Lear higher, more active; Regal Cinemas steady; Chester Downs unofficial guidance circulates

By Sara Rosenberg

New York, July 10 - Lear Corp.'s term loan was a little bit stronger during Friday's trading session as investors have had time to look over and digest the company's bankruptcy plan, which was filed earlier in the week.

Also in trading, Regal Cinemas Corp.'s term loan B was firm on the back of the company pricing an upsized bond offering that will be used to repay bank debt.

In other news, Chester Downs and Marina LLC saw some unofficial pricing indications on its term loan begin to make its way around the marketplace. Official talk on the deal, however, has still not been announced.

Lear trades up

Lear's term loan headed to higher ground in trading now that people have had a couple of days to analyze the company's Chapter 11 filing that was formally announced this past Tuesday, according to a trader.

The term loan was quoted at 70½ bid, 71½ offered, up from 70 bid, 71 offered during the previous session, the trader said.

"Firming and getting a little more active now that there's no more public/private issue because they filed for bankruptcy. Evens the playing field," the trader added.

Before actually filing for bankruptcy, the company had revealed that it reached an agreement in principle with a steering committee of its secured lenders and bondholders regarding the restructuring of about $2.3 billion of debt outstanding under its amended and restated credit and guarantee agreement, and about $1.3 billion of debt outstanding under its 8.5% senior notes due 2013, 5.75% senior notes due 2014, 8.75% senior notes due 2016 and zero-coupon convertible senior notes due 2022.

Then, on Tuesday, the company said that it received the support it was seeking from additional bank lenders and bondholders to move forward with the plan and, therefore, filed for Chapter 11.

As of the filing date, about 68% in principal amount of the company's secured lenders and more than 50% in principal amount of its bondholders had entered into agreements supporting the plan.

Lear plan details

Under the bankruptcy plan, Lear would have a new capital structure upon exiting that would consist of an up to $500 million exit financing first-lien term loan, a $600 million second-lien term loan and $500 million of series A convertible preferred stock.

The three-year exit financing first-lien term loan will have a 3.5% Libor floor and be priced at Libor plus 1,000 basis points for the first 18 months, Libor plus 1,100 bps for the following 12 months and Libor plus 1,200 bps thereafter.

This exit facility would actually be the company's $500 million debtor-in-possession term loan, which would convert into the exit loan upon Lear's emergence from bankruptcy.

The one-year DIP term loan, which can be extended to 15 months, is priced at Libor plus 1,000 basis points, with a 3.5% Libor floor.

JPMorgan and Citigroup acted as the joint lead arrangers and joint bookrunners on the DIP that will be used for working capital and other general corporate needs.

Lear also issuing stock

Lear's plan of reorganization also provides that the reorganized company would have a single class of common stock, including sufficient shares to provide for management equity grants, would issue to the lenders of warrants to purchase common stock with a value of up to $25 million and would issue to the holders of senior notes and certain other general unsecured claims of warrants to purchase 15% of the new common stock.

Specifically, senior credit facility claims would receive its pro rata share of the new second-lien term loan, the convertible preferred stock and about 26% of the new common stock.

Senior notes and other unsecured claims would receive about 46% of the new common stock and warrants to purchase 15% of the new common stock.

And, existing equity claims would have no recovery.

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

Regal Cinemas holds firm

Regal Cinemas' term loan B was pretty much flat on the day after running up by a few points on Thursday when the company came to market with a bond deal that will be used to repay bank debt, according to a trader.

The term loan B was quoted at 98½ bid, 99½ offered, the trader said, adding the during the previous day's activity, the bid was hovering between the 98½ to 98¾ context, with 98½ appearing to be the more "real" market.

Before the bond deal was announced, the term loan B had been quoted at 97½ bid, 98½ offered.

The $400 million of 8 5/8% senior notes priced on Thursday at 97.561 to yield 9%. This deal had been upsized from an originally announced size of $300 million.

Regal Cinemas is a subsidiary of Regal Entertainment Group, a Knoxville, Tenn.-based motion picture exhibitor.

Chester Downs pricing indications

Over on the primary front, Chester Downs and Marina has yet to release price talk on its proposed $230 million seven-year secured term loan (B3/B), which was launched to investors this past Wednesday, but some are hearing unofficial chatter on potential pricing, according to a fund manager.

The fund manager said that he has seen indications that the loan might carry a yield in the 12% to 12.5% area, with the original issue discount somewhere in the low 90s and the Libor floor not yet known.

Citigroup, Bank of America, JPMorgan and Jefferies are the joint leads on the term loan, with Citi the left lead.

The deal includes an incurrence-based high-yield covenant package.

Chester Downs deadline soon

Chester Downs and Marina is asking lenders to get their commitments in towards the new term loan on July 16.

Proceeds from the loan will be used to refinance existing debt and purchase partnership interests.

Amortization is based on the company's total leverage ratio. If leverage is 3.25 to 1.00, then amortization is 7.5% per annum. If leverage is less than or equal to 3.25 to 1.00 and greater than 2.50 to 1.00, then amortization is 3.5% per annum. And, if leverage is less than or equal to 2.50 to 1.00, then amortization is 1.0% per annum.

Security is substantially all of the assets of the company.

Chester Downs and Marina is the operator of a racetrack casino in Chester, Pa.

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