Lear pulled as buyout fails, old deal starts trading again; New World Gaming breaks, LCDX weaker

By Sara Rosenberg

New York, July 16 - Lear Corp.'s multi-billion dollar credit facility has been taken out of the market as the buyout of the company did not get stockholder approval, and with the removal of this deal, the old Lear credit facility began trading again.

In other news, New World Gaming Partners Ltd.'s credit facility freed for trading, with levels on the first- and second-lien term loans quoted atop par, and LCDX was softer as buyers stepped into the market.

Lear's $3.6 billion senior secured credit facility (B2/B) has been removed from the market as the buyout of the company by American Real Estate Partners LP was terminated due to stockholders not getting on board with the deal, according to a market source.

The credit facility consisted of a $1 billion five-year revolver, with a 50 basis point commitment fee, and a $2.6 billion seven-year term loan B priced at Libor plus 275 bps.

During syndication, pricing on the term loan B was flexed up twice - first from Libor plus 225 bps to Libor plus 250 bps, and then from Libor plus 250 bps to Libor plus 275 bps.

The term loan B had been sold to investors at an original issue discount of 991/2, another feature that was added during syndication, and has actually been trading since June 5. However, now that the deal is gone, all those trading tickets will be ripped up, the source added.

Under the failed acquisition agreement, American Real Estate Partners was going to pay Lear stockholders $37.25 per share, after revising the purchase price the other week from $36 per share in an attempt to get approval.

Bank of America acted as the lead arranger and bookrunner on the deal.

Lear is a Southfield, Mich.-based supplier of automotive seating, electronics and electrical distribution systems. American Real Estate Partners is a New York-based diversified holding company engaged in a variety of businesses and an affiliate of Carl C. Icahn.

Lear existing facility trades again

As a result of Lear's new credit facility being eliminated, the company's old credit facility started trading in the secondary market once again and was extremely busy after not seeing any activity for quite some time, according to traders.

The revolver was quoted at 96 bid, 97 offered, the traders said.

And, the term loan B was quoted at 99¾ bid, par ¼ offered, the traders added.

New World frees to trade

In more trading news, New World Gaming's credit facility allocated and broke for trading on Monday, with the strip of funded and delayed-draw first-lien term loan debt quoted at par bid, par ¼ offered and the second-lien term loan quoted at par 1/8 bid, par 5/8 offered, according to a market source.

The C$575 million first-lien term loan B (Ba3/B+) and the C$115 million delayed-draw term loan (Ba3/B+) are both priced at Libor plus 250 bps, and the C$400 million second-lien term loan (Caa1/CCC+) is priced at Libor plus 550 bps.

The delayed-draw term loan has a 50 bps undrawn fee that increases to 100 bps after six months if utilization is less than 50%.

The second-lien term loan carries call premiums of 102 in year one and 101 in year two.

At the end of last week, pricing on the funded and delayed-draw first-lien term loans was increased from original talk at launch of Libor plus 225 bps, and pricing on the second-lien was increased from original talk of Libor plus 500 bps.

New World Gaming's C$1.115 billion credit facility also includes a C$25 million revolver (Ba3/B+) that is priced at Libor plus 250 bps, with a 50 bps undrawn fee.

During syndication, pricing on the revolver was also flexed up from original talk of Libor plus 225 bps.

Bear Stearns and Royal Bank of Canada are the lead banks on the deal, with Bear Stearns the left lead and administrative agent.

New World Gaming, a joint venture owned by Publishing and Broadcasting Ltd. and Macquarie Bank Ltd., will use the credit facility to help fund the acquisition of Gateway Casinos Income Fund at a price of C$25.26 per unit in cash and Gateway's 5.35% convertible debentures. New World Gaming will also acquire the assets of Gateway Casinos Inc. These transactions have an enterprise value of C$1.37 billion.

Gateway Casinos is a Burnaby, B.C., casino operator. The company owns seven casinos in British Columbia and two in Alberta, with two under construction in British Columbia that will replace two existing facilities.

LCDX lower

LCDX was lower on a day-over-day basis on Monday in what was described as a "weird" session, according to traders.

The index went out at 96.60 bid, 96.80 offered, down from 97.10 bid, 97.20 offered on Friday, traders said.

However, early in the day LCDX got as high as 97½ bid before coming back in, traders remarked.

As for the cash market, that was a touch softer as well, with levels coming in by the end of the day by about an eighth to a quarter of a point, after opening up on Monday tighter and stronger.

"Equities trailed off a bit at the end of the day and cash names were off, but there was really no reason for the market to be down. Just sellers stepping in," one trader added.

MTC retranches

Meanwhile, back in the primary, MTC Holdings reworked the structure of its credit facility by increasing the first-lien term loan and eliminating the second-lien term loan, according to a market source.

The seven-year first-lien term loan is now sized at $575 million, up from $525 million, while pricing was left unchanged at an initial rate of Libor plus 185 bps, the source said.

On the flip side, the $50 million 71/2-year second-lien term loan that was being talked at Libor plus 400 bps was removed from the capital structure, the source added.

MTC's $625 million senior credit facility also includes a $50 million seven-year revolver with an initial rate of Libor plus 185 bps.

The revolver and first-lien term loan pricing will be in effect for three months, after which it will be tied to a leverage-based grid.

RBS Securities is the lead arranger and bookrunner on the deal.

Proceeds from the credit facility, along with $305.9 million of equity, will be used to help fund AIG Highstar Capital's acquisition of the company.

MTC is a San Francisco-based independent terminal operator.

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