Ford rally continues; General Motors rises with general market; Newport readies allocations

By Sara Rosenberg

New York, April 25 - Ford Motor Co.'s term loan upswing progressed into Friday's session on the heels of the company's recently announced surprisingly positive earnings results, and General Motors Corp.'s term loan was better as well, spurred on by the strength in the overall cash market.

In other news, Newport Television LLC is anticipated to allocate its credit facility shortly, which means the final original issue discount on the term loan should come out soon.

Ford's term loan was once again trading higher as the rally that began on Thursday following the release of good quarterly results made its was into the Friday session, according to traders.

The term loan was quoted anywhere from 91 to 91 1/8 bid, 91 5/8 offered, traders said, up from Thursday's levels of 90 bid, 90¾ offered and Wednesday's levels of 89 bid, 89½ offered.

And, on Friday morning, the term loan had been seen as high as 91½ bid, 91¾ offered, before settling in a bit by the close, one trader remarked.

"Earnings. Overall sentiment in the market: This thing has been way too cheap for way too long," the trader said in explanation of Ford's Friday forward momentum.

For the first quarter, Ford announced net income of $100 million, or $0.05 per share, compared to a net loss of $282 million, or $0.15 per share, in the first quarter of 2007.

The company's first-quarter pre-tax operating profit from continuing operations, excluding special items, was $736 million, up $669 million from a year ago. On an after-tax basis, first-quarter operating profit from continuing operations, excluding special items, was $525 million, or $0.20 per share, compared with a loss of $172 million, or $0.09 per share, in the same period a year ago.

Revenue for the quarter, excluding special items, was $39.4 billion, down from $43 billion a year ago.

The company attributed its good numbers to outstanding performance in Europe and South America. Ford posted profits of $739 million in Europe and $257 million in South America in the first quarter, North America results improved by nearly $600 million compared with the first quarter of 2007, and $1.7 billion in cost savings were achieved.

Ford is a Dearborn, Mich.-based manufacturer and distributor of automobiles.

GM trades up

General Motors's term loan gained some ground during market hours as the cash market in general was up by around a quarter of a point, according to a trader.

The term loan was quoted at 94¼ bid, 95¼ offered, up from 94 bid, 95 offered on Thursday, the trader said.

Based on its performance, it appeared as if the term loan shrugged off Friday's news that Moody's Investors Service changed the rating outlook for General Motors to negative from stable.

Moody's said that the change in outlook reflects concerns that GMAC LLC's ability to provide retail and wholesale funding in support of General Motors's automotive operations may be eroded by the operating weakness at its subsidiary, ResCap LLC.

Moody's went on to say that it believes that in order for ResCap to have continued access to debt capital, GMAC may be required to provide additional indications of support for the unit and that it is likely to do so. This support, however, could weaken GMAC's own credit profile and limit its ability to access the secured and unsecured debt markets.

"GMAC has always filled a critical role in supporting GM's retail sales, and anything that lessens its ability to provide that support is a negative for GM. We think that one of the tradeoffs for GMAC's potential support of ResCap is an erosion in its ability to support GM's retail sales," said Bruce Clark, senior vice president with Moody's, in the rating release.

Additional factors contributing to the negative outlook are the considerable cash requirements that General Motors will face during 2008 and 2009.

"A critical element of GM's strategy is to maintain enough liquidity to bridge the large cash consumption requirements of 2008 and 2009, until significantly lower health care expenditures start to occur in 2010. Our key credit concern is that while this liquidity bridge is pretty robust through 2008, it could become more tenuous as the company gets in into the latter half of 2009. We'll continue to focus a lot of our attention on GM's liquidity and its adequacy to get the company to 2010," Clark added in the release.

General Motors is a Detroit-based automaker.

BWIC trades

A good portion of an about $375 million BWIC was heard to have traded after bids were due on Friday morning, according to a trader.

The BWIC was comprised of mostly par names like First Data Corp., Alltel Communications Inc., "and a bunch of others," another trader added.

Newport to allocate soon

On the new deal front, Newport Television is currently expected to give out allocations on its credit facility early during the week of April 28, according to a buyside source.

The $590 million senior secured credit facility includes a $75 million revolver and a $515 million term loan.

The term loan is priced at Libor plus 500 bps, with a 3% Libor floor, and is said to be oversubscribed in the 90 to 91 original issue discount context.

It is still unclear where the original issue discount will firm, the source said, but some are guessing that it might be at 91.

"If you, as an agent, have massive oversubscription at 90, do you allocate at 90? It's coming out of your hide as a bank. Only they know their book at 91. If they were stuck on 90, I think they'd say it. I think they need to talk to some of the people in the book and see what's possible. Just guessing though," the source added.

At launch, the term loan was presented to investors with an original issue discount of 95. The discount was then modified to the 91 to 92 area in the hopes of building momentum, and then it was revised again to the latest guidance.

Wachovia, Goldman Sachs and UBS are the lead banks on the deal.

Proceeds from the already funded credit facility were used to help finance Providence Equity Partners Inc.'s acquisition of Clear Channel Communications Inc.'s television group for $1.012 billion. Providence's total equity commitment was about $260 million.

The sale included 56 television stations, including 18 digital multicast stations, located in 24 markets across the United States. Also included in the sale were the stations' associated web sites, the Television Operations Center and Inergize Digital Media, which manages the television group's online and wireless initiatives.

The acquisition was first announced in 2007 and before finally closing in mid-March, Providence tried to get out of the deal, but Clear Channel took the equity firm to court, and then Wachovia tried to back out of the debt commitment.

However, over the course of the negotiations, the purchase price for Newport Television was lowered from the originally agreed upon price of $1.2 billion.

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