Xerox, Allied Waste up slightly as market technicals continue to drive up prices

By Sara Rosenberg

New York, Jan. 27 -Xerox Corp. and Allied Waste Industries Inc. were both up a touch with market technicals cited as the primary reason behind the movement, although Xerox's positive earnings news could have had some influence on its slight strengthening.

Xerox's revolver was seen as high 95¼ bid, 96¼ offered on Tuesday, up about a quarter of a point from previous levels, according to traders, while the term loan remained unchanged at 101 bid, 101½ offered.

On Tuesday, the Stamford, Conn., document company announced better-than-expected fourth-quarter earnings that included earnings per share of 22 cents, 11% percent equipment sale growth, 1% revenue growth for total fourth-quarter revenue of $4.3 billion and operating cash flow of $1 billion.

For the full year 2003, the company reported net income of $360 million or 36 cents per share, equipment sale revenue of $4.3 billion, an increase of 7% from $4 billion in 2002, total revenue of $15.7 billion, a decline of 1% from $15.8 billion in 2002, debt reduction of $3 billion, operating cash flow of $1.9 billion and a year-end cash balance of $2.5 billion.

Meanwhile, the bid on Allied Waste's term loan B was seen "a hair stronger" at 101 5/8 compared to a 101½ bid on Monday, according to a trader.

No specific news prompted the higher bid, which was once again said to be a result of market technicals.

Allied Waste is a Scottsdale, Ariz., non-hazardous solid waste management company.

Goodyear unmoved

Goodyear Tire & Rubber's U.S. term loan was seen at 99½ bid on Tuesday with no offer present, according to a trader, who placed the bid level in line with previous bids out there. There were no quotes available on the asset-based credit facility since it is hardly ever traded, the trader added.

The Akron, Ohio, tire company announced on Tuesday that it plans to syndicate a $300 million term loan add-on to its existing $1.3 billion asset-based credit facility. JPMorgan and Citigroup are the lead banks on the deal.

Proceeds of the loan would be used for general corporate purposes.

Furthermore, Goodyear said that it intends to begin discussions with lenders about an amendment to its senior secured credit facilities to allow for future capital markets transactions, which may involve the granting of junior liens on some of the collateral securing the company's senior secured U.S. credit facilities.

Overall, traders continued their struggle to find paper in the secondary bank loan market on Tuesday in an environment that essentially consists of all bids and no offers, which of course results in higher prices.

"Unless you have something to sell to me we have nothing to talk about," one trader said, adding that even with the latest surge of earnings news there has been very little response in terms of bid/offer levels as the market relies more on technicals than on credit to determine prices.

Buffets on CreditWatch

As news emerged on Tuesday of a Buffets Inc. recapitalization plan that includes a $310 million amended senior secured credit facility at the holding company and $100 million senior discount notes offering at the operating company, Standard & Poor's placed the company's ratings on CreditWatch with negative implications.

"The CreditWatch listing follows Buffets' announcement of a refinancing that adds about $85 million of incremental debt to the company's capital structure," S&P said. "Upon successful completion of the planned refinancing, Standard & Poor's will review the transaction and the company's financial policy. Standard & Poor's will also assign ratings to the new $100 million senior discount notes and the $310 million amended senior secured credit facility upon review of documentation."

Ratings put on CreditWatch with negative implications include the B+ bank loan rating and B- subordinated debt rating.

The credit facility, which is set to launch via a bank meeting on Wednesday, consists of a $30 million 31/2-year revolver with an interest rate of Libor plus 325 basis points and a 50 basis points commitment fee, a $20 million 31/2-year existing letter-of-credit facility with an interest rate of Libor plus 325 basis points, a $30 million 51/2-year synthetic letter-of-credit facility with an interest rate of Libor plus 350 basis points and a $230 million 51/2-year term loan B with an interest rate of Libor plus 350 basis points.

Credit Suisse First Boston is the sole lead arranger on the Eagan, Minn., restaurant operator's bank deal.

Proceeds from the amended facility, combined with cash on hand and proceeds from the senior discount notes offering, will be used to refinance all of Buffets' outstanding term loan debt, repurchase Buffets' 11¼% senior subordinated notes due 2010 and/or repay bank debt with $50 million of the proceeds, redeem Buffets Holdings' series A senior subordinated and series B junior subordinated notes due 2011, make a distribution to stockholders and pay transaction fees and expenses.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.