% approval in order for the amendment to pass.

Bank of America is the administrative agent on the loan.

Cumulus Media is an Atlanta-based radio company.

Retail slides on results, LCDX dips

The retail sector as a whole seemed to drop lower in trading as the U.S. Census Bureau announced disappointing retail and food services sales for February, according to traders.

For example, Claire's Stores Inc., a Pembroke Pines, Fla.-based specialty retailer of value-priced jewelry and accessories, saw its term loan B quoted at 76½ bid, 77½ offered, down from 77 bid, 78 offered, traders said.

Dollar General Corp., a Goodlettsville, Tenn.-based discount retailer, saw its term loan B-1 quoted at 87¾ bid, 89 offered, down on the bid side from 88 bid, 89 offered, traders continued.

Michaels Stores Inc., an Irving, Texas, specialty retailer for the hobbyist and do-it-yourself home decorator, saw its term loan B drop to 82¾ bid, 83¾ offered from 83½ bid, 84½ offered.

Revlon Inc., a New York-based personal care products company, saw its term loan quoted at 90¾ bid, 91¾ offered, down from 91¼ bid, 92¼ offered.

Rite Aid Corp., a Camp Hill, Pa.-based drugstore chain, saw its term loan drop to 90½ bid, 91½ offered from 91½ bid, 92½ offered, traders remarked.

General Motors Corp., a Detroit-based automaker, saw its term loan quoted at 87½ bid, 88½ offered, down from 88¼ bid, 89¼ offered.

And, Ford Motor Co., a Dearborn, Mich.-based automaker, saw its term loan quoted at 81¾ bid, 82¾ offered, down from 82½ bid, 83½ offered, traders said.

For the month of February, the U.S. Census Bureau said that advance estimates of U.S. retail and food services sales, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $380.2 billion, a decrease of 0.6% from January.

Total sales for the December through February period were up 3.3% from the same period a year ago.

"Retail sales did not start off the day very well," one trader remarked.

In fact, the cash market as a whole had a negative tone to it on Thursday, with traders placing levels down anywhere from a quarter of a point to three eighths of a point.

And, LCDX 9 was lower as well, with levels going out around 91.65 bid, 91.75 offered, down from 92.05 bid, 92.15 offered, traders added. The index was said to have gotten as low as 91.55 bid, but it rebounded a little bit in the afternoon with stocks.

Nasdaq closed up 19.74 points, or 0.88%, Dow Jones Industrial Average closed up 35.50 points, or 0.29%, S&P 500 closed up 6.71 points, or 0.51%, and NYSE closed up 45.93 points, or 0.52%.

Abitibi-Consolidated sets talk

Moving to the primary, Abitibi-Consolidated held a bank meeting on Thursday morning to kick off syndication on its $450 million 364-day senior secured term loan, and in connection with the launch, guidance was announced, according to a buy-side source.

The term loan is being talked at Libor plus 700 basis points, with an original issue discount in the 97 area, and a Libor floor somewhere in the range of 3% to 3.5%, the source said.

"[Pricing guidance] is subject to reverse inquiry," the source remarked. "It's newsprint. You're taking a lot of risk. There's a reason they're paying what they have to pay."

Goldman Sachs is the lead bank on the deal that will be used to help refinance existing debt, including the company's 6.95% notes, 5¼% notes, 7 7/8% notes, and credit facilities A and B.

Other funding for the refinancing will come from $415 million of three-year senior secured notes, $300 million of convertible notes and $256.8 million of exchange senior notes - assuming 90% participation in an exchange offer for near-term maturity notes.

The senior secured notes are expected to price somewhere in the 13% area, the source added.

The company also plans on closing the sale of its Snowflake, Ariz., mill in mid-April. This sale is expected to generate proceeds of $161 million, of which a portion will be used to repay some term loan debt.

As part of the transaction, the company is seeking an amendment to the existing Bowater Inc. revolver to allow for, among other things, the potential issuance of new AbitibiBowater equity-linked securities and a delay or modification to Bowater's planned separation of its Catawba, S.C., coated paper facility.

Abitibi is a Montreal-based producer of newsprint and commercial printing papers, market pulp and wood products.

CB Richard price talk

Guidance on CB Richard Ellis's $300 million term loan A-1 (Ba1/BB+) due Dec. 20, 2013 surfaced on the heels of the deal being launched to lenders this past Tuesday.

The term loan A-1 is being talked at Libor plus 350 basis points with an original issue discount of 991/2, a syndicate document revealed.

The debt is being obtained under the accordion feature in the company's existing credit agreement.

Financial covenants include maximum net leverage ratio of 3.75 times and minimum interest coverage ratio of 2.25 times.

Credit Suisse is the lead bank on the deal that will be used to fund working capital needs and for general corporate purposes.

Pro forma for the transaction, TTM Dec. 31, net debt to normalized EBITDA is 1.8 times.

Commitments are due on March 25, and closing is targeted for March 27.

CB Richard is a Los Angeles-based commercial real estate services company.

Graphic Packaging markets term loan at OID

Graphic Packaging International, Inc. is in the process of trying to syndicate its already funded $1.2 billion senior secured term loan due May 16, 2014 to investors with an original issue discount of 93, according to a market source.

Pricing on the term loan is Libor plus 275 bps.

Bank of America, JPMorgan, Goldman Sachs and Deutsche Bank are the lead banks on the deal that was launched this past Tuesday, but funded on Monday.

Proceeds were used to refinance existing bank debt in connection with the company's combination with Altivity Packaging LLC.

In connection with the transaction, the company got a $100 million add-on to its revolving credit facility as well.

The company's existing $1.055 billion term loan due May 16, 2014 remained in place and continues to be priced at Libor plus 200 bps.

Graphic Packaging is a Marietta, Ga., paperboard packaging company.

DG FastChannel closes

DG FastChannel, Inc. closed on its $145 million senior credit facility, according to a news release.

The facility consists of a $30 million revolver priced at Libor plus 225 bps, a $65 million term loan A priced at Libor plus 225 bps and a $50 million acquisition term loan priced at Libor plus 250 bps, a market source said.

All tranches were sold at an original issue discount of 37.5 bps.

During syndication, the revolver was upsized from $25 million revolver, the term loan A was upsized from $60 million and the acquisition term loan was downsized from $60 million.

BMO Capital Markets acted as the lead arranger on the deal. Other members of the bank group include Wachovia Bank, Webster Bank, Citibank, Fifth Third Bank, First Tennessee Bank, First Bank and Bank of the West.

Proceeds are being used to refinance the company's existing credit facility, to fund the acquisition of Level 3 Communications, Inc.'s Vyvx advertising services business and for general corporate purposes.

The Vyvx transaction is expected to close in the second quarter, subject to securing regulatory approvals and the satisfaction of other customary conditions.

The company has also obtained a financing commitment from BMO for a two-year $65 million bridge loan.

DG FastChannel is an Irving, Texas-based provider of digital media services to the advertising and broadcast industries.

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