LCDX drops a point; Fresenius term loan eases below 98 OID; Ashland extends commitments deadline

By Paul A. Harris

St. Louis, Sept. 29 - The bank loan market underwent selling on Monday, dropping throughout the session but diving deeper on afternoon news that the U.S. House of Representatives narrowly defeated a financial rescue bill that had been supported by President George Bush, Treasury secretary Paulson and congressional leaders of both parties.

The LCDX bank loan index was at 92.10 bid, 92.55 offered at 4:15 p.m. ET, a point lower from the morning, a trader said.

Earlier, just as the "rescue package" news was beginning to circulate the market, the LCDX was at 92 9/16 bid, down from 93¼ bid at Friday's close, another trader said.

"The loan market is off terribly," said the trader.

"Everything is at a standstill."

Univision Communications Inc.'s term loan was trading at 65 bid, 66 offered, down from 68 bid at Friday's close, the trader said, adding that the Charter Communications Inc. loan was also down.

Fresenius eases

The Fresenius Kabi Libor plus 350 basis points six-year term loan B, which priced at 98 and was allocated late last week, was quoted at 97½ bid on Monday, the trader said.

Last Friday it was quoted as high as 98¼ bid, 99¼ offered, but retreated to 98 1/8 bid, 98 5/8 offered before the close.

Elsewhere, a source close to the deal said that through most of Monday Fresenius was straddling the 98 issue price, and spotted the paper at 97½ bid, 98 offered at the close.

"The new 2008 deals are not getting hit as much as the older deals," said this source from a bank loan syndicate desk.

"All summer you were seeing the 2008 deals above the OID. Now you're seeing them go below the OID for the first time.

"But they're still not getting hit as hard as the 2007 deals."

Before allocating the Fresenius loan was upsized by $500 million from $1 billion as a result of being oversubscribed. But the OID was widened to 98 from the original 99.

With the loan upsizing, the company's bridge loan was downsized to $800 million from $1.3 billion.

Late last week the high-yield bond offering to take out that bridge was roundly expected to launch during the present week.

However given Monday's capital markets turmoil the junk is unlikely to surface this week, according to the informed source.

Media names

The FoxCo Acquisition Sub LLC Libor plus 425 bps term loan B, which came at a 97 OID during mid-summer, was at 95 bid, 96 offered on Monday afternoon, according to the syndicate official.

That deal was part of the financing for Oak Hill Capital Partners' acquisition of eight FOX network affiliated television stations from News Corp. for about $1.1 billion in cash.

On the other hand, Weather Channel's Libor plus 400 term loan, which came in July, also at an OID of 97, held in at 99 bid on Monday, the source added.

"Nothing right now is name- or credit-specific," the syndicate official said.

"Everything is just mimicking the equity markets."

Ford lower

The loan paper of Ford Motor Co. was at 67¾ bid, down a point from Friday, a trader said Monday morning.

That level seemed "just about right" to another trader who spoke late in the day, and added that U.S. auto-makers, hoping for some kind of loan package from the U.S. Government to help them through this period of restructuring and challenged liquidity, were likely not heartened by the news that came out of the House of Representatives.

"Part of what was holding them up was this perception that there would be a loan package," the trader remarked.

Meanwhile Baldor Electric Co., which saw its third quarter estimates come in below expectations, saw its stock underperform the markets, dropping a whopping 15.63% on Monday, the trader noted.

"The last I saw the loan was 94½ bid, 95½ offered, and it's probably a little lower today," the source said.

"It's not a very active name, but it's one that's out there."

Ashland extends deadline

Ashland Inc. indefinitely extended the deadline for its $750 million seven-year term loan B, said a market source, who added that commitments had previously been due on Monday.

The extension was prompted by turmoil in the financial markets," added the source.

The Ashland term loan B has been talked at Libor plus 350 basis points.

The facility is also comprised of a $500 million five-year revolver talked at Libor plus 325 bps, a $500 million five-year term loan A talked at Libor plus 325 bps.

Bank of America and Scotia Capital are the joint lead arrangers and joint bookrunners on the credit facility, with Bank of America the administrative agent.

Elsewhere structural and timing changes to the Landry's Restaurants Inc. $300 million credit facility and the Goober Drilling $230 million asset-based credit facility are expected, an informed source said Monday.

Landry's is in the market with a $300 million senior secured credit facility via Wells Fargo Foothill and Jefferies.

The facility consists of a $50 million five-year revolver and a $250 million five-year term loan A.

According to filings with the Securities and Exchange Commission, pricing on the revolver and the term loan A is expected to be Libor plus 400 basis points, with a 3.25% Libor floor, and the revolver has a 50 bps commitment fee.

Amortization on the term loan is 2.5% in year one, 7.5% in year two and 10% in years three, four and five, with the rest due at maturity.

Proceeds from the credit facility will be used to help fund the buyout of the company by Fertitta Holdings Inc for $21 per share in cash. The total value of the deal is about $1.3 billion, including about $885 million of debt.

Meanwhile Goober Drilling is syndicating a $230 million asset-based credit facility via Jefferies.

The facility consists of a $140 million revolver and a $90 million term loan, with pricing on both tranches able to range from Libor plus 275 basis points to 350 bps based on leverage.

Proceeds will be used to refinance existing debt.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.