Evergreen revises second-lien call protection; Travelport trades lower; Auto sector sees weaker tone

By Sara Rosenberg

New York, Sept. 19 - Evergreen International Aviation, Inc. sweetened call premiums on its second-lien term loan tranche and is now hoping to allocate its new deal next week.

Meanwhile, in the secondary, Travelport Inc.'s term loan was a touch weaker as investors questioned the company's motives behind not releasing financial guidance with recent second-quarter results.

In addition, the auto sector as a whole felt heavy during Tuesday's session as negative feelings were felt throughout the market, helped along by downgrades to Ford Motor Co.'s ratings and continued speculation on a potential Chapter 11 filing by Dura Automotive Systems Inc.

Evergreen International Aviation modified call protection provisions on its second-lien term loan so that it is now 103 in year one, 102 in year two and 101 in year three, as opposed to just 102 in year one and 101 in year two, according to a market source.

The $100 million 61/2-year second-lien term loan (Caa1/CCC+) is priced with an interest rate of Libor plus 750 basis points.

The company's $370 million credit facility also includes a $30 million five-year revolver (B1/B+) and a $240 million five-year first-lien term loan B (B1/B+), with both of these tranches priced at Libor plus 325 basis points.

The first-lien term loan B is being offered to investors with an original issue discount of 991/2.

During syndication, the transaction has gone through a number of changes.

When the deal first launched in late July, the revolver was sized at $50 million with price talk of Libor plus 275 basis points, the first-lien term loan B was sized at $300 million with price talk of Libor plus 275 basis points and the second-lien term loan was sized at $50 million with price talk of Libor plus 750 basis points (in line with final pricing).

Then, in early August, the first-lien term loan B was downsized to $250 million while the second-lien term loan was upsized to $100 million, and pricing on the revolver and first-lien term loan B was flexed higher to Libor plus 325 basis points.

And, just last week, the revolver was downsized to $30 million from $50 million, and the first-lien term loan B was downsized to $240 million from $250 million with the official addition of the original issue discount.

Credit Suisse is the lead bank on the deal that will be used to fund a tender offer for any and all of the company's outstanding 12% senior second secured notes due 2010.

As for allocations, they are now expected to go out early next week since documents were just posted on Tuesday and lenders will need time to review the documentation, the source said.

Previously, it was hoped that allocations would be going out sometime this week.

Evergreen is a McMinnville, Ore.-based portfolio of five diverse aviation companies.

United Subcontractors expected at high end

United Subcontractors Inc.'s first- and second-lien bank debt is expected by some investors to end up toward the high end of pricing guidance given the industry the company is in and its dependence on home building, according to a fund manager.

Currently, the $300 million first-lien term loan (B2/B) and the $15 million synthetic letter-of-credit facility (B2/B) are being talked at Libor plus 275 to 300 basis points, and the $200 million second-lien term loan (Caa1/CCC+) is being talked at Libor plus 750 to 800 basis points.

The company's $550 million credit facility also includes a $35 million revolver (B2/B) that is being talked at Libor plus 275 basis points.

Goldman Sachs is the lead bank on the deal.

Leverage through the first lien would be around the mid-2 times area, and leverage through the second lien would around the mid-4 times area.

Proceeds will be used to fund a $125 million dividend payment to Wind Point Partners and to refinance existing debt.

United Subcontractors is a Salt Lake City-based installer of residential and commercial insulation systems and provider of related products and services.

Travelport term loan trades off

Travelport's term loan was softer by about a quarter of a point on Tuesday as people got nervous over the company's decision not to include future financial guidance in the recent release of second-quarter financials, according to a trader.

The Parsippany, N.J.-based travel company's term loan closed the day at par 1/8 bid, par ½ offered, down from previous levels of par 3/8 bid, par ¾ offered, the trader said.

On Monday, the company announced second-quarter results that included revenue of $693 million, EBITDA loss of $1.07 billion and net loss of $1.06 billion.

Travelport generated $221 million in cash flow from operations during the quarter, and, at the end of the quarter Travelport had $266 million of cash and cash equivalents on hand.

Auto sector heavy

The auto sector in general had a heavy tone on Tuesday as Ford's ratings were cut deeper into junk and chatter continued to circulate on Dura Automotive's potential for filing for bankruptcy protection, according to a trader.

Dura, a Rochester Hills, Mich.-based parts maker saw its second-lien term loan close the day quoted at 96½ bid, 97¼ offered; however, the paper was not seen trading much during market hours, the trader said. By comparison, on Friday, the bank debt was being quoted wide at 96¾ bid, 98 offered.

The trader explained that, other than Dura, there were no specific auto names that came to mind in terms of weakening bank debt levels since it was a very quiet day in terms of volume, but the weaker sector tone was unmistakable.

On Tuesday, Moody's Investors Service cut Ford Motor Co.'s corporate family and senior unsecured ratings to B3 from B2 and Ford Motor Credit Co.'s senior unsecured rating to B1 from Ba3. The outlook is negative.

Moody's said that the downgrade of Ford's long-term ratings reflects the intense pressure the company is facing as a result of the shift in consumer preference away from trucks and SUVs and toward more fuel efficient vehicles.

Moody's noted that Ford's recently announced initiative to accelerate its Way Forward restructuring plan will attempt to address all of the key risks arising from this shift in demand, but operating performance and cash flow will likely be very weak through 2009 even if the execution of the plan is highly successful.

Furthermore, Moody's anticipates that it will be challenging for Dearborn, Mich., automotive manufacturer to achieve all of the cost, revenue and pricing objectives contemplated by the plan.

Meanwhile, Standard & Poor's lowered its long-term corporate credit ratings on Ford Motor Co. and Ford Motor Credit Co. to B from B+. The outlook is negative.

S&P said that the downgrade reflects the seemingly relentless deterioration in Ford's North American automotive operations, which are now expected to remain unprofitable until at least 2009.

Fidelity National lower

Fidelity National Information Services Inc.'s term loan B retreated slightly in trading on market technicals, according to a trader.

The term loan closed the day at par 1/8 bid, par ½ offered, down from previous levels of par ¼ bid, par 5/8 offered, the trader said.

"It's a low coupon name coming under some pressure," the trader added.

Fidelity National is a Jacksonville, Fla.-based provider of technology to the financial services and real estate industries.

© 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.