Chrysler Corp. loan plans emerge; Swift rebounds; Movie Gallery fall continues; LCDX, cash lower

By Sara Rosenberg

New York, July 27 - More details surfaced on the plans for Chrysler Corp. LLC's credit facility, including that the second-lien term loan is now delayed-draw and being taken down by the non-bank parties involved in the transaction, and the first-lien term loan will be back for retail syndication, but when that will happen is still up for question.

In other news, although CompuCom Systems Inc. has opted to delay its bond offering, syndication on the company's in-market term loan B will continue as planned.

Over in the secondary, Swift Transportation Co. Inc.'s term loan B regained some of the ground it lost during the previous session and Movie Gallery Inc.'s first-lien term loan B continued to be pressured by market weakness and poor earnings from Blockbuster Inc.

And, as has been the case for most of this week, LCDX and the cash market were once again softer as everyone is looking to sell and no one is looking to buy.

Long-term plans for Chrysler Corp.'s $12 billion buyout financing credit facility have become clearer as the company has opted to turn its second-lien term loan into a delayed-draw tranche that will not come back for broad syndication for at least a year, according to a market source.

In addition, the first-lien term loan will initially be funded by the lead banks, but plans are to bring the postponed transaction back to market when conditions improve, the source explained.

The $2 billion now delayed-draw second-lien term loan (Caa1/B-/BB+) is being taken by Cerberus Capital Management LP, the buyer of Chrysler Corp., and DaimlerChrysler AG, the seller and retainer of a minority interest.

It was heard that the second-lien loan was likely sold to them at the revised talk of Libor plus 700 basis points - up from original talk of Libor plus 600 bps - with call protection of non-callable for one year, then at 103 in year two and 101 in year three.

"They're going to hold that for at least a year," the source said about the second-lien loan.

"It's delayed-draw for up to 12 months and then at the end of that it has to fund," the source added.

As for the $10 billion first-lien term loan B (B1/B+/BB+), "that will come back at a later date. Will be funded by the banks in the mean time. Not sure of pricing," the source remarked.

The first-lien term loan B was being guided at Libor plus 375 bps, after flexing up from original talk at launch of Libor plus 325 bps, and carries call protection of non-callable for one year then at 101 in year two.

Syndication on this transaction was revealed to be postponed this past Wednesday when changes were made to the Chrysler Financial credit facility, with sources saying that the decision was made to focus on Financial first and then deal with Chrysler Corp.

JPMorgan, Goldman Sachs, Citigroup, Bear Stearns and Morgan Stanley are the joint bookrunners on the deal, with JPMorgan, Goldman and Citigroup the joint lead arrangers.

Proceeds will be used to put cash on the balance sheet for liquidity. Along with the equity, the company will have approximately $17.5 billion of cash at closing.

Chrysler Corp. is a producer and seller of Chrysler, Dodge and Jeep vehicles.

Chrysler Financial chugging along

Meanwhile, the Chrysler Financial $8 billion credit facility is heard to be moving along, with the first-lien debt basically done and the second-lien debt making progress, according to a market source.

The facility consists of a $4 billion five-year first-lien term loan B (B1/BB-/BBB-) priced at Libor plus 400 bps, with a discount of 99 and call protection of 102 in year one and 101 in year two, a $2 billion six-year second-lien term loan (B2/CCC+/BB) priced at Libor plus 650 bps, with a discount of 98½ and call protection of 103 in year one, 102 in year two and 101 in year three, and a $2 billion five-year ABL revolver (B1/BB-) priced at Libor plus 275 bps.

So far during syndication, pricing on the first-lien term loan B was lifted from revised talk of Libor plus 300 bps and original talk at launch of Libor plus 275 bps, a 99½ discount was added and then revised to 99 and call protection was changed from just 101 in year one.

In addition, pricing on the second-lien term loan was raised from revised talk of Libor plus 550 bps and from original talk at launch of Libor plus 500 bps, a 99 discount was added and then revised to 98½ and call protection was changed from just 102 in year one and 101 in year two.

JPMorgan, Citigroup, Goldman Sachs, Bear Stearns and Morgan Stanley are the joint bookrunners on the deal, with JPMorgan, Citigroup and Goldman Sachs the joint lead arrangers.

Proceeds will be used to help fund the buyout of the provider of financial services for vehicles in the NAFTA region by Cerberus from DaimlerChrysler.

CompuCom bonds delayed, loan rolls on

CompuCom Systems postponed its $210 million senior subordinated notes offering until September from August, but syndication of the company's $190 million term loan B (Ba2/BB) will continue to go on, according to a market source.

The term loan B was launched to investors with a bank meeting on July 19 with price talk in the Libor plus 300 bps area.

"[They already] got accounts doing work and will continue that process," the source said.

The source went on to say that basically all the bond postponement means for the loan is that the company will have more time for the loan syndication process, since now it's looking at a September close as opposed to an August close.

Bear Stearns is the lead bank on the bank and the bond deals.

Proceeds will be used to help fund the acquisition of the company by Court Square Capital Partners from Platinum Equity.

Other financing will come from $50 million borrowed under the company's existing receivable securitization facility and equity of about 30%.

The transaction is valued at about $628 million and is subject to regulatory approvals as well as satisfaction of other customary closing conditions.

In connection with the buyout, CompuCom intends to tender for all of its outstanding 12% senior notes due 2014.

In addition, CHR Intermediate Holding Corp., another subsidiary of CompuCom's parent company CHR Holding Corp., plans to tender for all of its outstanding senior floating-rate toggle notes due 2013.

Leverage through the secured debt will be around 2.7 times, and total leverage will be around 5.0 times.

CompuCom is a Dallas-based provider of technology services that help clients through the requisition, procurement, deployment, management and retirement lifecycle of their IT assets.

Aeolus Re talk emerges

Price talk on Aeolus Re's proposed $275 million credit facility came out now that the deal has been launched with a bank meeting on Thursday, according to a market source.

The $100 million term loan B is being talked at Libor plus 250 bps, the $125 million term loan A is being talked at Libor plus 200 bps to 225 bps and the $50 million revolver is being talked at Libor plus 200 bps to 225 bps, the source said.

JPMorgan is the lead bank on the deal.

Aeolus Re is a Bermuda-based reinsurance company.

Swift inches up

Moving to trading news, Swift Transportation's term loan B climbed back up on Friday after a pretty significant fall during the previous session as some financials emerged that were better than people had expected, according to a trader.

The term loan B traded as high as 91 and the settled in to close out the day at 88 bid, 89 offered, up from 86 bid, 87 offered on Thursday, the trader said. On Wednesday, the paper was being quoted at 91 bid, 92 offered.

"There was some story about cash balance being better than people had thought," the trader said about the loan's positive momentum.

On Thursday night, Swift announced that as of June 30, its cash balance was $171 million, of which $148 million is currently unrestricted, and credit available on its revolving line of credit exceeded $250 million.

The company also said that its EBITDA for the second quarter exceeded revenue and EBITDA reported for the first quarter of 2007.

Second-quarter financial results will be released to bank lenders and noteholders after the market closes on Aug. 14 so as to allow appraisers time to complete their work to support purchase accounting allocations among asset classes.

Participants in the company's term loan B can access the financial results through the Swift IntraLinks site hosted by Morgan Stanley, and qualified institutional investors that currently own or are considering purchasing the company's senior secured notes may access the information through a new IntraLinks site hosted by Swift.

Swift is a Phoenix-based truckload carrier.

Movie Gallery drops some more

Movie Gallery's first-lien term loan gave up a couple of more points in trading on Friday, pressured by market conditions and Blockbuster's recently announced disappointing earnings results, according to a trader.

The Dothan, Ala.-based video rental company's first-lien term loan ended the day at 82 bid, 84 offered, down from 85 bid, 87 offered, the trader said.

In addition, the second-lien term loan was heard to be somewhere in the 40s, the trader remarked.

"I just heard that today. Last levels I heard were in the 60s. It's incredibly illiquid. The thing doesn't trade," the trader added about the second-lien loan.

On Thursday, Blockbuster announced second-quarter financial results that included a net loss of $35.3 million, or $0.20 per common share, as compared with net income of $68.4 million, or $0.31 per diluted common share, for the second quarter of 2006.

In addition, the Dallas-based provider of in-home movies and game entertainment saw total revenues decrease 2.8% to $1.26 billion for the quarter from $1.3 billion for the second quarter of 2006 and operating loss totaled $13.7 million, compared with operating loss of $2.1 million for the same period last year.

Furthermore, cash flow used for operating activities decreased $17 million to $40.3 million from cash used of $23.3 million last year and free cash flow decreased $20.8 million to a negative $59.8 million from a negative $39 million.

LCDX, cash weaken

In more secondary news, Friday was once again a volatile day for LCDX and the cash market as sellers are overrunning the market, according to a trader.

The index went out at 91.75 bid, 92.00 offered, down from 93.10 bid, 93.35 offered on Thursday, the trader said. At the open on Friday, the index was quoted at 92.40 bid, 92.60 offered.

As for the cash market, that was down by about another half a point to a point, depending on the name, the trader added.

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