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Ford seeks lenders to step up for plan to extend $8.9B bank loan

Ford Motor Co. is seeking responses today on a plan to extend its $8.9 billion revolving credit due 2013 by an additional two years, sources said. J.P. Morgan is handling the amendment, which pays 25 bps. Ford will drop its $2 billion incremental facility in favor of language allowing the deal to grow to as much as $12 billion.

There’s no immediate change to the current pricing grid post extension. Pricing is currently L+212.5, with a 37.5 bps facility fee, for L+250 all-in drawn at the BB+ senior unsecured level. There was only about $130 million utilized at year-end, according to an SEC filing.

The collateral-release provision, too, remains unaltered in the extension request. The deal is currently secured by a substantial portion of domestic automotive assets including a majority of principal domestic manufacturing facilities; domestic accounts receivable; domestic inventory; up to $4 billion of marketable securities; 100% of the stock of principal domestic subsidiaries, including Ford Credit (but not its assets); Ford Motor Company of Canada; 66-100% of the stock of all major first-tier non-U.S. subsidiaries; and certain domestic intellectual property, including trademarks

When Ford obtains investment-grade unsecured ratings from two of the three agencies and its term loans are repaid (the term debt was repaid last year), the collateral drops away and a revised pricing grid kicks in.

That grid is as follows: for BB or lower, L+300, with a 50 bps facility fee; for BB+, L+225/37.5 bps; for BBB-, L+175/25 bps; for BBB, L+150/20 bps; and for BBB+, L+125/15 bps.

The amendment also bakes into the deal the ability to extend either the 2013 or 2015 loans for an additional one or two years, sources said. – Chris Donnelly

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Averting possible default, Germany’s Q-Cells postpones bond maturity

German solar panel maker Q-Cells has averted a potential default today by postponing the maturity date of its 2012 notes until April 30, the company announced. The euro convertible notes, with $282.4 million outstanding, according to Capital I.Q., bear interest at 1.375% and would have matured today. Approximately 80% of creditors approved the extension, according to the announcement.

In addition to the 2012 issue, the company has two other issues of subordinated Eurobonds, with $301.6 million in 5.75% notes due 2014 and $172.91 million in 6.75% notes due 2015 outstanding. All are indicated or quoted at highly distressed levels, with the 2012 notes at 19.5, the 2014 notes at 22.8 and the 2015 notes at near zero, according to trade data and Capital I.Q.

After a basic agreement was reached with creditors in early February to restructure all outstanding convertible bonds, the extension was the next step of what is to be a more involved financial restructuring of company’s liabilities, the company said. After yesterday’s meeting, the company says there are further procedural steps for the financial restructuring. Q-Cells is optimistic that this will succeed, and it expects to implement the financial restructuring in the second half of this year.

Q-Cells offered €350 million of the notes due 2012 in 2007 via Citigroup and Dresdner Kleinwort as joint lead managers and bookrunners and HVB as co-lead manager. Two years later, it came back to market with €225 million of the notes due 2014 via Citi and Morgan Stanley as lead managers and bookrunners, and Commerzbank, UBS Investment Bank, UniCredit Group, and WestLB AG as co-leads managers. Then, in 2010, the company offered €128.7 million via Citi, Goldman Sachs, and UniCredit Bank AG as joint bookrunners. – Max Frumes

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Cengage Learning says amend-to-extend loan deal en route

Cengage Learning term debt is quoted on either side of 93 as word circulated that the higher-education publisher said it would shortly roll out an amend-to-extend transaction. The news, which had been expected, came during a presentation this morning at J.P. Morgan’s high yield and leveraged finance conference, sources said.

Investors were hearing last week that the issuer might be seeking a short-term extension of the loans given the pressing maturity of its junior debt. Roughly $1.215 billion of 10.5% senior notes, $233.6 million of 13.25% senior subordinated discount notes and $127 million of 13.75% senior PIK notes all mature in 2015.

The Cengage TLB dates back to June 2007, when a Royal Bank of Scotland-led arranger group syndicated a $3.44 billion term loan and a $300 million revolving credit to finance the leveraged buyout of the higher-education publisher by Apax Partners and OMERS Capital Partners. There was $3.293.8 billion outstanding under the L+225 term loan at Dec. 31.

Cengage, formerly Thomson Learning, in June 2008 completed a $625 million incremental term loan, which cleared at L+375, with a 3.75% LIBOR floor and 102, 101 call premiums in years one and two, respectively. Proceeds backed the company’s $750 million acquisition of Houghton Mifflin’s College Division. The incremental term loan currently stands at $603 million. Corporate ratings are B/B3. – Staff reports

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Distressed debt: SuperMedia term loan gets bump in trading market after tender offer

Since the announcement on Thursday of SuperMedia’s latest debt repurchase offer, the company’s term debt (L+800, 3% LIBOR floor) has added at least two points, to 50/52, sources said. SuperMedia, the distressed publisher of Yellow Pages and other directories, is launching its second sub-par buyback in three months, this time preparing to spend $31 million to repurchase debt at 48-53. The offer will expire at 5:00 p.m. EST on Feb. 29, according to the company.

The buybacks are allowed under the amendment to the term loan agreed to by SuperMedia and lenders Nov. 8, with J.P. Morgan as collateral agent and administrative agent.

The company spent $117 million in December to prepay $235 million of the senior secured term loan at 49.75. This was after a failed offer to tender its term loan in a range of 43-46. Additionally, through Dec. 31, the company made additional debt principal payments of $191 million.

SuperMedia, formerly known as Idearc, emerged from bankruptcy in January 2010. Under the Chapter 11 reorganization plan the company reduced its debt from $9.3 billion, to $2.75 billion of secured bank debt. After these latest paydowns and tenders, the company’s long-term debt fell to $1.74 billion by year-end, according to the company’s 10K posted last Thursday. – Max Frumes/Kerry Kantin

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Bankruptcy: After twists, turns, A&P nets reorganization-plan confirmation

The bankruptcy court overseeing the bankruptcy proceedings of the Great Atlantic & Pacific Tea Co. on Feb. 27 confirmed the company’s reorganization plan, the company said. The confirmation was expected, even though the path to yesterday’s hearing took a few late twists and turns. A company spokesperson said the company was “taking the necessary steps to emerge from Chapter 11 as soon as possible,” but would not commit to a specific timeline.

As reported, the plan is backed by a $490 million new money commitment from Yucaipa Companies, Mount Kellett Capital Management and Goldman Sachs Asset Management, consisting of a new private placement of $210 million of second-lien notes (to be issued with a 5% OID, yielding $200 million of new money), $210 million of third-lien notes, and $80 million of new equity (see “Details, background of A&P financing proposal,” LCD, Nov. 4, 2011).

Under the company’s proposed plan, second-lien noteholders, with an allowed claim of roughly $310 million, would be paid in cash. Under the company’s initial plan, unsecured creditors were to share in a $40 million cash pool on a pro rata basis (see “A&P files reorg plan and disclosure statement,” LCD, Nov. 15, 2011), but two weeks ago the company amended its plan (see “A&P cuts unsecured creditor recovery in face of exit loan downsizing,” Feb. 16, 2012) to eliminate that payment after it was forced to downsize its exit facility amid arrangers’ efforts to fill out the loan (see “A&P fills downsized exit loan as new terms emerge,” Feb. 13, 2012).

Unsecured creditors may yet see a recovery from a contingent fund, however, if a cash sale of A&P or its assets takes place in the next five years.

The company filed for Chapter 11 on Dec. 12, 2010 in White Plains, N.Y. The company announced the new money financing deal on Nov. 3, 2011, and filed a proposed reorganization plan incorporating that deal on Nov. 14, 2011. The bankruptcy court approved the company’s disclosure statement on Dec. 15, 2011.

The hearing to confirm the company’s plan began Feb. 6, but its completion was postponed several times as a result of the company’s struggles in connection with its exit financing. After filing amended plan terms on Feb. 16, the company said it would schedule the conclusion of the confirmation hearing on Feb. 27, to afford creditors an opportunity to review the plan’s revised terms. – Alan Zimmerman

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High yield bonds: Hertz add-on notes price at 104 to yield 5.83%

Hertz today completed an add-on to its 6.75% senior notes due 2019 via sole bookrunner Barclays, according to sources. Terms were inked at the high end of price guidance at the target size of $250 million. With the additional notes the total issue size grows to $1.25 billion. The original $500 million was placed in January of last year and it was reopened four months later for another $500 million. Proceeds from the new deal, along with cash on hand, will be used to take out existing senior notes. Hertz plans to redeem all of the outstanding 8.875% notes due 2014 and all of the 7.875% notes due 2014. As of Dec. 31, $162.3 million of the 8.875% notes and €213.5 million of the 7.875% notes were outstanding, an SEC filing shows. Terms:

Issuer Hertz Corp.
Ratings B/B2
Amount $250 million
Issue add-on senior notes (144A)
Coupon 6.75%
Price 104
Yield 5.833%
Spread T+448
FRN eq. L+427
Maturity April 15, 2019
Call nc3.5
Trade Feb. 28, 2012
Settle March 13, 2012 (T+10)
Books Barc
Co-Lead
Co’s.
Px talk 103.75-104
Notes w/ equity clawback for 35% @ 106.75; w/ change-of-control put @ 101; carries T+50 make-whole call; issue size now $1.25 billion.
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Federal Signal refinances into expensive senior loan package

Oak Brook, Ill.-based Federal Signal has refinanced 2012 loan maturities with an expensive, senior-secured-replacement package that features a $215 million, five-year term loan at L+1,000, the company disclosed late last week. The term loan is subject to a 2% LIBOR floor and carries a facility fee of 2%, according to the company.

Repayments in 2012 are permissible with proceeds from certain asset sales, then are subject to call premiums of 102.75 in 2013 and at 102 in 2014.

In conjunction with the term loan, Federal Signal has obtained a $100 million, five-year asset-based revolver. Pricing ranges from L+175-350, depending upon availability, according to the company.

TPG Specialty Lending is sole arranger on the term loan, while Wells Fargo Capital Finance and GE Capital are co-collateral agents on the RC, with Wells Fargo as administrative agent for that facility.

Proceeds refinanced existing debt, including a roughly $234 million revolver that was due to mature in April.

“This is an important first step in strengthening the company’s balance sheet,” CEO Dennis Martin said in a statement last week. He said the new financing will provide flexibility as Federal Signal improves profitability and invests in 2012 growth initiatives.

Federal Signal designs and makes safety, security and communication equipment; street sweepers and other environmental vehicles and equipment; vehicle-mounted and aerial platforms for fire fighting, rescue, electric utility and industrial uses.

The company also makes technology-based products and services for the public-safety and intelligent-transportation-systems markets. Additionally, Federal Signal sells parts and tooling, and provides service, repair, equipment rentals and training. The company operates 19 manufacturing facilities in six countries.

Under the previous financing agreement, the company struggled with covenants and received waivers from lenders relating to interest-coverage ratios. As part of the waivers, lenders led by Bank of Montreal restricted dividend payments. As of Sept. 30, 2011, Federal Signal was in compliance with all covenants contained in its debt agreements.

In the first quarter of 2010, Federal Signal acquired VESystems for $34.8 million, and Sirit for $74.9 million. The acquisitions were funded with cash and drawings against the availability of its RC. The company also issued 1.2 million shares of common stock to fund a portion of the VESystems purchase.

There are no public debt ratings listed for Federal Signal. – Kelly Thompson

Follow Kelly on Twitter @MMktDoyenne for middle-market financing news.

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Orange Austria extends loan covenant waiver request deadline to today

The deadline for consenting to Orange Austria’s covenant waiver has been extended to close of business today, according to sources.

The waiver asks lenders to waive the debt coverage covenant test while adding a minimum EBITDA test, and also reduces the permitted debt basket while reducing RCF commitments, sources said. Last Friday, the request was slightly amended to improve consent fees from 10 bps plus 5 bps if the sale fails to occur by Sept. 30, to an upfront 50 bps fee on consent. If the request is approved, Orange Austria will obtain a covenant waiver to September, sources added.

Lenders have been anticipating covenant issues later this year, and sources said the current waiver is a way to buy some time for the regulatory approval of its sale to Hutchison Whampoa. As Hutchison Whampoa already owns 3 Austria, and could look to combine the two operators, there have been some questions as to whether the regulators will approve of the sale. To smooth regulatory agreement, Hutchison is expected to sell some assets to Telecom Austria, according to sources.

As reported, the Hong Kong based company will buy France Telecom’s 35% stake, as well as Mid Europa Partners’ 65% stake, for an enterprise value of roughly €1.3 billion.

The 2007 buyout of the Austrian mobile operator was financed by €1.325 billion of debt, including €150 million of second-lien and €125 million of mezzanine, putting total leverage at 7.2x. – Sohko Fujimoto/David Cox

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Claire’s Stores add-on high yield bond offering prices at 101.5 to yield 8.7%

Claire’s Stores today completed an add-on offering of secured notes via J.P. Morgan, according to sources. Terms on the B/B3 drive-by were inked at the low end of dollar-price guidance, but it was upsized by $50 million, to $100 million, which in turn brings the total outstanding to $500 million. The Apollo Management-controlled specialty retailer will use proceeds from the deal to reduce borrowings under its credit facility. The original $400 million offered earlier this month was aimed at repaying a portion of the company’s term loan. About $1.15 billion of the term loan was outstanding as of Oct. 29, SEC filings show. Terms:

Issuer Claire’s Stores
Ratings B/B3
Amount $100 million
Issue add-on secured notes (144A-life)
Coupon 9.00%
Price 101.5
Yield 8.67%
Spread T+759
FRN eq. L+738
Maturity March 15, 2019
Call nc3
Trade Feb. 13, 2012
Settle March 12, 2012 (t+10)
Books JPM
Px talk 101.5-120
Notes total now $500 million; 1st call @ par +75% of coupon.

 

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Bankruptcy: Indianapolis Downs, creditors near consensus on path forward

Indianapolis Downs is seeking an additional extension of the exclusive period during which only the company can file a reorganization plan, this time through March 19, in order to give two key stakeholders more time to agree on a process for moving the case forward.

The company is also seeking to extend the exclusive period to solicit votes to the reorganization plan, through May 7.

According to a supplemental motion to extend exclusivity filed on Feb. 22 with the bankruptcy court in Wilmington, Del., the company said it and the two stakeholders – Fortress Credit Opportunities Advisors, which holds a blocking position in the company’s second-lien notes and 90% of the company’s third-lien notes, and an ad hoc committee of second-lien noteholders – “are close to reaching a consensus on the appropriate path forward.”

According to the filing, that path would comprise a “parallel process” that would require the company to engage, first, in a Section 363 sale process and, if that turned out unsuccessful, would be followed by a consensual reorganization plan supported by Fortress and the ad hoc panel.

As reported, Indianapolis Downs and Fortress previously came up with a reorganization plan that would convert third-lien notes to 100% of the equity in the reorganized company and provide the second-lien notes with a combination of cash from a new roughly $300 million first-lien exit facility and new securities in the principal amount of $260 million. The company said it believed the plan would pay second-lien noteholders in full.

But the ad hoc committee of second-lien holders said it would oppose the plan on a variety of grounds, guaranteeing a contested confirmation hearing. Instead, the committee proposed a sale process in which it said it was willing to provide a credit bid to serve as a stalking-horse credit bid. Indianapolis Downs, however, said there were “significant legal impediments” to a credit bid because of Fortress’s second-lien blocking position.

As also reported, the company’s exclusive period to file a plan was scheduled to expire on Jan. 31, but at the end of January the company filed a motion seeking a short exclusivity extension, through Feb. 14, to give Fortress and the ad hoc committee time to negotiate a consensual process for moving the case ahead. The company said, however, that it has “taken longer than expected to complete a promised term sheet reflecting their view of the process,” adding that the additional time now being sought afforded by the extra exclusivity would allow the company to “continue to facilitate these discussions and to allow additional time for the creditor constituencies to negotiate and provide a term sheet.”

Before a hearing could be held on the short exclusivity extension, however, the company extended the hearing date to Feb. 27, effectively extending exclusivity to that date as well, because under the Delaware court’s rules exclusivity is automatically extended to the hearing date. According to the supplemental motion, the hearing on exclusivity remains on track for Feb. 27.

Meanwhile, the company said that Fortress and the ad hoc committee have been negotiating both with the company and with one another independently, and “are working diligently to resolve open issues.” The company said that Fortress and the committee were “close to reaching a consensus,” adding that once a term sheet is agreed upon, the company will evaluate the proposed final process, obtain board approval and prepare needed documentation.

In the supplemental motion, the company explained the unique dynamic that has stood in the way of a consensus in the case. “While both the ad hoc second-lien committee and Fortress have been very constructive in their discussions with the debtors,” the company said, “it has been clear from the beginning of these Chapter 11 cases that the ad hoc second-lien committee and Fortress … have different views of both value and an appropriate split of that value between them. This dynamic is made more difficult by the fact that Fortress holds a blocking position in the second-lien notes and, therefore, the ad hoc second-lien committee does not speak for sufficient holders of second-lien notes to carry the class under a plan of reorganization.”

With respect to a potential Section 363 asset sale, the company had previously said it had received expressions of interest from three potential buyers. In the supplemental motion, the company described each as a “credible buyer,” but added that the offers were at “a preliminary stage and there are issues with each expression of interest.”

Further, as the company has previously said, there remain “other parties that might also be interested in acquiring the Debtors’ assets through a process.”

Meanwhile, if the company is required to turn to a traditional reorganization plan, it said that as of Oct. 26, 2011, it had received indications of interest from six providers interested in providing exit financing to the company. – Alan Zimmerman