Alltel rallies on buyout buzz; Western Refining up again; Lear bid dips; MonaVie sets talk

By Sara Rosenberg

New York, June 4 - Alltel Communications Inc.'s bank debt skyrocketed on Wednesday on chatter that the company may be bought by Verizon Communications Inc., Western Refining Inc.'s term loan continued to rise on its recently announced amendment proposal and Lear Corp. saw the bid on its term loan inch lower after the company cut its sales guidance.

Moving to the primary, MonaVie came out with price talk on its credit facility as the deal was launched during market hours and O'Reilly Automotive Inc.'s revolver has reached full subscription levels.

Alltel's bank debt jumped up by a couple of points in trading after a CNBC story came out saying that Verizon is considering acquiring the company, according to a trader.

The term loan B-1 ended the day at 96¾ bid, 97½ offered, up from the 93¼ bid, 93¾ offered levels that were seen prior to the news on Wednesday, and the 93 3/8 bid, 93 7/8 offered levels that were seen at the close on Tuesday, the trader said. The paper reached a high of 97 3/8 bid, 98 1/8 offered post news before coming in a bit by the close.

The term loan B-2 ended the day at 97 1/8 bid, 97 5/8 offered, after reaching a high of 97 3/8 bid, 98 1/8 offered, the trader continued. The debt was up from the 93 3/8 bid, 93 7/8 offered levels that were seen prior to the news on Wednesday, and the 93¼ bid, 93¾ offered levels that were seen at the close on Tuesday.

Lastly, the term loan B-3 ended the day at 97½ bid, 98½ offered, after reaching a high of 98 bid, 99 offered, the trader remarked. This tranche was quoted at 93 5/8 bid, 94 1/8 offered prior to the news on Wednesday and at 93¾ bid, 94¼ offered at the close on Tuesday.

The trader explained that the term loan B-3 traded the highest on Wednesday because, if Alltel is bought, this debt would be taken out at 101. The term loan B-1 and B-2 would be taken out at par in a buyout situation.

As for why the debt came in off its highs by the end of the day, the trader said, "People sort of overshot to start off. It's been extremely volatile.

"Around the time that the BCE news came out, this rumor surfaced but it had no verification. This had been sort of the end goal all along, but people were thinking it was like five years out," the trader added.

According to the CNBC report, Verizon is in talks to purchase Alltel for about $27 billion.

Late last year, Alltel was purchased by TPG Capital and GS Capital Partners for $71.50 per share in cash, in a transaction that was valued at $27.5 billion.

Alltel is a Little Rock, Ark., provider of wireless voice and data communications services. Verizon is a New York-based provider of communication services.

Western Refining gains more ground

Western Refining's term loan traded higher once again as investors continued to react to the company's amendment proposal, according to a trader.

The term loan was quoted at 94¾ bid, 95¼ offered, up from Tuesday's levels of 93¼ bid, 93¾ offered, and from Monday's levels of 89½ bid, 90½ offered, the trader said, adding, however, that volume was lighter in the name on Wednesday when compared to the previous session.

On Tuesday, Western Refining held a conference call to launch an amendment that would result in juicier terms and consent fees for lenders in exchange for covenant revisions.

Under the amendment, the company would raise pricing to Libor plus 375 basis points from Libor plus 175 bps, add a 3.25% Libor floor and pay lenders a total of 100 bps for consents - half of which would be paid at the end of the second quarter and half of which would be paid at the end of the third quarter.

In return, the company is looking to get the leverage covenant waived for the second quarter, replaced by a minimum-EBITDA requirement in the third and fourth quarters, and loosened in 2009.

The company also wants to upsize its revolver to $1 billion from $800 million.

Bank of America is leading the amendment.

Western Refining is an El Paso, Texas-based independent crude oil refiner and marketer of refined products.

Lear bid lower

Lear's term loan saw a weakening on the bid side after the company revised its 2008 financial outlook based on lower North American vehicle production and increased commodity costs, according to a trader.

The term loan was quoted at 93½ bid, 94½ offered, compared to Tuesday's levels of 93¾ bid, 94½ offered, the trader said.

On Wednesday morning, Lear announced that it lowered its 2008 forecast for North American industry production to about 13.8 million vehicles from about 14.1 million vehicles.

As a result of the lower production forecast and a continued increase in raw material costs, the company changed its sales outlook for 2008 to about $15.3 billion from the previous outlook of $15.5 billion.

In addition, guidance for income before interest, other expense, income taxes, restructuring costs and other special items was reduced to a range of $600 million to $640 million from the previous range of $660 million to $700 million.

Lear also increased its estimated restructuring investment for 2008 to about $125 million and revised the outlook for full-year free cash flow to about $200 million.

The company said that it is continuing to evaluate and aggressively implement cost reductions and restructuring actions to mitigate the impact of lower production volumes and rising commodity prices.

"Industry conditions in North America have continued to be challenging, with the lowest expected production volumes since the early 1990s and unprecedented increases in raw material and energy costs," said Bob Rossiter, chairman, president and chief executive officer, in a news release.

"Like our customers, we are continuing to aggressively realign our capacity and implement structural cost reductions to improve our longer-term competitiveness. We are also expanding our operations outside North America, which represented about 55% of our net sales in 2007."

Following this news, Standard & Poor's said that Lear's changes to 2008 guidance have no immediate impact on its ratings or outlook since the ratings and outlook already adequately reflect the challenging operating environment for auto suppliers.

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

MonaVie talk surfaces

Over in primary news, MonaVie held a bank meeting at 2 p.m. ET in New York on Wednesday to kick off syndication on its proposed $135 million credit facility, and in connection with the launch, price talk was announced, according to a market source.

Both the $10 million revolver and the $125 million term loan A were presented to lenders with talk of Libor plus 500 bps to 550 bps, the source said.

In addition, the facility contains a Libor floor and is being offered to investors at an original issue discount, the source remarked.

Jefferies is the lead bank on the deal that will be used for a dividend recapitalization.

Total leverage is 0.7 times.

MonaVie is a health drink with acai berries.

O'Reilly subscribed

O'Reilly Automotive's $1.2 billion asset-based revolving credit facility is currently fully syndicated at initial talk, according to a market source, who said that the deal is expected to close in July.

The facility consists of a $125 million first-in, last-out tranche that is priced at Libor plus 375 bps and a $1.075 billion conforming borrowing base tranche that is priced at Libor plus 250 bps.

Bank of America and Lehman Brothers are the lead banks on the deal, with Bank of America the left lead.

Proceeds from the revolver will be used to refinance existing debt, fund the cash portion of the acquisition of CSK Auto Corp. and provide liquidity.

Under the transaction agreement, O'Reilly will acquire all of the outstanding common shares of Phoenix-based CSK in an exchange offer in a transaction valued at about $1 billion, including about $500 million of debt.

CSK shareholders will receive $12.00 in value per share, including $11.00 of O'Reilly common stock plus $1.00 in cash.

Following the close of the transaction, Springfield, Mo.-based O'Reilly will be the third largest national auto parts retailer with about 3,200 stores located across the United States. The combined company had pro forma revenues of $4.4 billion in 2007.

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