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  • Syndicated Loan Market Commentary 08/03/2010 0 comments
    Aug 4, 2010 2:18 PM
    Overnight Asia held on and continued to rally gaining 1% as fears were eased yesterday over the sovereign debt crisis after both HSBC and BNP reported solid earnings. Europe ended lower after dismal economic data came out of the US that raised doubts on the recovery. Spending, housing and factory orders all came in under expectations and the bears started growling; the flight to safety was back on. Also, P&G’s earnings disappointed the street and showed that the consumer is still pinching pennies and buying less name brand goods. So, sentiment was hurt again and equities closed lower; the S&P finished at 1120.46 (-0.48%) and the Dow closed at 10,636.38 (0.36%).
     
    The loan market was pretty uneventful today as we continue to be in the shadow of the high yield market; which again was on fire with 7 new deals coming to the market. Flow names were active today as liquid issues continue to be attractive as fears over the U.S. recovery came back into question. Tribune’s term loan was active today following an investor call and moved lower while creditors scramble to come up with a new plan. Overall in the secondary we saw decent two way flows but the results of the day were mixed with loans trading up and down a quarter point.  Indices were however, quite active today, and big volume was seen in both the HYCDX and the LCDX. The HYCDX 14 closed unch’d, 98 ½ - 98 3/4 and the LCDX 14 fell an eighth to 96 7/8 – 97 1/8.  
     
    The outlook on the loan market should remain positive despite signs of a cooling in manufacturing. We got a big run up from inventories getting restocked, but the issue now is that the goods are not flying off the shelves. We are going to need to see a pick in consumer spending before we get another cycle of fundamental improvement. So, keep a close eye on the jobs market; that will be the catalyst. However, there is no need to call for the double dip; we will probably get another round of stimulus to help make the economic data look better. But, the loan market should continue to see prices driven higher as technical’s will be playing a bigger role.
     
     
    News
    • Sanofi-Aventis chief Chris Viehbacher should avoid paying much more than about $70 per share, or a total of $19 billion, to land U.S. biotech group Genzyme, shareholders in the French group say. Two shareholders told Reuters they would not be happy with the drugmaker paying much over $70 a share, or around $18.7 billion, while a third said he was concerned about some valuations being put on Genzyme, which run to over $80 a share. Viehbacher, who took over 20 months ago, is shaking up the Paris-based firm by cutting costs and diversifying operations and buying Genzyme would be the biggest move he has made so far in his hunt to buy new sales to offset revenues lost as a result of patent expirations.
    • General Growth Properties Inc today announced it has filed an amended plan of reorganization, disclosure statement and amended investment agreements with the United States Bankruptcy Court for the Southern District of New York. The company said it does not expect to need the previously contemplated term loan because it plans to reinstate $1.3 billion of Rouse Bonds due 2012 and 2013. The reinstatement of the notes will in part satisfy GGP's financing needs upon emergence from bankruptcy.
    • ArvinMeritor Inc today announced plans to sell its body systems business for a purchase price of approximately $35 million. The divesture will substantially complete the sale of its light vehicle systems business.
    • Late yesterday Lions Gate Entertainment Corp announced its board rejects Carl Icahn's unsolicited tender offer to purchase up to all of the issued and outstanding common shares for $6.50 per share.
    • YRC Worldwide's revolver rose to 61.25 bid from the 59 context this morning after the company announced it has entered into an amendment on its credit agreement that converts $150 million of its outstanding revolver borrowings to term loans. Also, as per the amendment, the company would retain 100% of the estimated $30 million of net proceeds from initial closing of the sale of YRC Logistics and the company's revolver would be reduced by 50% of those proceeds. Then, the company would receive 75%, rather than 25%, of the next $20 million of net cash proceeds from sale and leaseback transactions and the company's revolver would be reduced by 50% of those proceeds. In addition, the company would receive 25% of subsequent proceeds from the sale of real estate and sale and leaseback transactions and the company's revolver and term loan under the credit agreement would be ratably reduced by 75% of such proceeds. Adjusted EBITDA now includes a new add-back for charges, expense and losses from permitted dispositions and discontinued operations. For the second quarter of 2010 the company's adjusted EBITDA under this amendment was $40 million as compared to the covenant requirement of $5 million.
    • Tribune Co's loans fell more than a point today after a lenders call that took place this morning. The term loan B declined to 62.5-63.5, the term loan X is 61.25-62.25, the incremental loan is currently 55-57, the delayed-draw term loan is 62-63, and the revolver is 64.5-66. No details regarding the subject of the call were forthcoming.
     
    Earnings
    • Dean Foods' 2Q10 adjusted EBITDA fell to $207 million, down 16%, from $248 million a year ago. Sales increased 10.2% to $2.96 billion from the year earlier period.
    • Hawker Beechcraft today reported 2Q10 revenue of $639.3 million, down 21.7% from the year earlier period. Adjusted EBITDA was $15.3 million, compared to $105 million a year ago. The company has $307 million in cash and $236.5 million available under its revolver.
     
    New Issue
    • Warner Chilcott's $2.25 billion debt financing consists of a $500 million term loan A, a $1 billion term loan B and $750 million in unsecured notes. Price talk on the TLB is LIB+425 with a 2.25% Libor floor and a 98.5 OID. The TLB has 101 call protection. JP Morgan launched the financing today to back a $2.15 billion dividend to Warner Chilcott's shareholders. Warner Chilcott will also amend its existing credit to allow for the dividend recap financing.
    • Price talk on Clopay Ames True Temper's $500 million term loan is LIB+450-500 with a 1.75% Libor floor and a 98 OID. Goldman Sachs launched the loan today. It backs Griffon Corp's $542 million acquisition of Ames True Temper (NYSE:ATT) from Castle Harlan Partners. Clopay Ames True Temper is a newly formed wholly-owned subsidiary of Griffon. The financing also includes a $150 million asset-based facility. In addition, Griffon will provide $75 million in cash. The corporate family and term loan rating is B2. The ABL facility is rated Ba2. The combined assets of ATT and Griffon's Clopay Building Products and Performance Plastics subsidiaries will secure the borrowings under the financing commitments. Griffon expects to have cash in excess of $200 million available for general corporate purposes after the completion of the deal. Griffon currently conducts its operations through Telephonics Corporation, Clopay Building Products Company and Clopay Plastic Products Company.
     
    Price Flex
    • Pricing on Fairmount Minerals' term loan B has was cut to LIB+450 from talk of L+475-500. The1.75% Libor floor and a 98.5 OID remain intact. Pricing on the TLB, the TLA and the revolver steps down to LIB+425 when leverage is less than 2.75 times and after the receipt of June 30, 2011 financial statements. Pricing on the term loan A has firmed at talk of LIB+450 with a 1.75% Libor floor and a 98.5 OID. Pricing on the revolving credit facility has firmed at LIB+450 with a 98.5 OID. Recommitments were due today at 5:00 p.m. Barclays Capital, KeyBanc, Bank of America Merrill Lynch and PNC lead the $775 million deal. The corporate family rating is B1/BB-, while the facility rating is B1/BB. Proceeds are to back the company's buyout by American Securities.
     
    Ratings
    • Moody's Investors Service assigned an initial B2 corporate family and probability of default rating to Clopay Ames True Temper Holding Corp. ("Clopay"), which is a newly formed wholly-owned subsidiary of Griffon Corporation. Moody's also assigned a Ba2 rating to Clopay's $150 million new asset based revolving credit facility ("ABL") and a B2 to the $500 million new senior secured term loan facility. The rating outlook is stable. On July 19, 2010, Griffon Corporation, announced it had entered into a definitive agreement to acquire Ames True Temper (B3, Stable) for a total purchase price of $542 million. Proceeds from the $500 million term loan facility and $96 million in cash are expected to used to fund the acquisition of Ames True Temper ("Ames"). The transaction is not expected to create operating synergies between the two companies as Ames will continue to operate independently with the existing management team in place.
    • Standard & Poor's Ratings Service has assigned its 'CCC+' issue-level and '6' recovery ratings to Tenet Healthcare Corp's $600 million senior unsecured notes due 2020. Proceeds from the notes will finance a portion of the company's tender offer for up to $800 million of its 7.375% notes due 2013.
    • Moody's Investors Service affirmed the ratings of Multiplan Inc, including the corporate family and probability of default ratings at B2. Concurrently, Moody's assigned a Ba3 rating on both the company's proposed $75 million, 5-year revolving credit facility and $1.3 billion 7-year senior secured term loan B, and a Caa1 rating to the proposed $675 million senior unsecured notes due 2018. The ratings outlook is stable. On July 9, 2010, BC Partners and Silver Lake agreed to acquire Multiplan, Inc. from the Carlyle Group and Welsh Carson for $3.1 billion. Proceeds from the proposed credit facility and senior unsecured notes, along with cash equity from both financial sponsors and management's roll-over of equity, will be used to complete the acquisition. Multiplan's B2 Corporate Family Rating continues to reflect the company's relatively high leverage, history of acquisitions and LBO transactions and, lack of organic growth within the Primary PPO network segment. Further adding pressure to the ratings is the continuing uncertainty with respect to healthcare reform implications on insurers that could also give rise to challenges. Supporting the ratings are Multiplan's successful integration of prior acquisitions, high EBITDA margin, and the new combined company's scale and covered lives, albeit within a niche market.
     
    High Yield
    • PRICED: Tenet Healthcare USD600m 10y NC5 Sr Notes Yield 8%Tenet Healthcare Corp (NYSE:THC) USD600m 144A sr notes due 2020 (10y). NC5. Price talk of 8% area. Equity claw: 3y 35%. Caa1/CCC+. Via Barc/BAML/GS/Citi joint books, WFS, Scotia as co-managers. With reg rights. Investor call at 11.30am today. Pricing this afternoon. UOP: along with cash on hand to fund the tender offer for its USD800m 7.375% sr notes due 2013 (USD1,055 total consideration, includes USD30 consent fee). Biz: owns and operates acute care hospitals, ambulatory surgery centers and diagnostic imaging centers. HQ: Dallas, TX.
    • Pride International Inc filed to offer USD benchmark 10y sr notes via joint books GS/Citi/WFS/BofAML/Natixis. Outstanding ratings are Ba1/BBB-/BB+. MWC. CoC put at 101. UOP: general corporate purposes, which may include payments with respect to our three drillships under construction and other capital expenditures. 30y tranche added, guidance out as 8% area. 10y guidance 7% area. Area on both is +/- 12.5bps.
    • Marina District Finance Company Inc (Borgata) USD725m 144A sr sec notes 2- part. B2/BB (stable/stable). Via BAML/WFC/JPM/BARC/RBS/UBS joint books. Daiwa, Cap One co-managers. With reg rights. USD due 10/15/15 (5y). NC3. Talk 9.75% area (w/approx 1pt OID). USD due 08/15/18 (8y). NC4. Talk +25bp-37.5bp vs 5y tranche (w/approx 1pt OID). Books closed at 4pm today. Will price midday tomorrow. Will Settle T+2 (08/06).
    • PHH Corp (NYSE:PHH) USD250m 144A sr notes due 2016. UOP: repay revolver. Biz: leading outsource provider of mtg and vehicle fleet management services. HQ: Mount Laurel, NJ.
    • PRICED: Petrohawk Energy Corp (NYSE:HK) USD825m 144A sr unsec notes due 08/15/18 (8y). NC4 (MWC T+50bp). Equity claw: 3y 35%. B3/B+ (stable/stable). Barc/JPM/ BAML/RBC/ WFS/CS/BMO/BNPP joint books, CA, MS as sr co-managers, CapOne, Citi, Miz, Natixis co-managers.. With reg rights. 7.25% at 100. +434bp vs 3.50% 05/15/20. Del 08/17 (T+10).
    • Diamond Resorts Corp USD425m 144A sr sec notes due August 2018 (8y). NC4. Special call: 10% per year at 103 the 1st 4yrs. Via CS/BAML/Guggenheim joint books. With reg rights. Roadshow this week. Pricing next week. UOP: repay bank debt. Biz: provides resort management services.
    • PRICED: Trilogy Intl USD370m 6y NC3 Sr Sec Notes Yield 10.50%. Trilogy International Partners LLC/Trilogy International Finance Inc USD370m 144A/Reg S sr sec notes due 08/15/16 (6y). NC3. Rated Caa1/CCC+ (stable/stable). Via GS/DB/JPM joint books. No reg rights. 10.25% at 98.902, yield 10.50%. Del 08/10 (T+5). 144A
     
     
    August 4
    • Institute for Supply Management non-manufacturing report 10 a.m. ET
    • Treasury to auction $25 billion 56-day cash management bills
    • National Financial Partners Corp. conference call 8 a.m. ET
    • Sirius XM Radio Q2 earnings, conference call 8 a.m. ET
    • IntercontinentalExchange, Inc. Q2 earnings, conference call 8:30 a.m.ET
    • SPX Corp. Q2 earnings, conference call 8:30 a.m. ET
    • TRW Automotive Holdings Corp Q2 earnings 7 a.m. ET, conference call 8:30 a.m. ET
    • Clean Harbors, Inc. Q2 earnings, conference call 9 a.m. ET
    • EXCO Resources, Inc. conference call 9 a.m. ET
    • Innospec Inc. conference call 9 a.m. ET
    • Lionbridge Technologies, Inc. Q2 earnings, conference call 9 a.m. ET
    • Mueller Water Products, Inc. conference call 9 a.m. ET
    • SunGard Q2 earnings, conference call 9 a.m. ET
    • CapLease, Inc. Q2 earnings before market open, conference call 9:30 a.m. ET
    • Liberty Global, Inc. conference call 9:30 a.m. ET
    • Alliant Techsystems Inc. Q1 earnings before market open, conference call 10 a.m. ET
    • Alpha Natural Resources, Inc. Q2 earnings before market open, conference call 10 a.m. ET
    • Cincinnati Bell Inc. Q2 earnings before market open, conference call 10 a.m. ET
    • DG FastChannel, Inc. Q2 earnings before market open, conference call 10 a.m. ET
    • DuPont Fabros Technology, Inc. conference call 10 a.m. ET
    • El Paso Corp. Q2 earnings, conference call 10 a.m. ET
    • Franklin Street Properties Corp. conference call 10 a.m. ET
    • Hertz Corp. conference call 10 a.m. ET
    • Knology, Inc. Q2 earnings, conference call 10 a.m. ET
    • Nexstar Broadcasting Group, Inc. Q2 earnings before market open, conference call 10 a.m. ET
    • Orient Express Hotels Ltd. conference call 10 a.m. ET
    • RehabCare Group, Inc. conference call 10 a.m. ET
    • Speedway Motorsports, Inc. Q2 earnings, conference call 10 a.m. ET
    • Vonage Holdings Corp. Q2 earnings, conference call 10 a.m. ET
    • Wabash National Corp. conference call 10 a.m. ET
    • American Capital Ltd. conference call 11 a.m. ET
    • Ameristar Casinos, Inc. Q2 earnings 9 a.m. ET, conference call 11 a.m. ET
    • Arch Chemicals, Inc. Q2 earnings, conference call 11 a.m. ET
    • Brigham Exploration conference call 11 a.m. ET
    • Buckeye Technologies Inc. Q4 earnings, conference call 11 a.m. ET
    • CBL & Associates Properties, Inc. conference call 11 a.m. ET
    • FelCor Lodging Trust Inc. conference call 11 a.m. ET
    • HSN, Inc. Q2 earnings before market open, conference call 11 a.m. ET
    • Hughes Communications, Inc. Q2 earnings, conference call 11 a.m. ET
    • Otelco Inc. conference call 11 a.m. ET
    • BreitBurn Energy Partners LP Q2 earnings, conference call 1 p.m. ET
    • Calumet Specialty Products Partners, LP Q2 earnings before market open, conference call 1 p.m. ET
    • American Pacific Corp. Q3 earnings after market close, conference call 4:30 p.m. ET
    • Clearwire Corp. Q2 earnings 4 p.m. ET, conference call 4:30 p.m. ET
    • Cott Corp. Q2 earnings after market close, conference call 4:30 p.m. ET
    • Amkor Technology, Inc. Q2 earnings after market close, conference call 5 p.m. ET
    • Cardtronics, Inc. Q2 earnings after market close, conference call 5 p.m. ET
    • Global Cash Access Holdings, Inc. Q2 earnings after market close, conference call 5 p.m. ET
    • MedAssets, Inc. Q2 earnings 4 p.m. ET, conference call 5 p.m. ET
    • ON Semiconductor Q2 earnings after market close, conference call 5 p.m. ET
    • Pacer International, Inc. Q2 earnings after market close, conference call 5 p.m. ET
    • Smith & Wesson Holding Corp. Q4 earnings after market close, conference call 5 p.m. ET
    • Terremark Worldwide, Inc. Q1 earnings, conference call 5 p.m. ET
    • United Online, Inc. Q2 earnings after market close, conference call 5 p.m. ET
    • Amerco Q1 earnings after market close
    • Ashford Hospitality Trust, Inc. Q2 earnings after market close
    • Atwood Oceanics, Inc. Q3 earnings after market close
    • Avis Budget Group, Inc. Q2 earnings after market close
    • Bristow Group Inc. Q1 earnings after market close
    • Carriage Services, Inc. Q2 earnings after market close
    • Concho Resources Inc. Q2 earnings after market close
    • Cross Country Healthcare, Inc. Q2 earnings after market close
    • CVR Energy, Inc. Q2 earnings earnings after market close
    • GCI Q2 earnings after market close
    • Goodrich Petroleum Corp. Q2 earnings after market close
    • Hersha Hospitality Trust Q2 earnings after market close
    • HudBay Minerals Inc. Q2 earnings after market close
    • ION Geophysical Corp. Q2 earnings after market close
    • Jack in the Box Inc. Q3 earnings after market close
    • KapStone Paper and Packaging Corp. Q2 earnings after market close
    • Kendle International Inc. Q2 earnings after market close
    • Macquarie Infrastructure Co. Q2 earnings after market close
    • Ormat Technologies, Inc. Q2 earnings after market close
    • Plains All American Pipeline, LP; PAA Natural Gas Storage, L.P. Q2 earnings after market close
    • Providence Service Corp. Q4 earnings after market close
    • Psychiatric Solutions, Inc. Q2 earnings after market close
    • SandRidge Energy, Inc. Q2 earnings after market close
     
    16th Annual Thomson Reuters LPC Loan Conference
    Wednesday September 22, 2010
    Marriott Marquis, New York City

     
    Now in its 16th year, the Thomson Reuters LPC Loan Conference has become one of the industry's premiere annual events. Join investors, lenders, financial sponsors and treasurers as they discuss the outlook for a continually evolving loan market.
     
    Click Here to view our detailed agenda and to access registration information.
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