Huntsman continues to fall as investor disappointment on cancelled bond deal remains

By Sara Rosenberg

New York, May 28 - Huntsman Corp's bank debt headed lower again on Wednesday as investors continued to react to the recently cancelled $250 million bond offering. The loan was quoted at 89½ bid, 91 offered, according to traders, compared to a 91 bid, 92 offered on Tuesday.

On Friday the loan was quoted at 95 bid, 96 offered as the possibility of the bond deal being pulled was rumored around the marketplace, but it traded as high as 97¼ prior to that as investors were hopeful about being paid down with proceeds from the bond offering.

"It was a surprise to a lot of people," a trader explained. "The run up was predicated on people's confidence that they'd get the bond deal done."

The Salt Lake City-based company manufactures products for the chemicals, plastics, detergent, personal care, rubber and packaging industries.

In the primary, Laidlaw Inc. flexed its $625 million six-year term loan B up once again, this time to Libor plus 475 basis points, "and they've indicated that there's more room for change", a fund manager said. The deal was previously flexed up to Libor plus 425 basis points from an original price of Libor plus 350 basis points.

Furthermore, the institutional tranche is now being offered at 99, compared to a previous offer price of 991/4.

The $825 million senior secured credit facility (Ba3/BB) also contains a $200 million five-year revolver with an interest rate of Libor plus 300 basis points.

Credit Suisse First Boston and Citibank are leading the Burlington, Ont. transportation company's exit financing deal. The company filed for Chapter 11 on June 28, 2001 and hopes to emerge by the end of this month.

Hayes Lemmerz International Inc.'s $450 million six-year term loan B is now oversubscribed after flexing up at the end of last week to Libor plus 475 basis points. The tranche had been flexed up earlier in that week as well to Libor plus 450 basis points from Libor plus 425 basis points, at which time the offer price was changed to 99 from an original price of 991/2.

The $575 million exit financing credit facility (Ba3/BB-) also contains a $125 million five-year revolver with an interest rate of Libor plus 350 basis points, however terms on the pro rata are still kind of fluid, a syndicate source told Prospect News on Wednesday.

Citibank and Lehman Brothers are the lead banks on the deal, which is expected to close on June 3.

The Northville, Mich. auto parts maker and its subsidiaries located in the United States and one subsidiary in Mexico filed voluntary petitions for reorganization under Chapter 11 on Dec. 5, 2001.

Rent-A-Center Inc. closed on its new $600 million credit facility on Wednesday, according to a syndicate source. The deal allocated and broke for trading last Thursday with the term loan B immediately moving up from its original issue price of par to par ½ bid, par ¾ offered.

The facility consists of a $400 million six-year term loan B with an interest rate of Libor plus 225 basis points, a $120 million five-year revolver with an interest rate of Libor plus 225 basis points and an $80 million five-year letter of credit facility with an interest rate of Libor plus 225 basis points. All of the tranches were oversubscribed.

Interest on the B loan was flexed down during the syndication process from price talk of Libor plus 250 to 275 basis points and is now grid based, containing the potential to move back up to Libor plus 250 basis points if the company's leverage goes above two times.

Upfront fees on the revolver were 5/8 for a $15 million commitment and 75 basis points for a $20 million commitment.

Banks were asked to commit on a three to one basis with regards to the letter of credit facility and the revolver. For every $3 committed to the letter of credit facility, banks are required to commit $1 to the revolver.

The company drew down approximately $200 million of the term loan component on Wednesday, and may draw down the remaining $200 million at any time prior to Aug. 5, 2003.

The facility was originally expected to be sized at $650 million, but was reduced by $50 million after the company's concurrent bond offering was upsized by $50 million.

Lehman Brothers and JPMorgan are the lead banks on the deal, which will be used to refinance the company's existing senior debt.

"The refinancing of our senior credit facilities and the sale of our senior subordinated notes, together with the planned purchases of our common stock, are part of our effort to pursue long-term financing opportunities for the company," commented Mr. Robert D. Davis, the chief financial officer, in a news release. "We believe that these transactions will improve our overall financial flexibility and lower our cost of capital."

Rent-A-Center is a Plano, Tex. operator of company-owned stores in the rent-to-own industry.

Rite Aid Corp. closed on its new $1.85 billion senior secured credit facility (B1/BB), consisting of a $1.15 billion term loan and a $700 million revolver, both maturing in April 2008. Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. acted as joint lead arrangers on the deal.

The revolver is $150 million less than previously announced as a result of the company's recently completed $150 million offering of 9.25% senior notes due 2013.

Proceeds will be used by the Camp Hill, Pa. drugstore chain to repay the existing $968.6 million senior secured credit facility due March 2005 and the $107 million synthetic lease due March 2005 and to replace the existing $407.5 million revolving credit facility.

"The refinancing of our credit agreement is another positive development for Rite Aid," said Bob Miller, chairman and chief executive officer, in a news release. "The new facility gives us greater flexibility to operate our business because it extends the maturity of a significant portion of our debt by an additional three years and provides more capital to retire shorter maturities and invest in our business. The fact that we were able to complete the refinancing so far ahead of schedule is a tribute to the improvement we continue to make in our operating results."

Omnova Solutions Inc. closed on a new $100 million three-year asset-based credit facility and sold $165 million of 11.25% senior secured notes due 2010.

Proceeds were used to repay outstanding amounts under its existing revolving credit facility, to terminate the receivables sale program and to pay related fees and expenses.

Omnova is a Fairlawn, Ohio manufacturer of decorative and functional surfaces, emulsion polymers and specialty chemicals.

© 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.