NRG rallies as Exelon ups bid; Lear rises on bankruptcy plans; Fresh Del Monte allocates

By Sara Rosenberg

New York, July 2 - NRG Energy Inc.'s strip of institutional bank debt moved higher by a couple of points during Thursday's quiet, pre-holiday trading session after news emerged that Exelon Corp. increased its offer price to purchase the company.

Also, in the secondary market, Lear Corp.'s term loan gained a few more points on the back of the company's agreement with debtholders and plans to restructure through a Chapter 11 filing, and Oshkosh Corp.'s term loan B was unchanged to a touch lower after the previous day's run-up.

Meanwhile, on the new deal front, Fresh Del Monte Produce Inc.'s revolving credit facility allocated on Thursday morning with the deal wrapping up at initial terms.

NRG better on revised Exelon offer

NRG Energy's strip of institutional bank debt strengthened during market hours as Exelon announced that it increased its hostile takeover bid for the company, according to traders.

One trader had NRG's strip of term loan and letter-of-credit facility debt quoted at 96½ bid, 97¼ offered, up from 94½ bid, 95 offered and a second trader had the strip quoted at 96¼ bid, 96¾ offered, up from 94½ bid, 95½ offered.

Early Thursday morning, Exelon said that it is now offering to acquire all of the outstanding NRG common stock for 0.545 of a share of Exelon common stock per NRG share. This is a 12.4% increase over the initial exchange offer of 0.485.

Exelon explained in a news release that the primary reason for the increased offer is because about $1.5 billion of additional synergies were newly identified.

In addition, the new offer reflects the value of NRG's recent acquisition of the Reliant Energy retail business.

Exelon confident in financing

Exelon also said on Thursday that based on discussions with its outside advisors, it expects to be able to meet all financing needs associated with the transaction, including the refinancing of $4.7 billion of NRG's senior notes and other NRG debt, if necessary.

And, Exelon anticipates being able to complete the financing plans while maintaining its investment-grade ratings.

"Together, the two companies would become the first national generation company," said John Rowe, chairman and chief executive officer of Exelon, in the release. "There is no model that can do more for shareholders of both companies than an Exelon-NRG combination.

"This is our best and final offer, and we will use the time leading up to the NRG annual meeting on July 21 to communicate the value of our new offer to NRG shareholders, encouraging them to vote for nine new independent directors who can unlock that value," Rowe added.

NRG advises stockholders to wait

In response to the revised buyout proposal from Exelon, NRG advised its stockholders to take no action at this time pending the review by its board of directors.

NRG went on to say that its board of directors will carefully review the revised proposal with its advisors and determine the appropriate response promptly.

NRG is a Princeton, N.J.-based owner and operator of power generation portfolios. Exelon is a Chicago-based electric utility.

Lear still moving up

Lear's term loan was once again stronger as it continued to be spurred on by the company's recent announcement that it plans to begin a proposed restructuring in the near future through a bankruptcy filing, according to a trader.

The term loan was quoted at 77 bid, 79 offered, up from 74½ bid, 76½ offered, the trader said.

On Wednesday, Lear revealed that it is going to file for bankruptcy as a result of the unprecedented economic downturn and corresponding decline in global automobile production volumes, and the 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 getting DIP

As was previously reported, Lear has received commitments for a $500 million debtor-in-possession financing facility that is being led by JPMorgan and Citigroup.

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 did not make the 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.

Oshkosh flat to softer

Oshkosh's term loan B was said to be unchanged on the day by some, while others thought it was slightly lower on some profit taking after a more than two-point rally on Wednesday.

The term loan B was quoted by two traders at 94½ bid, 95½ offered on Thursday. However, one trader said that it was down from 94¾ bid, 95¾ offered on Wednesday, while the other trader said it was exactly in line with previous levels.

On Wednesday, the loan had moved up from around 92 bid, 93 offered on news that the company won a billion dollar-plus contract from the U.S. Department of Defense.

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.

Fresh Del Monte allocates

Over in the primary, allocations went out on Thursday morning on Fresh Del Monte's $500 million 31/2-year revolving credit facility, according to a market source.

The deal was very oversubscribed as of the June 30 commitment deadline.

Terms on the revolver were left unchanged since launch, including pricing of Libor plus 300 basis points with a 62.5 bps unused fee.

Rabobank is the lead bank on the deal that will be used to refinance the company's existing $600 million revolver due Nov. 10, 2009 and term loan due May 10, 2011.

At March 27, the company had about $330 million outstanding under the revolver and $138.8 million outstanding under the term loan.

Closing on the new deal is expected to take place during the week of July 13.

Fresh Del Monte is a Cayman Islands-based producer, transporter, marketer and distributor of fresh and fresh-cut fruit and vegetables.

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