Werner bank debt quoted between 90 and 93½ bid following bondholder call

By Sara Rosenberg

New York, Jan. 8 - Werner Holding Co.'s bank debt was quoted all over the place depending on which trader was asked, with levels being cited anywhere from 90 bid to 93½ bid following the company's bondholder conference call on Thursday.

According to one trader, the paper was seen at 90 bid, 92 offered, softer on the day. While a second trader placed the paper at 93½ bid, 95½ offered, up from an opening level of 92 bid, 93 offered. However, a third trader said "90 bid is too low and 93½ bid is too high" and placed the paper at 92 bid, 93 offered, up from an opening level of 91 bid, 93 offered.

During the bondholder conference call the company discussed why the choice was made to terminate the contract with Home Depot and enter into an exclusive agreement with Lowe's Cos. Inc.

Furthermore, company officials stated in the call that they are analyzing an operational restructuring to reduce costs to align with reduced sales volume. To meet this goal the company is looking to reduce manufacturing and distribution capacity and cut the overhead expense structure in the near term.

Toward the end of December, Werner revealed that it would stop supplying Home Depot with Werner products. The Greenville, Pa., ladder company also announced that it had entered into a long-term agreement with Lowe's under which Lowe's will be the exclusive source for Werner's climbing equipment.

Sales of all products to The Home Depot, including extension ladders, stepladders, attic ladders and assorted accessories accounted for $161.3 million or 31% of the company's total net sales in 2002 and $100.1 million or 27% of total net sales during the nine months ended Sept. 30.

In response to this news the company's bank debt plummeted to around 86 bid but then managed to dust itself off, rebounding to the 90 bid, 91 offered level. Prior to the announcement, the bank debt was quoted around 94 bid, 95 offered.

It was also revealed in late December, during a private lender call, that the company anticipated having to amend its credit facility since without Home Depot as a client EBITDA would probably fall short of the credit agreement requirement, and other financial covenants could potentially be missed as well, a market source previously told Prospect News.

"They expect to hold a meeting for the existing group in mid first quarter 2004 to go over an amendment type of deal and discuss their plans going forward. It will probably happen in February," the source had said.

Reliant cools off after run-up

Reliant Resources Inc.'s bank debt softened a little on Thursday after a strong start to the week in which the paper moved up by about two points over the course of two days.

The paper was quoted at 98¼ bid, 98¾ offered, down from "a couple of low 99 prints yesterday," according to one trader.

A second trader placed the bid slightly higher at 98½ but agreed with the 98¾ offered level. "There's a lot of it out there. It was really hot. Things cooled off a little bit," the trader said in explanation of the dip.

Reliant is a Houston-based energy and electricity company.

Oriental Trading closes

Oriental Trading Co. closed on its $110 million add-on to its credit facility consisting of a $30 million six-year first lien add-on to the company's term loan B with an interest rate of Libor plus 275 basis points and an $80 million seven-year second lien add-on (B2/B-) with an interest rate of Libor plus 600 basis points, according to a source close to the deal.

Originally, the deal consisted of a $25 million first lien add-on with an interest rate of Libor plus 300 basis points and a $75 million second lien add-on with an interest rate of Libor plus 650 basis points. However, the tranches were upsized and reverse flexed during syndication due to overwhelming demand.

On Thursday, the first lien paper was quoted at par 1/8 bid, par 3/8 offered and the second lien paper was quoted at 101¼ bid, 101¾ offered, according to a trader.

The deal allocated and broke for trading in mid December with the first lien piece quoted at par ¼ bid, par ¾ offered and the second lien piece quoted on the wide side at 101 bid, 102 offered, with bids fluctuating around 101 3/8 to 1011/2, although since allocations were so small on the second lien paper, the tranche did not trade actively on its first day in the secondary. The second lien tranche was quoted higher due to the existence of call protection on that specific paper.

BNP Paribas is the lead bank listed on the left for the first lien tranche, and Credit Suisse First Boston is the lead bank listed on the left for the second lien tranche.

Proceeds from the two add-ons are being used as part of the company's dividend recapitalization.

Oriental Trading is an Omaha, Neb., direct marketer of novelties, toys, party supplies, crafts, gift items, home décor products and garden accents.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.