Cash, LCDX fall as Bear liquidity crunch raises fears; BWIC sale surfaces; Merisant floats talk

By Sara Rosenberg

New York, March 14 - The cash market and LCDX 9 were both lower on Friday in a session during which all eyes were focused on Bear Stearns Co.'s Inc.'s liquidity drama, and a fairly large loan BWIC was put up for sale.

In other news, Merisant Co. started circulating price talk on its refinancing credit facility as the deal is getting ready to launch on Monday, and based on the guidance, the company will be increasing its interest rate by a significant amount.

Cash and LCDX 9 carried a largely negative tone to them as panic was in the air following news of Bear Stearns's need to get an emergency, bail-out loan from JPMorgan Chase & Co. and the Federal Reserve, according to traders.

On Friday morning, Bear Stearns announced that it has reached an agreement with JPMorgan and the Federal Reserve Bank of New York to provide a secured loan facility for an initial period of up to 28 days.

Since the financing is essentially insured by The Federal Reserve, JPMorgan does not believe this transaction exposes its shareholders to any material risk.

The purpose of the loan is to provide Bear Stearns access to liquidity as needed.

Bear Stearns also said that it is talking with JPMorgan regarding permanent financing or other alternatives.

"Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity. We have tried to confront and dispel these rumors and parse fact from fiction. Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations," said Alan Schwartz, president and chief executive officer, in a news release.

The Federal Reserve board voted unanimously to approve the financing arrangement.

"The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system," a Federal Reserve news release added.

Following this news, the cash market in general saw relatively light activity, but things appeared to be down by around a quarter of a point during what was described as a "pretty grim day here on Wall Street," one trader said.

LCDX 9 was down as well, with levels going out around 91.45 bid, 91 .65 offered, compared to around 91.65 bid, 91.85 offered on Thursday, traders said.

"Index was pretty active, started to rally early in the day on better-than-expected CPI numbers. Then the Bear news hit and everything fell," one trader remarked.

"Traded as high as 92.05 early in the morning, then fell off a cliff. Lot of trading in the 91.40 to 91.50 range," the trader added.

On Friday, the Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers was virtually unchanged in February, on a seasonally adjusted basis, following a 0.4% rise in January.

In addition, the index for all items less food and energy was also virtually unchanged in February after increasing 0.3% in January.

Stocks, also affected by the Bear Stearns chatter, ended the day lower, with Nasdaq down 51.12 points, or 2.26%, Dow Jones Industrial Average down 194.65 points, or 1.60%, S&P 500 down 27.34 points, or 2.08%, and NYSE down 191.24 points, or 2.17%.

BWIC up for sale

A $385 million BWIC was put up for sale on Friday that consists primarily of "regular par loans," according to a trader.

Bids are due on Monday at 12 p.m. ET.

Goldman Sachs is leading the auction process, the trader added.

Merisant talk emerges

Merisant price talk began making its way around the market on Friday as the company is getting ready to launch its proposed $245 million senior secured credit facility with a conference call on Monday, according to market sources.

Both the $35 million revolver and a $210 million first-lien term loan are being guided at Libor plus 650 basis points, sources said.

By comparison, Merisant's existing first-lien term loan, which is being taken out by this new deal, carries pricing of Libor plus 350 bps.

In addition, the new term loan has a 3.25% Libor floor and will be offered to investors at an original issue discount of 98, sources continued.

The term loan also carries soft call protection of 103 in year one, 102 in year two and 101 in year three.

Credit Suisse is the lead bank on the deal that is expected to be marketed primarily to existing lenders.

The amended and restated credit facility that the company is refinancing through this new transaction was just obtained in May 2007. The existing revolver is due in January 2009 and the existing term loan is due in January 2010.

Leverage through the bank deal is roughly 3.0 times, leverage through the opco subordinated notes is roughly 6.2 times and leverage through the holdco discount notes is roughly 8.0 times, sources added.

Merisant is a Chicago-based marketer of low-calorie tabletop sweeteners.

SM&P OID, Libor floor emerge

SM&P Utility Resources Inc.'s $115 million six-year credit facility is being talked with an original issue discount of 98½ and a Libor floor of 3%, according to a market source.

As was previously reported, the deal consists of a $50 million revolver and a $65 million term loan, with price talk on both tranches set at Libor plus 450 bps.

GE Capital is the lead bank on the deal that was launched with a bank meeting this past Wednesday.

Proceeds will be used to help fund the acquisition of the company by Stripe Acquisition Inc., an affiliate of Kohlberg Management VI LLC, from The Laclede Group Inc. for $85 million in cash.

The transaction, which is structured as a stock sale, is expected to close this month, subject to certain customary closing conditions, including debt and equity financing.

SM&P is a Carmel, Ind., underground locating and marking service business for telecommunication, cable, water, gas and power companies.

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