Oshkosh up on defense contract; NewPage falls with downgrade; Lear rises; Casella tweaks size

By Sara Rosenberg

New York, July 1 - Oshkosh Corp.'s term loan B gained some ground during Wednesday's trading session as the company received a fairly large delivery order from the U.S. Department of Defense, and NewPage Corp.'s term loan B weakened after the company's ratings were lowered.

Also in the secondary, Lear Corp.'s term loan rallied on news that the company is getting ready to file for Chapter 11, Ford Motor Co.'s term loan was better with June sales results and the LCDX 12 index was once again higher.

In other news, Casella Waste Systems Inc. upsized its term loan after it decreased its revolver and its bond offering, with the overall affect being that the total credit facility size ended up higher than originally anticipated.

Oshkosh B loan trades up

Oshkosh's term loan B headed higher during market hours as news emerged that the company won a billion dollar plus contract from the U.S. Department of Defense, according to traders.

The term loan B was quoted by two traders at 94½ bid, 95½ offered towards the end of the day. By comparison, on Tuesday, one of the traders had the term loan B at 92 bid, 93 offered and the other trader had the term loan B at 92¼ bid, 93 offered.

Under the contract, Oshkosh received an initial delivery order from the U.S. Army Tank-automotive and Armaments Command Life Cycle Management Command for 2,244 MRAP All-Terrain Vehicles valued at $1.05 billion.

Oshkosh is an Oshkosh, Wis.-based designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies.

NewPage slides with ratings

NewPage's term loan B softened on Wednesday on the back of the company's ratings being downgraded by Moody's Investors Service, according to a trader.

The term loan B was quoted at 84 bid, 85½ offered, down from 86½ bid, 87½ offered, the trader said.

On Tuesday night, Moody's announced that it lowered the corporate family rating of NewPage to Caa1 from B2 and senior secured credit facility rating to B2 from Ba3. The outlook is negative.

Moody's said that the downgrade reflects the company's weak operating and financial performance, significant debt load and expectations that it will continue to face weak demand and pricing for its principal products, coated paper.

The company's SGL-4 liquidity rating, which was left unchanged, indicates that NewPage has weak liquidity reflecting near-term covenant compliance challenges as well as Moody's expectations of no free cash flow generation over the next four quarters.

NewPage is a Miamisburg, Ohio-based coated paper manufacturer.

Lear higher on bankruptcy talk

Lear's term loan jumped up by a couple of points on Wednesday as the company revealed that it reached an agreement in principle with representatives for its secured lenders and bondholders, and that it plans to begin the proposed restructuring in the near future through a bankruptcy filing, according to a trader.

The term loan was quoted at 73½ bid, 74½ offered, up from 67½ bid, 68½ offered, the trader said.

Lear said that it is going to file for bankruptcy as a result of the unprecedented economic downturn and corresponding decline in global automobile production volumes, as well as continued difficult conditions in credit markets generally.

Under the agreement in principle, subject to certain limited exceptions, Lear's trade creditors will be paid in full.

The restructuring plan has the support of a majority of the members of a steering committee of the company's secured lenders and a steering committee of bondholders acting on behalf of an ad hoc group of bondholders. The company is seeking support for its restructuring plan from additional lenders and bondholders.

Lear plans new DIP

Lear also said on Wednesday that it received commitments for a $500 million debtor-in-possession financing facility.

JPMorgan and Citigroup are the lead banks on the deal.

The DIP financing will convert into exit financing with a three-year term upon the company's emergence from Chapter 11.

As a result of the pending reorganization plan, Lear has not made principal and interest payments due under its senior credit facility on June 30.

In addition, the company anticipates being in default under its 8.50% senior notes due in 2013 and 8.75% senior notes due in 2016, as the 30-day grace period applicable to the semiannual interest payment due on these notes will expire on July 2.

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

Ford better with numbers

Ford's term loan posted some gains in trading as the company announced June sales results that, although showed a year-over-year decline, were better than expected, and the company even said that it increased its market share during the month, according to a trader.

The Dearborn, Mich.-based automaker's term loan was quoted at 74 bid, 75 offered, compared to 72¾ bid, 73½ offered, the trader said.

For the month of June, total Ford sales were 155,195, down 10.9% from 174,091 in June 2008.

Total car sales for the month were 54,040, down 17% from 65,109 last year.

And, total truck sales for the month were 94,113, down 7.7% from 101,981 in the previous year.

"We're making steady progress and are firmly focused on our plan to build a sustainable and exciting Ford," said Jim Farley, Ford group vice president, marketing and communications, in a news release.

"We remain grounded, however, given challenging industry and economic conditions."

LCDX strengthens

The LCDX 12 index moved higher on Wednesday as stocks were better as well, according to a trader.

The index was quoted at 88.20 bid, 88.50 offered, up from 87.40 bid, 87.70 offered, the trader said.

Meanwhile, Nasdaq was up 10.68 points, or 0.58%, Dow Jones Industrial Average was up 57.06 points, or 0.68%, S&P 500 was up 4.01 points, or 0.44%, and NYSE was up 48.86 points, or 0.83%.

Casella modifies credit facility

Over on the new deal front, Casella Waste Systems reworked its term loan and revolver tranche sizes and sold fewer bonds than was initially expected, market sources told Prospect News.

The term loan is now sized at $130 million, up from $100 million, sources said.

And the revolver is now sized at $177.5 million, including letters of credit, down from $180 million, according to an 8-K filed with the Securities and Exchange Commission.

In addition, the company downsized its bond offering to $180 million from $205 million, and the 11% notes priced on Wednesday at 97.212 to yield 11¾%.

Price talk on the upsized term loan was left unchanged at Libor plus 500 basis points with a 2% Libor floor and an original issue discount of 941/2, and price talk on the revolver was also left unchanged at Libor plus 450 bps with a 2% Libor floor, sources continued.

"Wouldn't be surprised if that tightened as it is very close to the yield the second-lien notes came at," one source added.

Casella led by two

Casella's now $307.5 million, up from $280 million, senior secured first-lien credit facility (Ba2/BB) is being led by Bank of America and Comerica, with Bank of America the left lead.

Proceeds from the new facility, along with proceeds from second-lien notes offering, will be used to repay the company's existing credit facility.

There is a $42.5 million accordion feature under the credit facility.

Completion of the notes is conditioned on completion of the new credit facility. Closing is expected to take place on July 9.

Casella is a Rutland, Vt.-based solid waste, recycling and resource management services company.

Iowa Telecommunications closes

Iowa Telecommunications Services Inc. closed on its new $75 million term loan due Nov. 23, 2011 on Wednesday, according to an 8-K filed with the SEC.

Commission.

The term loan is priced at Libor plus 200 bps.

Rural Telephone Finance Cooperative acted as the arranger on the deal.

Proceeds were used to fund the $82 million acquisition of Sherburne Tele Systems Inc., a Big Lake, Minn.-based telecommunications company.

Iowa Telecommunications is a Newton, Iowa-based telecommunications service provider.

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