Freescale falls; Lyondell breaks; Visteon holds steady with numbers; LCDX inches higher

By Sara Rosenberg

New York, Feb. 25 - Freescale Semiconductor Inc.'s term loan headed lower on Wednesday as the company announced progress on its exchange offer and Lyondell Chemical Co.'s debtor-in-possession facility freed up for trading.

In other news, Visteon Corp.'s term loan was pretty flat after the release of its quarterly results in which the company also cautioned that it may not be able to stay in compliance with all of its debt covenants.

Also, LCDX 10 was a little bit better during the trading session despite equities ending the day slightly weaker.

Freescale slides

Freescale Semiconductor's term loan dropped by a couple of points in trading after the company revealed that it already has close to enough bonds exchanged to create a roughly $700 million incremental term loan, according to traders.

The term loan was quoted at 38 bid, 44 offered, with one trader saying that it was down around four points on the day and another trader saying it was down even more since he saw levels on Tuesday of 45 bid, 50 offered.

"Company going to layer in some size. Dilutive to bank holders," the second trader remarked in explanation of why the term loan traded lower.

On Wednesday, Freescale said that as of Tuesday, it had received commitments with respect to $2.89 billion aggregate principal amount of existing notes and that based on the amount of commitments delivered, it would incur about $694 million in new incremental term loan debt.

Freescale term loan details

Freescale's incremental term loan due Dec. 15, 2014 will carry pricing of 12.5% and will be guaranteed by the same guarantors under the company's senior secured credit facility.

The company's existing credit facility lenders declined to participate in the up to $1 billion incremental term loan that will be used to refinance bonds.

As a result, the eligible participants now only include holders of the company's senior floating-rate notes due 2014, 9 1/8%/9 7/8% senior PIK-election notes due 2014, 8 7/8% senior fixed-rate notes due 2014 and 10 1/8% senior subordinated notes due 2016.

Up to $250 million of the senior PIK-election notes, which are priority one, and up to roughly $746 million of the senior subordinated notes, which are priority two, can be swapped for the new term loan debt.

The senior floating-rate notes are acceptance priority three, and the senior fixed-rate notes are acceptance priority four. Maximum amounts for swaps of these notes are not available.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets.

Lyondell hits the secondary

Lyondell's debtor-in-possession financing facility broke for trading on Wednesday, with the new money portion trading down from its original issue discount price, according to a market source.

The $3.25 billion of new money, which gets a first lien, was quoted at 97 bid, 98 offered, the source said.

This new money piece is priced at Libor plus 1,000 basis points with a 3% Libor floor and was sold to investors at an original issue discount of 981/4. Only about $1.2 billion of the new money was syndicated, with the underwriters taking the rest, the source remarked.

Lyondell rollover quoted in the 50s

Lyondell's $3.25 billion of rollover DIP financing, which gets a second-lien, was quoted at 50 bid, 53 offered on its first day of trading, the source continued.

Like the new money, the rollover is priced at Libor plus 1,000 bps with a 3% Libor floor. There's no original issue discount since it's just a roll-up.

Lastly, the strip of pre-petition debt was quoted at 20 bid. This piece isn't really trading since everyone in it is just holding on to it, the source explained.

Lyondell's DIP also includes a $1.515 billion ABL revolver that is priced at Libor plus 700 bps.

Citigroup, Goldman Sachs, Merrill Lynch, ABN Amro and UBS Securities are the lead banks on the deal.

Lyondell is a U.S. subsidiary of LyondellBasell, a Netherlands-based polymer, petrochemicals and fuels company.

Visteon unmoved by numbers

Visteon's term loan held in at previous levels on Wednesday after the company came out with earnings results and talked about potential covenant problems, according to a trader.

The term loan was quoted at 18 bid, 21 offered, unchanged on the day, the trader said, adding that the levels were just quotes being that the paper didn't trade during the session.

For the fourth quarter, the company reported a net loss of $328 million, or $2.53 per share, compared to a net loss of $43 million, or $0.33 per share, last year.

Sales from continuing operations for the quarter were $1.7 billion versus $2.9 billion in sales in 2007.

EBIT-R for fourth quarter was negative $94 million versus $15 million in the comparable period last year.

"Visteon's financial results for the fourth quarter 2008 were significantly affected by the global economic slowdown as automakers quickly reduced production levels in nearly every market," said Donald J. Stebbins, chairman and chief executive officer, in a news release.

Visteon warns of covenant issues

Also on Wednesday, Visteon said that it can't be sure that it will remain in compliance with the terms of its outstanding debt instruments because of the continued downturn in the global automotive industry and the restrictive credit markets.

As of Dec. 31, the company's cash balances totaled $1.18 billion and total debt was $2.76 billion, which included $75 million drawn on its asset-based U.S. revolving credit facility and $92 million outstanding under its European receivables securitization facility.

Cash generated by operating activities totaled $37 million for the fourth quarter, compared with $331 million for the same period a year earlier, and free cash flow was a use of $27 million, compared with a source of $187 million last year.

The company went on to say that it continues to explore options to address future liquidity needs, including administrative reductions, delaying capital expenditures, curtailing, eliminating or disposing of substantial assets or operations, or undertaking other significant restructuring measures.

In addition, as a result of the volatile macro-economic and industry conditions, Visteon declined to provide earnings guidance for future periods.

Visteon is a Van Buren Township, Mich.-based automotive supplier that designs, engineers and manufactures climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers.

LCDX gains ground

LCDX 10 was stronger on a day-over-day basis, shrugging off the small drop that was seen in the stock market, according to a trader.

The index was quoted at 73.85 bid, 74.15 offered, up from Tuesday's levels of 73.60 bid, 73.90 offered, the trader said.

Nasdaq closed down 16.40 points, or 1.14%, NYSE closed down 68.57 points, or 1.42%, S&P 500 closed down 8.24 points, or 1.07%, and Dow Jones Industrial Average closed down 80.05 points, or 1.09%.

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