Georgia-Pacific softens; amendment in question; GM, Ford bounce around; LCDX slides

By Sara Rosenberg

New York, Dec. 10 - Georgia-Pacific Corp.'s term loan was a bit lower with the rest of the cash market on Wednesday, but the active trading in the name was likely prompted by the company's pending amendment request and the uncertainty over whether it will pass.

Also in trading, General Motors Corp. and Ford Motor Co. saw levels on their term loans seesaw on continued chatter about a government bailout, and LCDX 10 fell even though stocks were slightly better.

Georgia-Pacific weakens

Georgia-Pacific's term loan B came in a little during the trading session as the overall cash market felt softer by about a quarter to a half a point, according to a trader.

The term loan B was quoted at 76¼ bid, 77¼ offered, down from Tuesday's levels of 76½ bid, 77½ offered, the trader said.

"Everything is kind of down. Macro market feels like crap. Amendment spurring trading, but movement more macro," the trader explained.

Georgia-Pacific amendment up in the air

With consents due on Thursday from lenders for Georgia-Pacific's proposed amendment, the question still remains whether the amendment will pass as is, whether changes will be made or whether it will just not be done at all, the trader said.

"Got the stare-down game going. Retail investor base put up their counter to Citi. [Asking for] Libor plus 350 basis points, floor of 3% and tweaks to covenants," the trader remarked.

Currently pricing on the company's term loan B is Libor plus 150 bps and there is no Libor floor.

"My gut is [the lenders] got quite a bit of paper organized to at least push. It's a little bit of a game of chicken between the company and the accounts," the trader continued.

"This company's got a lot of flexibility particularly given the sponsorship. They've already shown their willingness to put in equity. Amendment gives them flexibility, but they have some other ways to get around it," the trader added.

Georgia-Pacific looking to revise covenants

Under the amendment proposal that was launched to lenders last week, Georgia-Pacific is trying to loosen its total leverage covenant.

Specifically, the amendment would keep the leverage covenant at 5.25 times, the current requirement, through 2010, whereas without the amendment, the covenant would move to 4.5 times in 2009 and 4.25 times in 2010.

In return for the amendment, the company is offering to repay $400 million of its term loan B and $100 million of its term loan A.

Furthermore, lenders would get a 100 bps amendment fee.

Citigroup is leading the amendment process.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

GM, Ford rollercoasters

General Motors and Ford were quoted all over the place on Wednesday as rumors continued to flood the market about the government rescue plan, according to a trader.

"Up in the beginning of the day and then down," the trader said about the companies' bank debt levels.

General Motors, a Detroit-based automaker, saw its term loan quoted at 44 bid, 48 offered, wider from Tuesday's levels of 44 bid, 46 offered, the trader remarked.

And, Ford, a Dearborn, Mich.-based automaker, saw its term loan quoted at 41 bid, 43 offered, down from 41½ bid, 44 offered, the trader continued.

Congress offering $15 billion

As was reported earlier in the week, Congress is currently working on a rescue plan for the auto companies that would provide around $15 billion in short-term financing, with most of that going to General Motors and Chrysler LLC to keep them out of bankruptcy.

This proposal isn't quite what the automakers asked for last week when they approached Congress.

General Motors had requested access to $18 billion in funds, comprised of a $12 billion bridge loan - of which it wants $4 billion this month - and a $6 billion revolving line of credit; Chrysler asked for $7 billion in loans from the government, and, Ford, requested access to an up to $9 billion bridge loan in case the current economic crisis worsens or there is a bankruptcy of a major competitor.

In addition, there's some question about whether the government will be the number claim, and if that's the case, whether the bank debt will have to be taken out or if they're going to find a way around covenants.

LCDX dips

LCDX 10 fell during trading hours despite the fact that the equities market was slightly improved, according to a trader.

"People think a lot more names on this are going to default," the trader said in explanation of the negative momentum.

The index went out around 74.10 bid, 74.50 offered, down from 75.35 bid, 75.65 offered, the trader added.

Nasdaq closed up 18.14 points, or 1.17%, Dow Jones Industrial Average closed up 70.09 points, or 0.81%, S&P 500 closed up 10.57 points, or 1.19%, and NYSE closed up 108.61 points, or 1.97%.

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