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  • Syndicated Loan Market Commentary 08/12/2010 0 comments
    Aug 12, 2010 6:09 PM
    Globally, everything was lower as investors fled from equities. Asia was down around 1% taking their cues from the US. Europe chopped around for most of the day but fell off a quarter after the U.S. jobless claims number; the FTSE bucked the trend to close firmer. The US was down around a half a percent today with the S&P and Dow closing at 1,083.61 (-0.54%) and 10,319 (-0.57%). With the economic outlook getting increasingly uncertain, investors are going to take profits from the recent rally and wait for things to get better. 2Q earnings got everyone excited, but when that was not matched with an increase in jobs, people got skeptical. Now, with the economic outlook slashed by both the U.S. and U.K. there is little incentive to add to payrolls. So, who is going to be spending? The Government? The Consumer? I doubt it will be either as they both are broke; so much for Keynesian economics. The only thing I see is the return of the supply-siders, but we need to get through the mid-term elections to see any sort of policy change. But, I digress.
     
    The loan market was weaker again today with flow names off around half a point. Newer issues are holding up but older vintage loans are having trouble. Investors are attracted to the yield of the newer issues and since most are fairly liquid that has helped keep prices stable. The strategy now is to buy selectively but remain mobile and avoid illiquid names. High beta names will continue to lose ground, so save some room to pick up those names once the weather clears. For now, keep your eyes out for any positive catalysts, but the negative trend will continue. The retail sales numbers will determine the direction of the market tomorrow so everyone better start praying. But, I will leave you with one piece of good news; loan and high yield mutual funds showed inflows of $102.4 million and $574.8 million respectively for the week ended August 11th. Have a good night.
     
    Headlines
    • Eurozone June industry output down, strong over Q2
    • Bud brewer Q2 boosted by Brazil and World Cup
    • Global stocks slip, dollar gains on US, Greek data
    • U.S. jobless claims jump shows labor market ailing
    • GM CEO steps down as profit revs up IPO engine   
    • U.S. housing market to skirt another big downturn
    • Shorting Wall Street on the campaign trail       
    • Fed to take more policy easing steps-Kaufman     
    • CVC readies Univar amend-to-extend, term loan    
     
    Must Read Articles
     
    News
    • General Motors Co has secured a $5 billion credit facility, two people briefed on the bank deal said on Wednesday, marking the return of the top U.S. automaker to the capital markets a year after it emerged from a landmark bankruptcy. GM now plans to file a registration for its IPO on Friday, a day after it reports what is expected to be its second consecutive quarterly profit, two people with direct knowledge of the process said. By securing the bank credit, GM cleared a hurdle toward an initial public offering of stock expected to make the U.S. government a minority shareholder and hand the Obama administration an important political win against critics of its $50 billion bailout of the automaker. GM, now 61 percent-owned by the U.S. government, is counting on the momentum from its improved profitability and better global auto sales to build investor interest for a stock sale that will mark the return of a one-time blue chip to the ranks of listed companies. The GM IPO, expected to be the largest ever for the U.S. market and an unprecedented privatization of an American industrial icon, is likely before the U.S. Thanksgiving holiday.
    • Las Vegas Sands has set a 2:00 p.m. deadline today after floating revisions on pricing and the terms of the paydown for the proposed amendment to its $5 billion credit facility. Pricing was increased by an additional 25bp to LIB+275 and the paydown is set to be the lesser of $1 billion or 40% of the part for those who extend for 2.5 years. Under the original terms of the amendment LVS would pay down $750 million of the outstanding $3.9 billion under its $5 billion credit facility, and extend approximately $2.25 billion for 2.5 years. Lenders who extended would have also received a 75bp price bump to LIB+250 along with a 10bp consent fee. The amendment was put to a vote Tuesday as planned, but Wednesday morning creditors were still waiting to hear the final result. At that time, the amendment was reportedly just shy of attaining the required 51% creditor approval. Several investor sources said that as of 9 a.m. yesterday morning Credit Suisse was still reaching out to lenders, having attained roughly 47% of the required vote. This morning, the blocking group was said to believe the amendment was close to netting the 51% approval.  
    • Univar USA sponsor CVC Capital Partners is prepping an amend-to-extend of the chemical company's existing credit and new $300 million term loan in a deal that would bring in an unnamed equity sponsor to buy up 49% of the company. First, under the amend-to-extend pricing would increase by 100bp to LIB+400, with the addition of a 1.5% Libor floor. The loan would be extended by two years to mature in 2016. Lenders who agree to extend would also receive an additional 12.5bp fee. Second, lenders are being asked to approve a new $300 million seven-year term loan; proceeds from the loan would pay a dividend to equity sponsor CVC. The proposed loan would pay LIB+450, carry a 1.5% Libor floor and rank pari-passu with the existing loan. Existing lenders would receive a 12.5bp fee to approve the new loan, however, under the proposed terms they would not be eligible to enter into the loan. Even though the new loan has wider pricing, it is unavailable to current lenders as it is already spoken for by a third party. Lenders are also being asked to approve the amendment and new loan without being advised on the identity of the new equity sponsor that would acquire 49% ownership of Univar. The transaction would not result in change of control. There are reportedly two equity sponsors in the running, both of which want to see the amendment passed in order to sign onto the deal. CVC however has not identified the two potential sponsors to existing lenders.
     
    On the Break
     
    New Issue
    • Vertis Inc has downsized its first-lien term loan by $60 million to $365 million. In addition, the last-out term loan is now a second-lien term loan, which has been upsized by $60 million to $210 million. Pricing on the first-lien loan remains unchanged at LIB+900 with a 97 OID and a 2% Libor floor. The call language is 104, 103.5, 102, 101 and par for the five years. Credit Suisse leads the deal. Amid market volatility in May, Vertis was to launch a $300 million note issue pari passu to its then $300 million term loan. And pricing on the term loan was to be determined after the notes had priced. Proceeds are to refinance existing debt.
    • Price talk on Toys-Delaware's $500 million term loan is LIB+450 with a 1.5% Libor floor and a 98.5 OID. Bank of America Merrill Lynch, JP Morgan and Goldman Sachs are launching today the refinancing for Toys-Delaware, a subsidiary of Toys R Us. Toys R Us announced Aug. 11 that Toys-Delaware will raise $1 billion in senior secured term loans and senior secured notes. Toys-Delaware intends to use the cash proceeds to repay its existing $800 million secured term loan facility and its existing $181 million senior unsecured credit facility, the company said in a statement. The loans and notes will not be guaranteed by Toys R Us.
    • Las Vegas Sands revised pricing and the terms of the paydown on its proposed amendment to its $5 billion credit facility. Pricing was increased by an additional 25bp to LIB+275 and the paydown is set to be the lesser of $1 billion or 40% of the part for those who extend for 2.5 years.
    • Gentiva Health Services has downsized its six-year term loan B by $20 million to $580 million after upsizing its bond offering by the same amount to $325 million. The call language is now 102, 101, compared to 101 earlier. Pricing on the term loan B was flexed up last week to LIB+500 with a 1.75% Libor floor and a 96 OID. Earlier, price talk on the TLB was LIB+450-475 with a 1.75% Libor floor and a 98 OID. Gentiva's upsized $325 million notes priced at par to yield 11.5%.
     
    High Yield
    Announced
    • Warner Chilcott Co LLC/Finance LLC (NASDAQ:WCRX) USD750m 144A sr unsec notes due 2018 (8y). NC4 (MWC T+50bp). Equity claw: 3y 35%. B3/B+ (-- /stable). Via BAML/JPM/GS joint books, Citi, CS, DB, MS, UBS as co-managers. With reg rights. Investor call at 11am today. Pricing this afternoon. UOP: along with sr sec term loans (USD500m term loan A-2 and USD1bn term loan B-2) via JPM/BAML to fund a leverage recapitalization, which includes the payment of a special dividend to its ordinary shareholders of USD8.50 per share or USD2.15bn total. Biz: specialty pharmaceuticals. HQ: Ardee, Ireland.
    • Travelport Ltd USD250m 144A/Reg S sr notes due March 2016 (6.5y). NC3 (then par plus half the coupon). Ratings TBD. Via CS/UBS joint books. Investor call late this morning. Pricing likely this afternoon. UOP: repay bank debt (term loan C and revolver), GCP. Travelport is a leading provider of critical transaction processing for the global travel industry.
    • Cardronics Inc (NASDAQ:CATM) USD200m SEC registered sr sub notes due 2018 (8y). NC4 (MWC). Equity claw: 3y 35%. Expected ratings B2/BB-. Via BAML/JPM joint books, WFS, BBVA, STI joint books. Investor call at 11am today. Pricing this afternoon.
     
    Price Talk
    • Price talk of 7.75% area is out on Warner Chilcott Co LLC/Finance LLC (WCRX) USD750m 144A sr unsec notes due 2018 (8y). NC4 (MWC T+50bp). Equity claw: 3y 35%. B3/B+ (stable/stable). Via BAML/JPM/GS joint books. Books close at 3.30pm. Pricing this afternoon.
    • Price talk is out on Cardronics Inc (CATM) USD200m SEC registered sr sub notes due 2018 (8y). NC4 (MWC T+50bp).Expected ratings B2/BB-. Via BAML/JPM joint books. Books close at 2.30pm. Pricing this afternoon.
     
    Priced
    • Multiplan Inc USD675m 144A sr notes due 09/01/18 (8y). NC4 (MWC T+50bp). Equity claw: 3y 35%. Caa1/CCC+ (stable/- -) Via BAML/Barc/CS joint books. 9.875% at 100. +767bp vs 4% 08/15/18. Del 08/26 (T+10). 144A CUSIP: 62546FAB7.
    • Cott Corp (NYSE:COT) USD375m 144A sr notes due 09/01/18 (8y). NC4. B3/B (stable/stable). Via DB/JPM/MS joint books, + co-managers. W/reg rights. 8.125% at 100. +592bp vs 4% 08/15/18. Del 08/17. 144A CUSIP: 221643AE9.
    • Gentiva Health Services Inc (NASDAQ:GTIV) increased to USD325m (from USD305m) sr notes 09/01/18 (8y). NC4 (MWC T+50bp). Equity claw: 3y 35%. B2/B- (stable/stable). Via Barc/BAML/STI joint books. With reg rights. 11.50% at 100. +928bp vs 4% 08/15/18. Del 08/17. 144A CUSIP: 37247AAA0.
    • PetroQuest Energy Inc (NYSE:PQ) USD150m SEC registered sr notes due 09/01/17 (7y). NC4 (MWC T+50bp). Equity claw: 3y 35%. Caa1/B (stable/stable). Gtd by subs, including PetroQuest Energy LLC. Via JPM sole books, BAML, CA, WFS, CS, Howard Weil, Johnson Rice, Stifel as co-managers, Capital One, Global Hunter, Pritchard, Simmons as jr co-managers. 10% at 100. +791bp vs 2.375% 07/31/17.
    • Travelport LLC/Travelport Inc USD250m 144A/Reg S sr notes due 03/01/16 (5.5y). NC3 (MWC T+50bp) (then par plus half the coupon). B3/CCC+ (stable/stable). Via CS/UBS joint books. 9% at 100. +735bp. Del 08/18 (T+4). 144A CUSIP: 89421JAA0.
     
    What to Watch tomorrow 8/13/10
    • Consumer price index, July (Bureau of Labor Statistics) 8:30 a.m. ET
    • Earnings, July (Bureau of Labor Statistics) 8:30 a.m. ET
    • Retail sales, July (Census Bureau) 8:30 a.m. ET
    • Business inventories, June (Census Bureau) 10 a.m. ET
    • Darling International Inc. conference call 10 a.m. ET
    • Hexion Specialty Chemicals, Inc. Q2 earnings before market open, conference call 10 a.m. ET
    • NBC Acquisition Corp. Q1 earnings, conference call 10 a.m. ET
    • OSI Restaurant Partners, LLC Q2 earnings, conference call 10 a.m. ET
    • Peninsula Gaming, LLC conference call 10 a.m. ET
    • Reichhold Industries, Inc. Q2 earnings, conference call 10 a.m. ET
    • SGS International, Inc. Q2 earnings, conference call 10 a.m. ET
    • Exopack Holding Corp. Q2 earnings, conference call 11 a.m. ET
    • GEO Group conference call 11 a.m. ET
    • Ahern Rentals, Inc. Q2 earnings, conference call 2 p.m. ET
    • Sheridan Group, Inc. Q2 earnings, conference call 2 p.m. ET
     
     
    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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