GMAC pulls portfolio; Cash market seesaws, LCDX slides; Dana, Calpine join drawdown list

By Sara Rosenberg

New York, Oct. 2 - GMAC LLC pulled a multi-billion loan portfolio from market on Thursday as a result of poor conditions, the cash market started off terrible and then rebounded slightly, but still was weaker on a day-over-day basis, and LCDX 10 continued to grind lower.

In other news, Dana Holding Corp. and Calpine Corp. are the two latest companies to announce that they borrowed funds under their revolving credit facilities to preserve liquidity, and while their term loans were down in trading, the movement was more likely a function of the overall market environment.

Meanwhile, over in the primary, Apria Healthcare Group Inc. came out with price talk on its credit facility as the deal was launched during the session, and Landry's Restaurants Inc. and MBF Healthcare Acquisition Corp. have both stopped targeting bank meetings for this week and have yet to identify new timing on their deals.

GMAC canceled the sale of its $2.7 billion loan portfolio on Thursday, with negative market conditions blamed as the impetus behind the decision, according to sources.

The portfolio was made up mostly of ABL and cash flow revolvers, although there was some institutional debt as well.

Of the total $2.7 billion, a little more than $800 million is funded debt, sources said.

"I saw the portfolio. Thought loans were an average mix of names, from very good to not quite so good with minimal distressed. I presume it was pulled because the market tone was so poor. Got better after it was pulled - coincidence?" one buyside source remarked.

"GMAC announced several months ago that going forward, it would be evaluating opportunities to shed non-core assets and operations as it focused on improving the longer-term health of the company," a GMAC spokesperson told Prospect News.

"As part of this initiative, the Commercial Finance business was evaluating the potential disposition of non-core assets, including a $2.7 billion portfolio of loan commitments. This evaluation was based on market conditions and as a result of the environment, the company has elected to terminate the offering at this time," the spokesperson added.

GMAC is a Detroit-based diversified financial services company.

Cash whipsaws, LCDX drops

The cash market in general was weaker on a net basis, but at least it did not go out at the lows of the day, and LCDX 10 retreated once again, according to traders.

"Cash market is down points," one trader said, explaining that the morning was terrible but that levels started to come back a little in the afternoon as there was "probably buying on some weakness."

"Started the day probably down four plus points. No specific catalyst to point to, just same trend that's been going on for the past few weeks," a second trader remarked. "End of day, [it] started coming up. Net, net, probably down two points. Buyers are stepping in. Everything's very cheap right now. I imagine there's a decent amount of guys short out there looking to cover up. But, that's not all of it. This is the first time we've seen real bids."

When asked whether Friday's House vote on the revised $700 billion economic bailout plan could have factored into the loan market's performance, the second trader did not really seem to think so.

"People assume it's going to pass, but people have different views as to what that's going to mean. It's definitely a positive, but not sure how much," the second trader said.

The trader went on to explain that the bailout may not necessarily stop the slide in loans. "Fundamentals, it should help banks. Technicals - are there more redemptions, are guys still going to need cash? - things like that might still push loans lower."

Meanwhile LCDX 10 on Thursday softened by about appoint and a half, with levels going out around 90.90 bid, 91.10 offered, compared to Wednesday's levels of 92.40 bid, 92.60 offered, traders added.

Equities also closed down, with Nasdaq dropping 92.68 points, or 4.48%, Dow Jones Industrial Average dropping 348.22 points, or 3.22%, S&P 500 dropping 46.78 points, or 4.03%, and NYSE dropping 364.54 points, or 4.85%.

Dana, Calpine draw funds, term loans dip

Dana and Calpine jumped on the bandwagon and announced draw downs under their revolvers, and while both their term loans traded lower on Thursday, traders said that the slide was probably a result of the cash market in general being down, not the news.

Dana's term loan was quoted at 82 bid, 85 offered, down from Wednesday's levels of 84 bid, 86 offered, traders said.

Calpine's term loan was quoted at 82 bid, 84 offered, down from Wednesday's levels of 83 bid, 86 offered, traders continued.

"So many companies have been doing this recently," one trader remarked about the draw down news. "No affect. Not really fazing anyone."

On Thursday morning, Dana, a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets, announced that it borrowed $200 million under its existing $650 million secured revolver.

And, late Wednesday night, Calpine, a San Jose, Calif.-based power company, announced that it borrowed $725 million under its $1 billion senior secured revolver.

Both companies attributed the decision to draw the funds to a desire to strengthen liquidity in the face of uncertainty in the capital markets.

Apria price talk

Switching to primary happenings, Apria Healthcare Group held a bank meeting on Thursday to kick off syndication on its proposed $150 million senior secured asset-based revolving credit facility, and in connection with the launch, official price talk emerged, according to a market source.

The revolver was launched with opening price talk of Libor plus 275 basis points, the source said.

Previously, there was chatter that the loan was going to be talked at Libor plus 250 bps. The source said that the deal eventually has the possibility to carry that pricing since there is a pricing grid that is tied to availability.

Bank of America, Wachovia and Barclays are the lead banks on the deal that is being obtained in connection with the company's buyout by the Blackstone Group for $21.00 per share in cash. The transaction is valued at about $1.6 billion.

Borrowings under the revolver can be used for working capital and general corporate purposes. Up to $30 million may be drawn under the revolver at close as long as availability is not less than $75 million.

The Blackstone acquisition will also be financed with $700 million of equity and the issuance of $1 billion of senior secured notes that is backed by a senior secured bridge loan.

If the borrowing base under the revolver is less than $150 million, but equal to or greater than $100 million, additional notes will be issued to make up for the shortfall.

Closing on the acquisition is expected to take place in the second half of 2008, subject to customary conditions, including approval by Apria's shareholders and termination of the Hart-Scott-Rodino regulatory waiting period, which was already obtained.

A meeting for Apria's shareholders is set to take place on Oct. 10.

Apria is a Lake Forest, Calif., home health care services company.

Landry's timing unknown

Landry's Restaurants was aiming to launch its proposed $300 million senior secured credit facility on Thursday. That bank meeting date, however, never did end up firming up and now timing on the deal is simply being labeled as to be determined, according to a market source.

Originally, Landry's had scheduled a bank meeting for Sept. 4 to launch the facility, but that ended up being delayed until Sept. 18. And then, the Sept. 18 bank meeting was pushed off primarily because of Hurricane Ike.

This most recent delay is being attributed to the hurricane damage as well as the current volatility in the markets.

Landry's credit facility consists of a $50 million five-year revolver and a $250 million five-year term loan A.

According to filings with the Securities and Exchange Commission, pricing on the revolver and the term loan A is expected to be Libor plus 400 basis points, with a 3.25% Libor floor, and the revolver has a 50 bps commitment fee.

There is no official talk on the deal as of yet.

Wells Fargo Foothill and Jefferies are the co-lead arrangers, co-bookrunners and co-syndication agents on the deal, with Well Fargo the administrative agent.

Proceeds will be used to help fund the buyout of the company by Fertitta Holdings Inc for $21 per share in cash. The total value of the deal is about $1.3 billion, including about $885 million of debt.

Fertitta is a newly formed entity wholly owned by the company's chairman, president, chief executive officer and original founder, Tilman J. Fertitta, who beneficially owns about 39% of the company's outstanding common shares.

Landry's is a Houston-based restaurant, hospitality and entertainment company.

MBF bank meeting indefinite

MBF Healthcare's $209 million senior secured credit facility had originally been hoped to launch this past Wednesday, but that launch date didn't materialize as markets are rough right now and new potential timing has yet to be announced, according to sources.

"Nothing actually delayed as nothing was ever scheduled," one source told Prospect News.

"Like on all deals now, [the banks] are discussing it with accounts and will determine when to launch," the source added.

The facility consists of a $25 million revolver, a roughly $142 million funded term loan and a $42 million delayed-draw term loan.

According to a PRER14A filed with the SEC on Thursday, pricing on the credit facility is expected to Libor plus 500 bps with a 3% Libor floor. The delayed-draw loan is expected to have a 150 bps unused fee and the revolver is expected to have a 50 bps commitment fee.

"Notwithstanding the terms of the commitment letter, it is possible that the final terms of the our debt financing agreements will provide for applicable margins and floors that are different than the amounts set forth above," the filing said.

CIT and Jefferies are the lead banks on the deal, with CIT the left lead.

Proceeds will be used to help fund the acquisition of Critical Homecare Solutions Holdings Inc. from Kohlberg & Co. LLC.

Other financing will come from about $67 million of mezzanine debt, which, according to the PRER14A, is expected to be priced at 14.5%, comprised of somewhere between 12% to 12.5% in cash and the rest in PIK.

Originally, the company had received a commitment for an up to $285 million senior secured credit facility from Jefferies, consisting of a $25 million five-year revolver, a $140 million to $155 million five-year first-lien term loan, a $20 million first-lien one year delayed-draw, with a five-year final maturity, term loan, and a $40 million to $85 million six-year second-lien term loan.

This initial credit facility commitment, however, expired on July 31, so the parties worked to get a new commitment and achieved their goal on Aug. 28, a day before the deadline that would have allowed for the termination of the acquisition.

In connection with getting the new financing commitment, the acquisition agreement was amended to extend the termination date to Oct. 31.

The enterprise value of the transaction is estimated at $479 million. Originally, it was estimated at $534 million, but was restructured this summer.

MBF Healthcare is a Coral Gables, Fla., blank check company formed to acquire businesses in the health care industry. Critical Homecare Solutions is a Conshohoken, Pa., provider of comprehensive home infusion therapy and specialty infusion services.

Turner ups pricing

Turner Bros. increased pricing on its $86 million six-year credit facility and added a 3% Libor floor to the deal, according to a market source.

Both the $15 million revolver and the $71 million term loan are now priced at Libor plus 550 bps, up from initial talk of Libor plus 475 bps, the source said.

The original issue discount on both tranches was left unchanged at 98, the source added.

GE Capital is the lead bank on the deal that is being used to fund Huntsman Gay Capital Partners' acquisition of the company from Saw Mill Capital.

Other financing is coming from $52 million of mezzanine debt that is being placed by the company/sponsor.

Turner Bros. is a provider of industrial plant maintenance services using its fleet of cranes and specialized transportation equipment.

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