American Axle up on GM agreement; Jarden lifts fee; West extends deadline; SugarHouse overfills

By Sara Rosenberg

New York, Aug. 18 - American Axle & Manufacturing Holdings Inc.'s term loan rallied during market hours following word of agreements with General Motors Co. regarding a payment and a new second-lien loan.

Also moving up quite a bit in the secondary was the Reader's Digest Association Inc.'s term loan B, with its agreement in principle on a restructuring and planned Chapter 11 filing seen as the likely driver even though the news did little to boost levels during the previous session.

There were a few updates on Tuesday regarding amendment proposals, including Jarden Corp. raising the fee it will pay to investors for consents, West Corp. once again extending its consent deadline and Michaels Stores Inc. receiving lender approval.

In other news, SugarHouse Casino's in-market deal has attracted a good amount of attention resulting in the books being oversubscribed.

American Axle jumps higher

American Axle's term loan was significantly stronger on Tuesday as the company revealed that it will get from General Motors a $110 million payment and a $100 million second-lien term loan, subject to amending its credit facility, according to traders.

Furthermore, the payment, which, among other things, cures costs associated with Motors Liquidation Co.'s bankruptcy cases and resolves outstanding commercial obligations between the parties, and second-lien loan are subject to negotiation and execution of definitive agreements.

Following the news, American Axle's existing term loan was quoted by one trader at 85½ bid, 87½ offered, up about six points on the day, and by a second trader at 84 bid, 86 offered, up from around 80½ bid, 82½ offered on Monday.

"Getting [a] loan from GM and getting [an amendment] to allow the company to receive cash from GM. Boosting pricing [on the existing loan] to Libor plus 600 basis points with a 2% floor," the first trader added.

American Axle second-lien

The proposed second-lien term loan with General Motors will be available in multiple draws, with a minimum draw size of $25 million, through Sept. 30, 2013,

The loan will be repayable at par at any time prior to maturity on Dec. 31, 2013.

Pricing on the loan will be based on Libor and there will be a 2% Libor floor.

Based upon the amount of the second-lien term loan drawn, the company will issue to General Motors five-year warrants to purchase a pro rata portion of up to 12.5% of its outstanding common stock.

In addition, the company has agreed to also issue five-year warrants to General Motors at the time the parties enter into definitive agreements to purchase up to 7.4% of its outstanding common stock.

American Axle extends waiver

Also on Tuesday, American Axle announced that it extended its credit facility waiver and amendment regarding non-compliance with covenants to Aug. 31 from Aug. 20.

Under the extension agreement, the company is required to maintain a daily minimum liquidity of $75 million.

JPMorgan is the administrative agent on the deal.

American Axle is a Detroit-based producer of driveline and drivetrain systems and related components and chassis modules for the automotive industry.

Reader's Digest gains ground

In what seemed to be a delayed reaction to some, Reader's Digest's term loan B moved higher by a couple of points in trading on the back of its Monday announcement that it expects to file for Chapter 11 as part of a restructuring agreement that it is working on with lenders, according to traders.

The term loan B was quoted by both traders on Tuesday at 40½ bid, 41½ offered. One of the traders had the loan quoted at 35 bid, 37 offered on Monday and at 37 bid, 37½ offered on Friday. The other trader had the loan quoted at 36½ bid, 38½ offered on Monday and at 33½ bid, 35½ offered on Friday.

Under the planned restructuring, which was announced Monday morning and detailed in an 8-K filing after the close, lenders will exchange a substantial portion of Reader's Digest's $1.6 billion in senior secured debt for equity. Ownership of the company will be transferred to the lender group.

The arrangement also establishes the substantive terms of the $550 million in debt that will remain on the company's balance sheet upon emergence, a 75% reduction from the current $2.2 billion in debt.

Reader's Digest financing plans

Reader's Digest's agreement in principle includes a commitment from certain members of the senior lender group to provide a $150 million new money debtor-in-possession term loan that is being led by JPMorgan.

The DIP has a term of nine months with one three-month extension and is priced at Libor plus 1,000 bps with a 3.5% Libor floor. If the extension option is exercised, pricing will move to Libor plus 1,100 bps. There is also a 200 bps unused commitment fee.

The DIP will be convertible into a three-year exit facility upon the company's emergence from bankruptcy.

The company will also get as part of its exit financing a $300 million second-lien term loan priced at Libor plus 550 bps cash plus 650 bps PIK with a 3.5% Libor floor, or Libor plus 1,200 bps cash if LTM EBITDA is greater than $180 million, and a $100 million Euro term loan priced at Libor plus 550 bps cash plus 450 bps PIK, with a 3.5% Libor floor, or Libor plus 1,000 bps cash if LTM EBITDA is greater than $160 million.

Reader's Digest is a Pleasantville, N.Y.-based media and marketing company.

Jarden changes fee

In other news, Jarden increased the fee on its amendment proposal to 15 basis points from 5 bps in the morning, while leaving the 5 p.m. ET consent deadline unchanged, according to a market source.

Under the amendment, the company is looking to extend a portion of its term loan B debt to Jan. 24, 2015 through the creation of a new term loan B-4 tranche and pricing on this extended debt would be Libor plus 325 bps with no Libor floor.

The company's existing term loan B debt is currently due in 2012. There is a B-1 that is priced at Libor plus 175 bps, a term loan B-2 that is priced at Libor plus 175 bps and a term loan B-3 that is priced at Libor plus 250 bps.

Last week, the company expressed to lenders that it is willing to upsize the term loan B-4 to $750 million from an originally proposed size of $600 million as long as half of that amount comes from term loan B-3 rollover and the other half comes from term loan B-1 and B-2 rollover.

By Tuesday afternoon, there was still no word on the final size of the B-4 tranche, the source added.

More Jarden amendment details

Along with the term loan B-4, the company asked to amend its credit facility to allow for the sale of secured notes that would be used to pay down term loan B borrowings at par.

In addition, the amendment would allow Deutsche Bank, JPMorgan and Barclays to be issuers of letter of credit.

Also, the amendment would increase the permitted receivables basket to $400 million from $250 million and the general debt basket to $150 million from $75 million.

Deutsche Bank is the lead bank on the amendment.

Jarden is a Rye, N.Y.-based consumer products company.

West revises deadline

For a second time, West pushed out the consent deadline on its amendment proposal, this time moving it to Wednesday at noon from the close of business Tuesday, according to a market source.

The deadline had originally been extended on Monday when a number of changes to the amendment proposal were announced.

Under the amendment, the company is looking to extend the maturity on $700 million of term loan borrowings until 2016 from 2013.

The extended term loan would be priced at Libor plus 387.5 bps, up from current pricing of Libor plus 237.5 bps and from initial price talk of Libor plus 362.5 bps.

Other modifications that were made to the amendment included the addition of two years of 101 soft call protection, and a springing maturity at 91 days prior to the senior notes maturity in 2014 subject to a 2.8 times net secured leverage test.

Allocations are pro rata across all rolling accounts for the term loans and there is mandatory prepayment pro rata across all tranches.

Deutsche Bank, Wells Fargo and Bank of America are the lead banks on the amendment.

West is an Omaha, Neb.-based provider of outsourced communication services.

Michaels Stores gets lender OK

Continuing on the topic of amendments, Michaels Stores received enough consents from investors to pass its amendment proposal that was launched on Aug. 11, according to a market source.

Under the amendment, the company is allowed to issue senior secured or unsecured notes and incremental term loans.

However, proceeds from any notes or new term loans must be used to repay the company's existing term loan B at par.

Deutsche Bank acted as the lead bank on the amendment.

Lenders were paid a 2½ basis point amendment fee.

Michaels is an Irving, Texas-based specialty retailer of arts, crafts, framing, floral, wall decor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator.

SugarHouse nets orders

Over on the new deal front, SugarHouse Casino's credit facility is oversubscribed and the lead banks are now working on getting the credit agreement to investors so that they can wrap the deal up and hand out allocations, according to a market source.

The hope is to complete the process by the end of this week, but it is possible that it may not wrap up till next week, the source remarked.

The $180 million credit facility (B-) consists of a $10 million revolver, a $20 million delayed-draw term loan talked at Libor plus 825 bps with a 3% Libor floor and an original issue discount of 96, and a $150 million funded term loan talked Libor plus 825 bps with a 3% Libor floor and an original issue discount of 96.

Pricing on the loan is currently anticipated to finalize in line with the original talk, the source added.

Credit Suisse and Jefferies are the lead banks on the deal that will be used to fund the construction of the SugarHouse Casino on the Delaware River in Philadelphia by HSP Gaming, LP.

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