Georgia-Pacific tweaks amendment; LNR tendering for some term debt; BCE mega-deal canceled

By Sara Rosenberg

New York, Dec. 11 - Georgia-Pacific Corp. revised its amendment proposal on Thursday morning, offering lenders a bump in pricing and fine tuning the leverage covenant request, and following this news, the company's term loan B traded higher.

Also in trading, General Motors Corp. and Ford Motor Co. saw levels on their term loans slide lower, and LCDX 10 and the cash market in general weakened with equities.

In other news, LNR Property Corp. is currently tendering for a portion of its term loan A and/or term loan B debt after finally getting its buyback amendment approved earlier this week.

Over in new deal happenings, BCE Inc.'s gigantic proposed credit facility has gone away as the company's buyout agreement was terminated since solvency tests were unable to be met.

Georgia-Pacific modifies amendment

Georgia-Pacific came out with some changes to its amendment request, now offering lenders an increase in pricing and an adjustment to the total leverage covenant, according to a market source.

With the revisions, lenders would get pricing of Libor plus 200 basis points on the company's revolver, term loan A and term loan B - up from Libor plus 150 bps, the source said. Previously, no increase in pricing was being offered.

In addition, the leverage covenant would now be 5.25 times in 2008 and 2009, but would go to 5.0 times in 2010. By comparison, under the original proposal, the leverage covenant was going to be 5.25 times all the way through 2010. Currently the covenant is at 5.25 times, but without the amendment, it would move to 4.5 times in 2009 and 4.25 times in 2010.

As before, the company is still offering to repay $400 million of its term loan B and $100 million of its term loan A, and lenders would still get a 100 bps amendment fee.

The end of day Thursday consent deadline was left unchanged.

Citigroup is leading the amendment process.

Georgia-Pacific trades up

Georgia-Pacific's term loan B headed higher in trading on Thursday after the modifications to the amendment were announced, according to traders.

The term loan B was quoted at 77¼ bid, 78¾ offered, up from Wednesday's levels of 76¼ bid, 77¼ offered, traders said.

Georgia-Pacific is an Atlanta-based manufacturer and marketer of tissue, packaging, paper, building products and related chemicals.

Simmons doubts

Meanwhile, the chances of Simmons Bedding Co. don't appear too rosy, said a high yield portfolio manager who is watching the current spate of restructuring deals - even though a forbearance agreement with the senior secured lenders was extended to March 31, 2009.

"The bank loan lenders say they won't accept anything except the sponsors putting in equity," the buy-sider said.

Thomas H. Lee Partners acquired Simmons for $1.1 billion in 2003.

Word is the lenders turned down an amendment deal for Libor plus 800 basis points, with 200 bps up front, the buy-sider said.

"So far the bank loan lenders are saying 'No.'

"You're going to see a lot more of this kind of thing as we move into next year."

GM, Ford dip

General Motors and Ford saw their term loan levels come in during trading on talk that the $14 billion government bailout bill has stalled, according to a trader.

General Motors, a Detroit-based automaker, saw its term loan quoted at 42 bid, 46 offered, down from 44 bid, 48 offered, the trader remarked.

And, Ford, a Dearborn, Mich.-based automaker, saw its term loan quoted at 37½ bid, 40½ offered, down from 41 bid, 43 offered, the trader continued.

"There's a lot of uncertainty and the Street doesn't like uncertainty," the trader added.

As was previously reported, General Motors, Ford and Chrysler LLC are all looking for access to government money, with General Motors and Chrysler seen as being in the most immediate danger of needing to file for bankruptcy if that help isn't obtained in time.

LCDX, cash soften

In more trading happenings, LCDX 10 and the overall cash market were lower during the trading session as stocks fell, according to a trader.

The index went out around 73.10 bid, 73.40 offered, down from 74.10 bid, 74.60 offered, the trader said.

And, cash in general was down anywhere from a half a point to a point, the trader added.

Nasdaq closed down 57.60 points, or 3.68%, Dow Jones Industrial Average closed down 196.33 points, or 2.24%, S&P 500 closed down 25.65 points, or 2.85%, and NYSE closed down 126.34 points, or 2.24%.

LNR tenders for loans

LNR Property is tendering for up to $50 million of its term loan A and/or term loan B debt and is offering to pay lenders somewhere in the range of 48 to 53 for the paper, according to a market source.

The tender offer came on the heels of the company finally getting its buyback amendment approved - after two previously unsuccessful attempts - at the start of this week.

Under the amendment, the company can repurchase up to $400 million in total of term loan A and/or term loan B debt from lenders at a price that is below par.

Also, as part of the amendment, the company reduced the size of its revolving credit facility to $150 million from $350 million.

LNR amendment held back by EBITDA clause

Originally, the LNR amendment proposal was declined by investors with an EBITDA provision blamed for the failure, the source said.

Under the initial amendment, the company wanted to use gains from the loan repurchases towards the EBITDA calculation when determining restricted payments.

Once this clause was removed from the amendment, lenders gave their consents, the source added.

LNR is a Miami Beach, Fla.-based real estate investment and management company.

BCE deal dies

Switching to the primary market, BCE's enormous credit facility is no longer happening since the sale of the company has been canceled as a result of it being unable to deliver on the Thursday scheduled closing date an opinion from KPMG that it would meet the solvency tests in the definitive agreement, which is a condition to closing, according to a news release.

"The banks observe that the solvency opinion condition in the BCE acquisition agreement has not been met and that, as a result, the BCE acquisition agreement has been terminated. As a result of the termination of the acquisition agreement, the banks' obligations under the signed financing documents terminate today," the news release said.

As outlined last year in filings with the Securities and Exchange Commission, BCE's leveraged buyout was expected to be funded with a C$23.05 billion credit facility and a C$11.3 billion bridge loan to back high-yield offerings.

The credit facility was going to consist of a C$2 billion six-year revolver, a C$4.2 billion six-year term loan A, a C$16.5 billion seven-year term loan B and a C$350 million one-year delayed-draw term loan.

Citigroup, Deutsche Bank, RBS Securities and TD Securities were going to act as the lead banks on the debt.

BCE buyout was worth C$51.7 billion

Last summer, BCE agreed to be acquired by Teachers Private Capital, Providence Equity Partners Inc., Madison Dearborn Partners LLC and Merrill Lynch Global Private Equity for an offer price of C$42.75 per common share and all preferred shares at various prices ranging from C$25.25 to C$25.87.

The all-cash deal was valued at C$51.7 billion, including C$16.9 billion of debt, preferred equity and minority interests.

As a result of the termination of the agreement, BCE is demanding payment of the $1.2-billion break-up fee from the purchasers. The purchasers, however, have taken the position that they are not obligated to pay the fee.

According to BCE, all closing conditions were satisfied, other than the solvency opinion, a condition to closing that was to be satisfied by its nature at the effective time, and that under such circumstances, the agreement provides that the break up fee will be paid.

BCE is a Montreal-based communications company that provides telephone, internet, television and information services.

Paul A. Harris contributed to this report

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