Supervalu dips on revised outlook; LCDX drops with stocks; Dana sets talk

By Sara Rosenberg

New York, Jan. 8 - Supervalu Inc.'s term loan B inched its way lower in trading after the company reduced its fiscal 2008 outlook, and LCDX declined late in the session in sympathy with equities.

In other news, Dana Corp. came out with price talk on its credit facility as the deal was launched with a bank meeting during market hours.

Supervalu's term loan B was softer on Tuesday as the company cut its fiscal 2008 outlook estimates to reflect revised guidance for identical store sales growth and pre-tax net synergies, according to a trader.

The term loan B was quoted at 97 3/8 bid, 98 1/8 offered, down from previous levels of 97½ bid, 98¼ offered, the trader said.

For the fiscal year ending Feb. 23, the company now expects diluted earnings per share to range between $2.71 and $2.77, compared with previous guidance of $2.73 to $2.83, as identical store sales growth is now guided at 0.5% to 1% and pre-tax net synergies are anticipated to be approximately $40 million.

In addition, diluted earnings per share before one-time costs is now estimated at $2.91 to $2.97, compared with previous guidance of $2.93 to $3.03.

The company also reported fiscal 2008 third-quarter numbers that included net sales of $10.2 billion, compared with $10.7 billion last year; net earnings of $141 million, an increase of 25% compared to $113 million last year; and diluted earnings per share of $0.66, an increase of 22% compared to $0.54 last year.

Also, total debt to capital was 61% at the end of the fiscal third quarter, compared with 64% at fiscal 2007 year-end.

"Our third quarter results continue to benefit from the transformational acquisition in 2006 as we deliver the sixth straight quarter of double-digit earnings per share growth. We are pleased with our overall results, despite some headwind from softer than expected retail sales in the quarter," Jeff Noddle, chairman and chief executive officer, said in a company news release.

Year-to-date, net sales increased 24% to $33.7 billion compared to $27.1 billion last year, net earnings increased 32% to $437 million compared to $332 million last year, and reported diluted earnings per share increased 16% to $2.03 compared to $1.75 last year.

Supervalu is an Eden Prairie, Minn., supermarket operator.

LCDX falls

Also in the secondary, LCDX 9 was weaker, with most losses seen late in the day, as stocks tumbled in the late afternoon hours, according to a trader.

The index was quoted around 95.55 bid, 95.70 offered, down from around 96.00 bid, 96.10 offered, the trader said.

"Started the day with things feeling good and that receded as equities sold off. Index traded off like 40 cents in the last hour of the day," the trader remarked.

"Cash market on the whole felt better to start the day. Now pretty much unchanged. It's not going to feel the move from this because [the] equities [fall] happened so quickly," the trader added.

As for stocks, Nasdaq ended down 58.95 points, or 2.36%, Dow Jones Industrial Average ended down 238.34 points, or 1.86%, S&P 500 ended down 25.99 points, or 1.84%, and NYSE ended down 136.16 points, or 1.44%.

Equities' negative performance was largely attributed to Countrywide Financial Corp. Rumors of a potential Countrywide bankruptcy filing swirled around the market, and despite the company's statement that there is no substance to the rumor, its stock declined $2.17, or 28.4%.

Claire's, Swift plunge

Consumer-related names continued to take a beating in trading on Tuesday, including Claire's Stores Inc. and Swift Transportation Co. Inc., according to a trader,

Claire's Stores term loan B was quoted at 81 bid, 82 offered, down about a point or two on the day, the trader said.

Swift Transportation's term loan B was quoted at 79 bid, 80 offered, down from 80½ bid, 81½ offered, the trader continued.

"It's nothing specific. Just 'cause they're consumer related," the trader added.

Claire's is a Pembroke Pines, Fla.-based specialty retailer of value-priced jewelry and accessories for girls and young women.

Swift Transportation is a Phoenix-based truckload carrier.

Dana price talk

Moving to the primary, Dana held a bank meeting on Tuesday morning to kick off syndication on its $2 billion exit financing credit facility, and in conjunction with the launch, price talk was announced, according to a market source.

The $1.35 billion seven-year term loan B (Ba3/BB) was presented to lenders with talk of Libor plus 350 basis points and an original issue discount in the 97 context, the source said.

The $650 million five-year asset-based revolver (Ba3/BB+) was presented with talk of Libor plus 200 bps and a commitment fee of 37.5 bps, the source continued.

Upfront fees on the asset-based revolver are 25 bps for $25 million, 50 bps for $50 million and 75 bps for $75 million, the source added.

Citigroup, Lehman Brothers and Barclays are the lead banks on the deal.

Proceeds will be used to repay the company's debtor-in-possession credit facility, to make other payments required upon its exit from bankruptcy and to provide liquidity to fund working capital and other general corporate purposes.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets.

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