GM up on new player in GMAC bid; Movie Gallery gains on good buying interest; Compsych floats talk

By Sara Rosenberg

New York, March 13 - General Motors Corp.'s revolving credit facility revved its way to higher levels as some new information came out on bidders for its financing arm, and Movie Gallery Inc.'s term loan headed up as well as better buying interest was seen in the name.

In the primary, Compsych Corp. started to circulate price talk on its new credit facility as the deal is getting ready to officially launch into syndication with a bank meeting on Tuesday.

GM's revolver was stronger during Monday's market hours as news reports emerged on a new participant in the bid for General Motors Acceptance Corp., according to a trader.

The revolver closed the day quoted at 83¾ bid, 84¾ offered, up by about half a point, the trader said.

"There was an article this morning in the Journal about a Japanese bank putting in money with Cerberus for GMAC. [The revolver] always reacts to any GMAC news," the trader explained.

GM has been trying to sell a 51% stake in GMAC for months. The company was originally hoping to sell the stake to an investment-grade financial buyer in hopes that such a sale would restore GMAC's credit rating to investment grade and greatly lower its borrowing costs, but as more information surfaces, it seems more and more likely that a hybrid buying group is the way things will end up.

GM is a Detroit-based designer, manufacturer, and marketer of cars and light trucks.

Movie Gallery rises

In other secondary happenings, Movie Gallery's term loan was seen trading at stronger levels as good buying interest was apparent in the market, according to a trader.

The term loan closed the day quoted at 92 bid, 92½ offered, up from previous closing levels of 91 bid, 92 offered, the trader said.

"Moody's downgraded it on Friday. I think people saw it as an opportunity to buy into the paper but I don't think it's really panned out. [It's] just seeing better buying; so, it's been bid up. Everyone knows there's an amendment in the works. They're trying to get in before [the amendment] pushes through," the trader explained.

On Friday, Moody's Investors Service downgraded Movie Gallery's bank debt to Caa1 from B2 and notes to Caa3 from B3, while leaving the ratings with a negative outlook, explaining that the downgrade reflects the expectation that the company's performance will deteriorate during 2006 resulting in significantly weakened liquidity, further erosion in credit metrics and negative free cash flow.

Some traders had said on Friday that after the downgrade, the term loan was being quoted at 90 bid, 91 offered, up slightly from Thursday's closing levels of 89¾ bid, 90½ offered, but not nearly as good as the 91 bid, 92½ offered levels that were seen on Friday morning.

However, other traders said that the term loan was pretty much unaffected by the downgrade with levels remaining in this 91 bid, 92 offered context until the close on Friday.

The company has been in the spotlight since the start of last week as lender calls were held to discuss necessary amendments to loan financial covenants.

The Dothan, Ala.-based operator of video retail stores is not in default under its covenants but is looking for relief going forward and in return, would likely give lenders an amendment fee and higher pricing on all loan tranches.

Compsych sets talk

Switching to the primary, Compsych came out with price talk on its $110 million senior secured credit facility as the deal is gearing up for its Tuesday launch, according to a market source.

Both the $10 million five-year revolver and a $100 million six-year term loan will be presented to lenders with opening price talk of Libor plus 300 basis points, the source said.

UBS is the lead bank on the deal that will be used to help fund Summit Partners' purchase of the company.

Compsych is a Chicago-based provider of fully integrated employee assistance programs, managed behavioral health and work-life services.

Domino's closes

Domino's Pizza Inc. closed on its $100 million term B add-on that is priced with an interest rate of Libor plus 150 basis points, in line with existing term loan pricing, according to a company news release.

JPMorgan acted as the lead bank on the deal.

Proceeds from the add-on, along with $45 million of cash on hand, were used to repurchase and retire about 5.6 million shares of Domino's common stock from investment funds associated with Bain Capital LLC for $145 million, or $25.78 per share, reducing Bain's ownership of the company's common stock to 28% from 34%.

In connection with this transaction, the Ann Arbor, Mich.-based pizza chain had to amend its credit facility to allow for the additional borrowing and to increase its share repurchase basket.

Following the repurchase, total debt was $802.6 million with a leverage ratio of 3.35x.

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