Sabic upsizes term loans; LCDX dips with equities; Cash tone stronger; Movie Gallery rebounds slightly

By Sara Rosenberg

New York, Aug. 13 - Sabic Innovative Plastics Holding BV increased the size of its credit facility as it decreased the size of its bond offering.

Over in the secondary, LCDX ended the day a touch lower with stocks, and Movie Gallery Inc.'s first-lien term loan bounced back a little bit from Friday's drop.

Sabic announced on Monday that it upsized its term loan A and term loan B tranches and downsized its proposed bond offering, according to a market source.

The term loan A (Ba1/BB+) is now sized at $1.5 billion, up from $1.1 billion, the source said. Price talk on the tranche remained at Libor/Euribor plus 125 basis points.

Meanwhile, the term loan B (Ba1/BB+) is now sized at $5.145 billion, up from around $4.3 billion, the source continued. Price talk on this tranche remained at Libor/Euribor plus 250 bps with an original issue discount of 991/2.

At launch, it was said that the term loan B would be broken down into subtranches of $3.2 billion and €795 million. However, now with the change to the total size, the breakdown of the U.S. and euro tranche sizes is not yet determined, the source added.

As for the senior notes offering, that was reduced to around $1.5 billion from around $2.765 billion equivalent.

The company's now $7.645 billion (up from around $6.4 billion) credit facility also includes a $1 billion asset-based revolver (Ba1/BBB-) talked at Libor plus 150 bps.

Citigroup, JPMorgan, HSBC, ABN Amro and GE Capital are the lead banks on the deal, with Citi the left lead.

The facility has maintenance covenants.

Proceeds from the loan and the bonds will be used to help fund the acquisition of GE Plastics from General Electric Co. for $11.6 billion.

GE Plastics is a Pittsfield, Mass., supplier of plastic resins. Saudi Basic Industries is a Riyadh, Saudi Arabia, manufacturer of chemicals, fertilizers, plastics and metals.

LCDX slips, cash better

LCDX went out on Monday at slightly weaker levels as equities seesawed, but cash ended with a positive tone, according to traders.

The index went out around 94½ bid, 94¾ offered, down from Friday's levels of around 94 5/8 bid, 95 1/8 offered, traders said.

"It opened at 95 3/8, 95 7/8 and then gave up gains starting at around noon," one trader remarked. "It continued to slide through the afternoon. Equities went down, went back up and then went down again. [It] probably affected LCDX."

At the close Nasdaq was down 2.65 points, or 0.10%, the Dow Jones Industrial Average was down 3.01 points, or 0.02%, the S&P 500 was down 0.72 points, or 0.05%, and the NYSE was down 6.18 points, or 0.07%.

As for the cash loan market, "it felt better but there wasn't really any activity behind it," a trader said. "It felt good but nobody was really doing anything."

For example, Thomson Learning, a Stamford, Conn.-based higher education, careers and library reference company, saw its term loan B end at 95½ bid, 96½ offered, up from previous levels of 95 bid, 96 offered, the trader continued.

And, Kinder Morgan Inc., a Houston-based energy infrastructure provider, saw its term loan B end the day at 95¼ bid, 95¾ offered, up about a quarter of a point from prior levels, another trader added.

Movie Gallery trades higher

Movie Gallery's first-lien term loan traded a touch stronger as investors have had time to digest all that the company's recent 10-Q filing had to say and realize there weren't many surprises in there, according to a trader.

The first-lien term loan traded at 83 on Monday, compared to a trading level of 82 on Friday, one trader said.

A second trader had the first lien ending Monday's session around 81 bid, 83 offered. By comparison, on Friday, a different trader had the paper going out at 80 bid, 82 offered.

"Everybody is expecting that they'll run out of money and file [for bankruptcy]. [It] wasn't a shocker what they said in their 10-Q," the second trader said.

On Friday, the company filed a 10-Q with the Securities and Exchange Commission in which it stated that it will likely not have sufficient liquidity to operate its business through the third quarter of 2007 without gaining access to additional capital.

As a result, the company is considering a number of alternatives, including asset divestitures, recapitalizations, restructurings, alliances with strategic partners, a sale to or merger with a third party, and a Chapter 11 filing.

Furthermore, Movie Gallery plans to continue to take actions to conserve cash and improve profitability, such as accelerating the closure of unprofitable stores, consolidating stores in certain markets, realigning its cost structure to better reflect its reduced size and seeking a more competitive capital structure.

The company explained that the liquidity crunch is a result of significant losses from operations because of current industry conditions and increased competition in the home video market and significant vendor terms contraction.

For the quarter ended July 1, the company reported a net loss of $309.94 million, or $9.69 per share, compared to a loss of $14.90 million, or $0.47 per share, last year, and total revenue was $561.22 million, down from $601.29 million.

For the 26 weeks ended July, net loss was $324.81 million, or $10.18 per share, compared to net income of $25.45 million last year, or $0.80 per share, and total revenue was about $1.21 billion, down from $1.30 billion.

At July 1, the Dothan, Ala.-based video rental company had $45.5 million of cash and cash equivalents and did not have any available borrowings under its credit facility.

Currently, the company has a forbearance agreement with its first-lien credit facility lenders regarding non-compliance with covenants.

This agreement is set to expire on Tuesday.

"The forbearance is probably going to get pushed out. Everybody already [is] expecting a filing here anyway," a trader concluded.

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