LandSource trades up as forbearance passes; Freescale slides as CEO resigns; Dana dips

By Sara Rosenberg

New York, Feb. 8 - LandSource Communities Development LLC's first-lien term loan B headed higher on Friday as lenders approved a short-term forbearance agreement, Freescale Semiconductor's term loan weakened after management changes came out and Dana Corp.'s exit facility term loan dropped during its second day of trading.

In other news, MECS Inc. allocated its credit facility on Friday as the deal successfully syndicated following a bump up in pricing.

LandSource Communities Development's first-lien term loan B gained some ground on Friday after news emerged that the company's five-day forbearance/amendment agreement was passed by lenders, according to a trader.

The first-lien term loan B was quoted at 74 bid, 76 offered, up from 69 bid, 71 offered on Thursday, the trader said.

The forbearance/amendment agreement keeps the company out of default under a borrowing base covenant.

As part of the agreement, pricing on the first-lien term loan B was raised to Libor plus 475 basis points from Libor plus 275 bps.

In addition, lenders are getting a 12.5 bps fee.

As was previously reported, the company is facing non-compliance with the borrowing base covenant as a result of a new appraisal on their land that showed deterioration in the underlying value of that land.

The company needs $800 million to bring it into compliance with the covenant and cover a cash-flow shortfall over the next two years. However, the sponsors are only willing to put in $300 million.

Originally, the company wanted to get a 60-day forbearance agreement but lenders wanted to keep the issue closely monitored, which is why such a short-term resolution was obtained.

LandSource is a joint venture between Lennar Corp., LNR Property Corp. and MW Housing Partners. Its primary investment is Newhall Land and Farming Co., which owns 15,000 acres in Santa Clarita Valley, Calif.

Freescale falls

Freescale Semiconductor's term loan moved lower during market hours as management changes were announced and the market in general had a weaker feel to it, according to a trader.

The term loan was quoted wide at 80 bid, 82 offered, down from Thursday's levels of 81½ bid, 82½ offered, the trader said.

"Everything felt a bit weak today - unchanged, to an eighth, to a quarter of a point lower," the trader added.

On Friday morning, Freescale revealed that Michel Mayer, chairman and chief executive officer, has decided to step down, and that the company and its board of directors have initiated a search for someone to replace him.

Mayer will continue in his current role until a successor has been identified and will remain chairman of the board until the transition is effective.

"The Freescale team executed well over the last four years. Following a successful IPO, we dramatically improved the operating profitability of the company and strengthened the leadership team," Mayer said in a company news release. "One year into a successful LBO, the time is right for me and my family to take some time off before exploring new challenges. The company is well positioned to continue its transformation."

Freescale is an Austin, Texas, designer and manufacturer of embedded semiconductors.

Dana inches down

Dana's term loan B was softer during its second day in the secondary market, although volume in the name was light, according to a trader.

The term loan B was quoted at 89½ bid, 90½ offered, down from its first-day trading levels on Thursday of 90 bid, 91 offered, the trader said.

The term loan B was sold to investors at a discount of 90, is priced at Libor plus 375 basis points, with a 3% Libor floor for two years, and carries hard call protection of 102 in year one and 101 in year two.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets.

MECS wraps up

Moving to the primary, MECS gave out allocations on its $190 million credit facility during Friday's market hours now that the deal was completed at juicier pricing, according to a market source.

The $40 million revolver and the $150 million term loan both firmed up with pricing of Libor plus 450 bps, up from original talk at launch of Libor plus 400 bps, the source said.

As was initially proposed, both tranches were sold to investors at an original issue discount of 99.

GE Capital is the lead bank on the deal that will be used to help fund the buyout of the company by American Securities Capital Partners.

MECS is a Chesterfield, Mo., provider of engineering, procurement and construction management services to processing plants that use sulfuric acid in their processes.

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