Swift up on revolver draw; Lear softens with bankruptcy talk; Georgia-Pacific likely passing

By Sara Rosenberg

New York, June 26 - Swift Transportation Co. Inc.'s term loan B rallied in a quiet trading session on Friday on talk that the company drew down its revolving credit facility and rumors of a potential bond offering.

Also in the secondary, Lear Corp.'s term loan headed lower as speculation over a possible bankruptcy filing was swirling around the marketplace, spurred on by the near-term expiration of the company's loan waiver.

In other news, Georgia-Pacific LLC's revised amendment proposal was expected by investors to pass on Friday, and the company's term loan B held steady in trading on the news.

Swift posts big gains

Swift Transportation's term loan B strengthened by a couple of points in trading after talk surfaced that the company borrowed all the remaining funds under its revolving credit facility, according to traders.

The term loan B was quoted at 74¾ bid, 76¼ offered, up from 69¼ bid, 70¼ offered on Thursday, traders said.

One trader explained that the term loan B rose on the drawdown chatter because people started to think that the company might be facing covenant non-compliance and it borrowed the funds before it could lose access to the revolver as s result of a default.

If the company is indeed facing covenant issues, then it would likely have to try to amend its credit facility, which would likely result in higher pricing, the trader remarked.

Calls made to the company to confirm the draw were not returned prior to press time.

Swift also sees bond rumor

Another possible reason for Swift Transportation's term loan B's performance on Friday was the rumor that Swift Transportation could potentially be doing a bond deal, the trader continued.

According to the chatter, this possible bond offering would be used to pay down bank debt.

The trader also said that he didn't see anything to make him think that the bond rumor is true, but maybe some investors were lifting trading levels on the term loan B as a result of this hope of a paydown in the future, and because of the idea that any secured bond deal would be good for the bank debt.

Swift Transportation is a Phoenix-based truckload carrier.

Lear weaker as bankruptcy rumored

Lear's term loan was down a little bit during market hours as there was a lot of chatter that the company may file for Chapter 11 protection and that a filing could come as early as next week, according to traders.

The term loan was quoted by one trader at 71½ bid, 73½ offered, down from 72 bid, 74 offered, and by a second trader at 70 bid, 72 offered, down from 70½ bid, 72½ offered.

"Not really seeing people selling it. Heard there was a private amendment and private call yesterday. We're public on the name, so not sure what's going on," the first trader remarked.

The trader went on to explain that since there is all this uncertainty surrounding the company, people appear to be holding on to the paper until some clarity surfaces.

Lear waiver terminating soon

Currently, Lear is operating under a waiver of existing defaults and an amendment of the financial covenants under its credit facility, but that agreement with lenders is only good until June 30.

In addition, on June 1, the company opted to use a 30-day grace period for making the $38 million in semiannual interest payments due that day on its 8½% senior notes due in 2013 and 8¾% senior notes due in 2016.

The non-payment of interest on June 1 was a condition of the loan waiver and amendment.

With the waiver and amendment expiring shortly and the bond interest payments grace period coming to an end, talk about a bankruptcy filing has become more and more common.

The company has said in the past that it remains in active discussions with lenders regarding further modifications to the credit facility in light of existing and projected industry conditions.

Lear is a Southfield, Mich.-based supplier of automotive seating systems, electrical distribution systems and electronic products.

Georgia-Pacific expected to pass

Georgia-Pacific's amendment seemed to have enough traction by Friday's 4 p.m. ET consent deadline to pass, although final confirmation of that was unavailable prior to press time, as investors appeared to get on board with the transaction following a recent round of changes, according to a market source.

Under the amendment, the company is extending all or some of its revolver to October 2012 from December 2010 and up to $1 billion of its term loan B, with a minimum amount of $750 million, to December 2014 from December 2012. The company did not ask to extend its term loan A.

The term loan B extension is being done through the creation of a new term loan C (Ba2/BB+). By early afternoon, it was still unclear as to how much in commitments had come in towards the term loan C, the source said.

If the company doesn't get enough term loan B extensions to amount to $750 million, then it will not price a new term loan C but will still execute the other terms of the amendment, such as the paydown.

In connection with the amendment, the company is repaying $750 million of term loan A and non-extended term loan B debt on a pro rata basis.

Georgia-Pacific pricing

Georgia-Pacific's extended revolver and the term loan C will initially be priced at Libor plus 325 basis points, based on total leverage being less than or equal to 4.5 times, and both tranches will have a step up to Libor plus 425 bps if total leverage is greater than 4.5 times.

The revolver has an unused fee that is initially set at 50 bps. This fee can step up to 75 bps based on leverage.

Under the company's original amendment proposal, pricing on the extended debt was going to be Libor plus 300 bps with a step up to Libor plus 400 bps, but the spread was flexed up by 25 bps to entice investors into handing over consents.

As part of the recent amendment changes, Georgia-Pacific also removed all amendment requests impacting the financial and negative covenants, including the second-lien basket, and reinstalled existing Most-Favored-Nation protection to the term loan B.

By comparison, under the initial request, the company was asking to increase the leverage ratio under the credit facility to 4.75 times from 4.0 times during 2011, and 4.5 times thereafter, and measure the ratio on a net basis going forward.

Georgia-Pacific holds steady

Georgia-Pacific's term loan B held pretty firm on Friday after moving maybe a quarter of a point higher during the previous session when the amendment changes were announced, according to traders.

The term loan B was quoted by one trader at 94 bid, 96 offered and by a second trader at 94 bid, 95 offered, with both traders labeling the debt as basically unchanged on the day.

Citigroup acted as the lead bank on the amendment.

Lenders are being paid a 5 bps amendment fee.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of building products, tissue, packaging, paper, pulp and related chemicals.

LCDX softens

The LCDX 12 index was a little lower during market hours, as stocks were primarily weaker on the day, according to a trader.

The index was quoted at 85.85 bid, 86.15 offered, down from 86 bid, 86.30 offered, the trader said.

Meanwhile, Dow Jones Industrial Average closed down 34.01 points, or 0.4%, S&P 500 closed down 1.36 points, or 0.15%, and NYSE closed down 4.07 points, or 0.07%. Only Nasdaq ended higher on Friday, moving up by 8.68 points, or 0.47%,

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