Newport firms OID; LyondellBasell term B surfaces; Ford rises; UAL, US Airways up on merger buzz

By Sara Rosenberg

New York, April 28 - Newport Television LLC finalized the original issue discount on its term loan and expected details on LyondellBasell Industries's term loan B emerged as the deal is getting ready to launch next week.

In trading news, Ford Motor Co.'s term loan was stronger on Monday as Tracinda Corp. announced a cash tender offer for some of the company's stock, and UAL Corp. and US Airways Group Inc. both saw their term loan debt rise on talk that a merger is in the works.

Newport Television firmed up the original issue discount on its $515 million term loan at 91, the tight end of most recent guidance of 90 to 91, the high end of prior guidance of 91 to 92 and wider than the 95 level that was proposed at launch, according to a buyside source.

As of last week, some investors were already expecting the discount to firm at 91 because of chatter that the term loan was well oversubscribed at 90.

The term loan is priced at Libor plus 500 basis points, with a 3% Libor floor.

Allocations on the term loan are expected to be "very poor," the source remarked. "From my perspective, the bank deal had a lot of initial interest, which built to multiple times oversubscribed by Thursday last week. That's when the first warning went out that allocations for those who were not in early would be light. That warning was repeated today."

Newport Television's $590 million senior secured credit facility also includes a $75 million revolver.

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.

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

LyondellBasell finally approaching B loan market

LyondellBasell is bringing a portion of its term loan B debt (Ba2/BB) to market, months after funding took place in December, with syndication kicking off with a May 6 bank meeting in the United States and a May 7 bank meeting in London, according to a sources.

The roughly $9.5 billion term loan B will be divided into a term loan B-1 with no call protection, a term loan B-2 with call protection of 103 in year one and 101½ in year two, and a term loan B-3 that is non-callable for two years - with each tranche anticipated to be comprised of $2.5 billion plus €433 million, sources said.

Initial guidance on the term loan B debt is being floated around at Libor plus 375 bps, with a 3.25% Libor floor, sources continued.

It is expected that only one of the B loan tranches will be launched at first, although whether it will be the B-1, B-2 or B-3 is still to be determined, one fund manager told Prospect News.

Goldman Sachs, Merrill Lynch, ABN Amro and UBS are the joint lead arrangers and joint bookrunners on the already funded deal, with Goldman the left lead.

When the deal funded, Citigroup was the left lead bank on the facility, but sources said that the bank sold off its 20% share already and therefore is no longer involved.

With the Citi held debt already gone, the amount of term loan B that still needs to be syndicated would be roughly $7.6 billion.

It is assumed that Citi's 20% was taken equally out of the term loan B-1, B-2 and B-3, the fund manager remarked.

The term loan B is part of a senior secured credit facility that also includes a $1 billion cash flow revolver (Ba2/BB), a $2 billion U.S. and euro term loan A (Ba2/BB), a $1.15 billion ABL receivables purchase program facility and a $1 billion ABL inventory-based facility.

The ABL debt was successfully syndicated in November/December of last year, with the receivables purchase program facility pricing at Libor plus 150 bps and the $1 billion ABL inventory-based facility pricing at Libor plus 175 bps.

Prior to now, there has been no official launch of the term loan B.

Proceeds from the credit facility were used to help fund Basell AF SCA's acquisition of Lyondell Chemical Co. for $48 per common share in an all-cash transaction with a total enterprise value of about $19 billion, including the assumption of debt.

LyondellBasell is a Netherlands-based polymers, petrochemicals and fuels company.

Ford trades higher

Switching to the secondary, Ford's term loan was stronger during the Monday session as news emerged that Tracinda, the investment company of Kirk Kerkorian, intends to make a cash tender offer for some of Ford's common stock, according to a trader.

The term loan was quoted at 92 bid, 92½ offered, up from Friday's levels of 91 bid, 91 5/8 offered, the trader said.

"Kerkorian is trying to acquire a decent chunk of stock. People are hoping that he might take a more activist role and change things around a little bit," the trader said.

Under the proposed offer, Tracinda will tender for 20 million shares of Ford common stock at a price of $8.50 per share.

On April 2, Tracinda began accumulating shares in Ford and the investment company now owns 100 million shares, representing about 4.7% of the outstanding shares.

Upon completion of the tender offer, Tracinda would beneficially own 120 million shares of Ford common stock, or about 5.6% of the outstanding shares.

Tracinda said in a news release that it "has been following Ford closely since the company released its fourth-quarter 2007 results, which indicated that Ford's management was starting to achieve highly meaningful traction in its turnaround efforts.

"Last week, this was reinforced by Ford's first quarter 2008 results, achieved despite the difficult U.S. economic environment.

"Tracinda believes that Ford management under the leadership of chief executive officer Alan Mulally will continue to show significant improvements in its results going forward," the release added.

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, and revenue, excluding special items, was $39.4 billion, down from $43 billion a year ago.

Tracinda's tender offer will be subject to customary conditions for transactions of this type, including expiration of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The offer will not be subject to financing.

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

UAL, US Airways up with merger chatter

UAL and US Airways both saw their term loans move higher in trading on rumors that the two companies are currently in very advanced talks regarding a merger, according to a trader.

UAL's term loan was quoted at 87 bid, 88 offered, up from 86½ bid, 87½ offered, the trader said.

And, US Airways term loan was quoted at 74¾ bid, 75¾ offered, up from 74 bid, 75 offered, the trader continued.

"People would expect that if something happens they'll get paid down at par," the trader added.

There's been no official word from either UAL or US Airways on the possible merger, but on Sunday, UAL did issue a statement on consolidation from Glenn Tilton, chairman, president and chief executive officer.

"Our strategy is consistent. Consolidation is underway - ensuring you have the right partner is everything. We will pursue all options to ensure a strong, sustainable future for our airline and will not shy away from the tough choices necessary to create value for our shareholders and benefit our employees and customers," Tilton said in the release.

UAL is a Chicago-based provider of air transportation services. US Airways is a Tempe, Ariz.-based airline company.

Cash, LCDX better

The cash market in general and LCDX 10 both gained some ground Monday, according to a trader.

Cash was up about an eighth of a point and the index was quoted at 99.15 bid, 99.25 offered, up from 99.05 bid, 99.15 offered on Friday, the trader said.

Earlier in trading, the index got as high as 99.25 bid, the trader added.

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