GM, Ford, Chrysler trade down, WCI falls; Turner resets launch; Wrigley could see OID tighten

By Sara Rosenberg

New York, Aug. 4 - General Motors Corp., Ford Motor Co. and Chrysler Financial all saw levels on their bank debt soften on Monday as the pressure that was evident in the auto sector last week carried into this week

Also on the trading side, WCI Communities Inc.'s bank debt slid lower after the company announced that it filed for Chapter 11 as a result of the downturn in the real estate market and the economy in general.

In other news, Turner Bros. has pushed out the launch of its credit facility by one week and speculation is that Wrigley Co. could possibly see the original issue discount on its term loan B come in from current guidance since the tranche is so well oversubscribed.

Autos in general, such as General Motors, Ford and Chrysler Financial, continued to get slammed in trading as last week's negative attitude towards the sector followed the names into this week, according to traders.

General Motors, a Detroit-based automotive company, saw its term loan quoted at 74½ bid, 75½ offered, down from the 75½ bid, 76½ offered levels seen on Friday after earnings and July sales were announced, traders said. On Thursday, the loan had been quoted at 77¾ bid, 78¾ offered.

For the second quarter, General Motors reported a net loss of $15.5 billion, or $27.33 per share, including significant charges and special items, compared with net income from continuing operations of $784 million, or $1.37 per share, in the second quarter of 2007.

Regarding sales results, General Motors delivered 235,184 vehicles in the United States in July, down 26.7% from last year.

Moving on to Ford, a Dearborn, Mich.-based automotive company, its term loan was quoted at 76½ bid, 77½ offered, down from 77 1/8 bid, 78 1/8 offered on Friday, traders remarked. On Thursday, the loan was quoted at 78¾ bid, 79¼ offered.

Ford on Friday also reported July sales numbers. For the month, total sales were 161,530, down 14.9% from 189,920 last year.

Lastly, Chrysler Financial, a provider of automotive financial products and services, saw its first-lien term loan move down to 80 bid, 81 offered from 81 bid, 82 offered and its second-lien term loan drop to 58 bid, 60 offered from 60 bid, 62 offered, traders added.

On Sunday, Chrysler Financial announced that it renewed $24 billion in credit facilities, $6 billion shy of the actual $30 billion amount that it had hoped to raise.

The company said that it ended up renewing a smaller amount because of conditions in the credit markets and changes in its retail strategy.

The credit facilities provide funding for the company's dealer and consumer financial services products.

WCI retreats

In more trading happenings, WCI Communities' term loan and revolver were both weaker during the session after news of a bankruptcy filing hit the market, according to a trader.

The company's term loan was quoted at 85½ bid, 86½ offered, down from 87 bid, 89 offered and its revolver was quoted at 86 bid, 87½ offered, down from 88 bid, 89½ offered, the trader said.

"People think it's covered, but maybe it's not so convincingly slam dunk covered. Definitely had some nervous people want to sell some risk," the trader added regarding the bank debt.

On Monday, WCI announced that it and about 130 of its wholly owned subsidiaries had filed voluntary petitions to restructure their debt and capital.

Prior to the bankruptcy filing, the company reached a definitive agreement with its principal secured lenders regarding the terms on which it will have access to over $50 million of cash on hand to continue operating its business on an interim basis. A motion for approval of that arrangement has been filed with the court.

Furthermore, the company received a proposal from certain of its senior lenders to provide an additional $100 million of excess liquidity through a debtor-in-possession financing facility.

The parties are in advanced stages of negotiations regarding the terms of the DIP, which, if accepted by the company, would be subject to definitive documentation and court approval.

With the filing, Jerry L. Starkey, chief executive officer, left the company and David L. Fry, chief operating officer, has been appointed to act as interim president and chief executive officer until a permanent replacement is found.

"While WCI remains cash-flow positive and our asset base is strong, our ongoing operations have been adversely impacted by the continuing downturn in the real estate sector and the overall economy," Fry said in a news release. "Like other large homebuilders across the country, WCI continues to experience declines both in pricing and the sale of new homes and condominiums, as well as dramatic increases in cancellation rates.

"As a result, we need to restructure our debt and bring our capital structure in line with today's marketplace realities. We believe Chapter 11 provides the most efficient and timely process for accomplishing this," Fry continued in the release.

WCI also announced on Monday that it is terminating the offer to exchange $125 million of 4% contingent convertible senior subordinated notes due 2023. The exchange offer was subject to, among other things, a 90% minimum tender condition, the completion of the amendment and restatement of the company's credit facility and the issuance of $375 million of new secured second-lien notes.

The new second-lien notes were going to be used to repay the company's tower loan agreement in full and the existing credit facility pro rata between the term loan and the revolver.

"The company, with all diligence, has attempted to avoid a bankruptcy filing. However, the filing became necessary because of the recent failed effort to obtain financing and the recognition that the company's entire $1.8 billion of debt may soon be in default," said Carl C. Icahn, chairman of the board of directors, in the release

"This was confirmed when certain holders of the company's $125 million convertible notes informed the company that they rejected its exchange offer and instead insisted on being paid in cash in full on Aug. 5, 2008," Icahn added in the reelase.

WCI is a Bonita Springs, Fla.-based homebuilding and real estate services company.

Turner Bros. revises timing

Over in the primary, Turner Bros. moved the bank meeting for its proposed $88 million six-year credit facility to a tentative date of Aug. 13 from this Wednesday, according to a market source.

The source said that the delay is because the lead bank, GE Capital, is launching too many deals this week, such as HealthPort Inc. and Web Service Co.

The facility consists of a $15 million revolver and a $73 million term loan, with both tranches talked at Libor plus 475 basis points with an original issue discount of 98. There is no Libor floor.

Proceeds will be used to fund Huntsman Gay Capital Partners' acquisition of the company from Saw Mill Capital.

Other financing will come from $52 million of mezzanine debt that is being placed by the company/sponsor.

Turner Bros. is a provider of industrial plant maintenance services using its fleet of cranes and specialized transportation equipment.

Wrigley OID may decrease

Chatter around the market is that Wrigley may lower the original issue discount on its term loan B as a result of the strong investor reception that the deal has already received, according to sources.

The $3.6 billion term loan B is currently being offered at an original issue discount of 97. However, as of last week, there was something like $7 billion in orders towards the tranche, creating this anticipation that a discount revision could be in the works, sources explained.

This deal has been on fire from the start, as was evidenced by the talk that on the day of the retail bank meeting, which was July 23, the term loan B was already more than half done when looking at firm orders and oversubscribed when looking at indicated interest.

Price talk on the term loan B is Libor plus 375 basis points with a 3% Libor floor. Sources said that they don't really expect these terms of the deal to change.

Initially, based on filings with the Securities and Exchange Commission, it was thought that the B loan would be sized at $4.45 billion, but it was reduced prior to launch to account for a bond issue being left in place.

And, back in May, when the structure on the deal first emerged, sources heard rumors that the term loan B was expected around the Libor plus 400 bps context, but nothing official had been announced at that time.

Wrigley's $4.85 billion credit facility also includes a $250 million revolver and a $1 billion term loan A, with both of these tranches talked at Libor plus 325 bps.

Commitments towards the deal are due on Wednesday. It was previously said by one market source that the book was being left open for the full timeline since the pro rata tranches, although going well, were still being worked on being that commercial banks take a little longer to throw in their orders.

Goldman Sachs is the lead arranger on the deal, and Barclays, GE Capital, Rabobank and Sumitomo have signed on as co-arrangers.

Proceeds will be used to help fund the merger of Wm. Wrigley Jr. Co. and Mars Inc., and to provide for ongoing working capital and general corporate purposes.

Mars will pay $80 cash for each share of Wrigley common stock and class B common stock in a transaction valued at about $23 billion.

As part of the merger, Mars received a separate debt commitment from JPMorgan, Bank of America, BNP Paribas, Citigroup, Deutsche Bank, Lloyds TSB Bank and RBS Securities that provides for a $12 billion senior unsecured credit facility, consisting of a $1.5 billion revolver, an $8.5 billion term loan and a $2 billion bridge loan, according to SEC filings. This facility is expected to be investment grade.

Proceeds from the Mars facility will be used to finance the $11.6 billion equity contribution from Mars, the repayment or refinancing of certain Mars debt and for general corporate purposes.

Also, Berkshire Hathaway has agreed to provide $4.4 billion in subordinated debt financing to the surviving corporation in the merger and to invest $2.1 billion in equity securities.

A special meeting for Wrigley's stockholders to vote on the merger agreement is scheduled for Sept. 25.

Regulatory approvals for the transaction have already been received from the European Commission, and from U.S., Canadian and Australian regulators.

Mars and Wrigley are hoping to complete the merger as quickly as possible following receipt of stockholder approval.

Confections company, Wrigley Co., will be operated as a separate, stand-alone subsidiary of Mars, keeping its headquarters in Chicago. Mars is a McLean Va.-based producer of confectionery, food and petcare products.

TriZetto closes

TriZetto Group Inc. closed on its new $457.5 million senior secured credit facility (Ba3/BB-) on Monday, according to a market source.

The deal consists of a $315 million seven-year term loan B priced at Libor plus 450 bps with a 3% Libor floor and an original issue discount of 98, a $65 million six-year revolver priced at Libor plus 400 bps, and a $77.5 million six-year term loan A priced at Libor plus 425 bps with a 3% Libor floor and an original issue discount of 98.

During syndication, the term loan B was upsized twice, first from $280 million to $300 million and then to $315 million, as a result of the tranche being significantly oversubscribed. Also, the revolver was upsized from $50 million to improve liquidity and the term loan A was downsized twice, first to $92.5 million from $112.5 million and then to $77.5 million, in connection with the term loan B upsizings.

RBC Capital Markets acted as the lead arranger and bookrunner on the deal, with GE Capital the syndication agent.

Proceeds were used to help fund the acquisition of the company by funds advised by Apax Partners along with BlueCross BlueShield of Tennessee and the Regence Group for $22 per share in cash in a transaction valued at about $1.4 billion.

The financing also included $187.5 million of private senior unsecured mezzanine notes and equity. Recently, the equity contribution was increased by $5 million to $954.5 million to further enhance liquidity and was used as cash on hand on the balance sheet at close.

Total leverage is around 5.5 times.

TriZetto is a Newport Beach, Calif., developer, licenser and supporter of proprietary and third-party software products for the health care industry.

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